1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-3-1998

United States v. Evans

Precedential or Non-Precedential:

Docket 97-3445

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Recommended Citation

"United States v. Evans" (1998). 1998 Decisions. Paper 213.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/213
Filed September 3, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

NO. 97-3445 

UNITED STATES OF AMERICA, 

v. 

CURTIS EVANS 

 Appellant 

On Appeal From the United States District Court 

For the Western District of Pennsylvania 

(D.C. Crim. No. 96-cr-0167-5) 

Argued June 12, 1998 

Before: BECKER, Chief Judge, WEIS, Circuit Judge, 

and DOWD, District Judge.* 

(Filed September 3, 1998) 

 SHELLEY STARK, ESQUIRE 

 Federal Public Defender 

 KAREN S. GERLACH, ESQUIRE 

 (ARGUED) 

 Assistant Federal Public Defender 

 415 Convention Tower 

 960 Penn Avenue 

 Pittsburgh, Pennsylvania 15222 

Attorneys for Appellant, Curtis Evans 

_________________________________________________________________ 

*Honorable David D. Dowd, Jr., United States District Judge for the 

Northern District of Ohio, sitting by designation. 
 LINDA L. KELLY, ESQUIRE 

 United States Attorney 

 BONNIE R. SCHLUETER, ESQUIRE 

 (ARGUED) 

 Assistant United States Attorney 

 633 United States Post Office & 

 Courthouse 

 Pittsburgh, Pennsylvania 15219 

 Attorneys for Appellee United States 

OPINION OF THE COURT 

BECKER, Chief Judge. 

Curtis Evans appeals from his conviction on various

fraud-related charges. The primary question presented, 

which arises out of Evans' judgment of sentence, is whether 

the district court erred in conditioning his supervised 

release on reimbursement of the cost of court-appointed 

counsel. See 18 U.S.C. S 3583(d). We conclude that it did, 

and therefore vacate that portion of the judgment. We also 

remand for further sentencing proceedings because of the 

inadequacy of the district court's findings supporting its 

determination of the amount of loss from fraudulent

conduct. See U.S.S.G. S 2F1.1(b)(1) (1997).1 

I. 

A federal grand jury returned a forty-six count indictment 

against Evans and eleven other individuals. Evans was 

_________________________________________________________________ 

1. Additionally, Evans submits that plain error was committed by the 

seating of a juror who purportedly expressed an inability to be fair, and 

the wasting of a peremptory challenge on another juror who also 

purportedly expressed an inability to be fair. These contentions are 

unfounded. Alternatively, Evans contends that trial counsel's failure to 

move to strike either of these jurors constituted ineffective assistance 

of 

counsel. We will not address this claim on direct appeal. See United 

States v. Cocivera, 104 F.3d 566, 570 (3d Cir. 1996) (recognizing that 

claims of ineffective assistance of counsel are"ordinarily more 

appropriate for collateral attack"). 

 2 
convicted by a jury of nineteen counts of mail fraud in 

violation of 18 U.S.C. S 1341; two counts of use of a 

fictitious name to commit mail fraud in violation of 18 

U.S.C. S 1342; three counts of wire fraud in violation of 18 

U.S.C. S 1343; and one count of conspiracy in violation of 

18 U.S.C. S 371. The fraud inhered in a scheme of staging 

automobile accidents and then submitting insurance claims 

for non-existent medical treatment. The scheme, which 

operated in New York, Pennsylvania, and New Jersey, was 

masterminded by Alexander Grichener, but Evans played 

an apparently significant role in its Pittsburgh, 

Pennsylvania operations, particularly those involving the 

Keystone Medical clinic. Evans was sentenced to forty-two 

(42) months imprisonment and three (3) years supervised 

release for each count, to run concurrently; a $1250 special 

assessment; and payment of $2500 in restitution. The 

supervised release was conditioned upon the 

reimbursement of the costs of Evans' court-appointed 

counsel, in a monthly amount of not less than ten percent 

of his gross monthly income. 

During the trial it was revealed that Evans' financial 

affidavit, submitted as part of his application for courtappointed counsel, inaccurately represented Evans' and his 

wife's annual joint income as $48,000, when their actual 

joint income was $104,000. Evans testified that the court 

clerk filling out the affidavit had asked about joint takehome pay ($48,000), not gross pay ($104,000). At the 

sentencing hearing the court found that Evans had made 

"material misstatements" in his affidavit, and ordered 

Evans to repay the cost of his attorney as a condition of 

supervised release. Upon further questioning by Evans' 

counsel, the court explained that the condition was

imposed because Evans "had enough income that he was 

not entitled to a Public Defender," and that the condition 

was not punishment for the misrepresentation. 

The presentence investigation report stated that the 

amount of loss incurred by the insurance companies was 

$2,851,872.42, and thus exceeded $2.5 million for 

sentencing guideline purposes. A government agent testified 

at the sentencing hearing that he had calculated the 

amount of loss based on insurance company 

 3 
reimbursement checks deposited to the bank accounts of 

the eleven medical clinics and supply companies involved in 

the scheme. On cross-examination, the agent indicated that 

he did not know whether every deposit was associated with 

a staged accident. The district court then found"from the 

preponderance of the evidence [at the sentencing hearing] 

and the trial . . . that the amount of loss as a result of the 

conspiracy for which defendant knowingly took part and 

was expected and foreseeable exceed[ed] 2.5 million

dollars." Accordingly, Evans' base offense level of six was 

increased thirteen levels pursuant to U.S.S.G. S 2F1.1(b)(1).2 

Evans filed this timely appeal.3 

II. 

Evans contends that the conditioning of his supervised 

release on the reimbursement of counsel fees is violative of 

the supervised release statute, 18 U.S.C. S 3583. This 

contention was not raised in the district court, and thus we 

review it under the familiar plain error standard set forth 

infra in Part II.D. For the reasons that follow, we find that 

the district court committed plain error requiring the 

exercise of our discretion to vacate the judgment. 

The supervised release statute is not open-textured. An 

order may be a condition of supervised release only to the 

extent that it: 

 (1) is reasonably related to the factors set forth in 

 S 3553(a)(1), (a)(2)(B), (a)(2)(C), and (a)(2)(D); 

 (2) involves no greater deprivation of liberty than is 

 reasonably necessary for the purposes set forth in 

 S 3553(a)(2)(B), (a)(2)(C), and (a)(2)(D); and 

 (3) is consistent with any pertinent policy statements 

 issued by the Sentencing Commission pursuant to 

 28 U.S.C. S 994(a). 

_________________________________________________________________ 

2. Evans' offense level was further increased two levels, pursuant to 

U.S.S.G. S 2F1.1(b)(2), to a final level of twenty-one because the scheme 

involved multiple victims. 

3. The district court had jurisdiction pursuant to 18 U.S.C. S 3231. We 

exercise appellate jurisdiction under 28 U.S.C.S 1291. 

 4 
18 U.S.C. S 3583(d). Section 3553(a), referenced in

paragraphs (1) and (2) above, provides for consideration of: 

 (1) the nature and circumstances of the offense and 

 the history and characteristics of the defendant; 

 [and] 

 (2) the need for the sentence imposed -- 

 . . . 

 (B) to afford adequate deterrence to criminal 

 conduct; 

 (C) to protect the public from further crimes of t he 

 defendant; and 

 (D) to provide the defendant with needed education al 

 or vocational training, medical care, or other 

 correctional treatment in the most effective manner. 

The question before us is whether a reimbursement order 

authorized by the Criminal Justice Act ("CJA"), 18 U.S.C. 

S 3006A, which permits a court to order repayment of fees 

for appointed counsel whenever it finds that funds are 

available,4 satisfies the requirements of the supervised 

release statute. This is a question of first impression for us. 

The only other court of appeals to have addressed this 

issue in a published opinion was the Ninth Circuit in 

United States v. Eyler, 67 F.3d 1386 (9th Cir. 1995). The 

Eyler court concluded that a condition requiring 

reimbursement of attorney fees violated the supervised 

release statute because it was not related to the defendant's 

underlying criminal conduct of unlawful possession of 

firearms and "simply bears no relationship" to the pertinent 

statutory goals. See 67 F.3d at 1394; see also United States 

v. Lorenzini, 71 F.3d 1489, 1492-93 (9th Cir. 1995) (relying 

_________________________________________________________________ 

4. Section 3006A(f) provides in part: 

 Whenever . . . the court finds that funds are available for payment 

 from or on behalf of a person furnished representation, it may 

 authorize or direct that such funds be paid to the appointed 

 attorney, to the bar association or legal aid agency or community 

 defender organization which provided the appointed attorney, . . . 

or 

 to the court for deposit in the Treasury as a reimbursement to the 

 appropriation. . . . 

 5 
on Eyler to conclude without discussion that 

reimbursement of counsel fees is not related to offense of 

bank fraud). Evans contends that his reimbursement 

condition violates the first prong of the supervised release 

statute because it is not "reasonably related" to the nature 

and circumstances of his insurance fraud or to his history 

and characteristics, and does not further the statutory 

goals of deterrence, protection, and rehabilitation. See 18 

U.S.C. S 3583(d)(1); 18 U.S.C. S 3553(a)(1), (a)(2)(B)-(D). 

A. 

As to the factors identified in S 3553(a)(1), we considered 

a cognate question in United States v. Spiropoulos, 976 F.3d 

155, 165 (3d Cir. 1992), where we held that "[r]ecouping 

the costs of imprisonment has nothing to do with the 

nature or the seriousness of the offense, and hence is not 

authorized under S 3553(a)(1)." In the same vein, 

reimbursement of counsel fees is not related in any tangible 

way to insurance fraud. Furthermore, the reason for

imposing the condition -- Evans' financial ability to obtain 

a private attorney -- is not a relevant "nature and

circumstance" of insurance fraud nor, in our view, is it a 

"history and characteristic" of Evans himself. Even if Evans 

had the finances to afford an attorney because of profits 

attained from the fraudulent insurance scheme in which he 

was involved, we do not believe that the profitable nature of 

an offense alone is sufficient to establish a reasonable 

relationship between a reimbursement condition of 

supervised release and the offense of the defendant. 

Otherwise, any financially profitable crime, such as robbery 

or drug dealing, would necessarily be related to the 

repayment of counsel fees (or any other financial condition) 

merely because of the likely financial gain from the crime 

and regardless of the specific "nature and circumstances" of 

the offense, resulting in a defendant's "ability to pay" 

overriding all other relevant considerations. 

The government submits that Evans' material 

misstatements on his financial affidavit, which qualified 

him for appointment of counsel, are directly related to his 

filing of fraudulent insurance claims because they represent 

a continuation of the same criminal conduct. It is possible 

 6 
that without the misstatements Evans may not have been 

eligible for court-appointed counsel, 18 U.S.C.S 3006A(b), 

or would have otherwise been subject to a reimbursement 

order, see discussion infra. Furthermore, making 

misstatements on an affidavit is similar in nature and 

character to making fraudulent insurance claims in that 

both acts involve deception and lying. However, as we have 

explained, the district court made it quite clear that the 

reimbursement condition was not imposed because of 

Evans' misstatements, but rather because of hisfinancial 

ability. 

Moreover, even if the district court had imposed the 

reimbursement condition because of Evans' misstatements, 

the condition is nonetheless not reasonably related to the 

statutory goals of S 3553(a)(2)(B)-(D). As in Spiropoulos, 

where we found no "reason to believe" that assessing the 

costs of imprisonment acts as a deterrent, protects the 

public, or rehabilitates the defendant, see 976 F.2d at 165- 

66, the government has presented no evidence (nor made 

any argument) that the reimbursement condition would 

serve any of these purposes. We conclude that requiring the 

repayment of counsel fees incurred in defending a 

prosecution would not likely deter crime, protect the public, 

or serve any rehabilitative function. See 18 U.S.C.

S 3553(a)(2)(B)-(D); Eyler, 67 F.3d at 1394. But cf. United 

States v. Turner, 998 F.2d 534, 536-37 (7th Cir. 1993) 

(concluding that assessment of imprisonment costs deters 

criminal conduct). 

B. 

The government also relies on cases under the old 

Federal Probation Act, 18 U.S.C. S 3651 (repealed 1984),5 in 

which courts upheld the imposition of repayment of 

_________________________________________________________________ 

5. Section 3651 provided in part: 

 [W]hen satisfied that the ends of justice and the best interest of 

the 

 public as well as the defendant will be served thereby, [the court] 

 may suspend the imposition or execution of sentence and place the 

 defendant on probation for such period and upon such terms and 

 conditions as the court deems best. 

 7 
attorney fees as a condition of probation, for its contention 

that the reimbursement condition satisfies the supervised 

release statute. The cases are inapposite becauseS 3651 is 

materially different from the supervised release statute. The 

language of S 3651 was "broad and inclusive" and provided 

the sentencing court with an "exceptional degree of

flexibility." United States v. Gurtunca, 836 F.2d 283, 288 

(7th Cir. 1987) (quoting United States v. Missouri Valley 

Constr. Co., 741 F.2d 1542, 1552 (8th Cir. 1984) (Gibson, 

John R., J., concurring and dissenting), and United States 

v. Alexander, 743 F.2d 472, 479 (7th Cir. 1984)). See also 

United States v. Beros, 833 F.2d 455, 467 (3d Cir. 1987) 

(recognizing that S 3651 grants broad discretion to district 

courts). The only limitation on this power was the courtdeveloped "reasonable relationship to the treatment of the 

accused and the protection of the public." United States v. 

Santarpio, 560 F.2d 448, 455 (1st Cir. 1977) (quoting 

United States v. Alarik, 439 F.2d 1349, 1351 (8th Cir. 

1971)). 

In contrast, the supervised release statute is limited by 

the statutory requirements of S 3553(a)(1) and (a)(2)(B)-(D), 

see 18 U.S.C. S 3583(d), and thus the imposition of

conditions on supervised release must satisfy a more 

exacting standard. To the extent that the broad language of 

S 3651 may have been constrained by the same factors 

identified in S 3553(a)(2)(B)-(D), see Beros, 833 F.2d at 467 

(interpreting S 3651 as granting discretion to impose 

conditions reasonably related to rehabilitation of defendant 

and protection of public), the supervised release statute is 

nonetheless further restricted by S 3553(a)(1). See supra 

Part II.A. Consistent with these observations, we note 

support for our position in the Guide to Judiciary Policies 

and Procedures, promulgated by the Administrative Office of 

the United States Courts, which states: 

 Subsection (f) of [the CJA] does not authorize a judicial 

 officer to require reimbursement as a condition of 

 probation, and the Judicial Conference believes that 

 reimbursement of the cost of representation under the 

 Act should not be made a condition of probation under 

 any other authority. 

 8 
VII Guide to Judiciary Polices and Procedures: Appointment 

and Payment of Counsel P 2.22E (1997). In the context of 

the judiciary guidelines, we believe there is no difference 

between probation and supervised release because 

conditions of probation are now statutorily restricted in the 

same manner as conditions of supervised release. Compare 

18 U.S.C. S 3563(b) (probation statute) with 18 U.S.C. 

S 3583(d) (supervised release statute).6 

C. 

For the foregoing reasons, the district court clearly 

violated the first requirement of the supervised release 

statute when it imposed a condition that had no reasonable 

relationship to the factors identified in #8E8E # 3553(a)(1) and 

(a)(2)(B)-(D). This, of course, is not to suggest that the 

district court lacks power to order the reimbursement of the 

cost of counsel fees, because the CJA provides for such an 

order. District courts frequently impose such orders at the 

time counsel is appointed, and can in fact do so at any 

time. Furthermore, if a defendant fails to satisfy such an 

order, the district court can seek enforcement by instituting 

contempt proceedings, or by entering a judgment against 

the defendant which will act as a lien against his property. 

See Lorenzini, 71 F.3d at 1493. All we hold is that

reimbursement of counsel fees could not be effected in this 

case by making it a condition of supervised release. 7 

_________________________________________________________________ 

6. Although not at issue in this case, the imposition of conditions under 

the current probation statute likely also necessitates a more restrictive 

analysis than was required under the old statute. See 18 U.S.C. 

S 3563(b) (requiring discretionary conditions to be reasonably related to 

factors set forth in S 3553(a)(1), (2)); Lorenzini, 71 F.3d at 1493-94 

(considering S 3553(a)(1) and (2) factors in rejecting reimbursement of 

counsel fees as condition of probation). 

7. Evans has also relied on United States v. Cottman, 142 F.3d 160 (3d 

Cir. 1998), where we addressed the question whether the repayment of 

"buy-money" to the FBI as a condition of supervised release was 

authorized by the supervised release statute. We determined that the 

condition was "restitution," and as such was governed by S 3563(b)(2) 

permitting "restitution to the victim," but concluded that the definition 

of 

"victim" under S 3563(b) was parallel to the definition under the Victim 

 9 
D. 

We must still decide whether the district court's mistake 

amounts to a plain error that warrants the exercise of our 

discretion to correct. We believe that it does. As noted 

above, we review for plain error. See Fed. R. Crim. P. 52( b); 

United States v. Olano, 507 U.S. 725, 731-32 (1993). "There 

must be an `error' that is `plain' and that`affect[s] 

substantial rights.' " Olano, 507 U.S. at 732 (quoting United 

States v. Young, 470 U.S. 1, 15 (1985) (in turn quoting 

United States v. Atkinson, 297 U.S. 157, 160 (1936))). The 

deviation from a legal rule is "error," and an error is "plain" 

if it is "clear" or "obvious." Id . at 732-34. In most cases, an 

error affects substantial rights if it is prejudicial, i.e., 

"affected the outcome of the district court proceedings." Id. 

at 734. When such an error exists, "the Court of Appeals 

has authority to order correction, but is not required to do 

so." Id. at 735. We will exercise our discretion and vacate 

the sentence if the plain error affecting substantial rights 

also "seriously affect[s] the fairness, integrity, or public 

reputation of judicial proceedings." United States v. Retos, 

25 F.3d 1220, 1229 (3d Cir. 1994) (alteration in original) 

(quoting Olano, 507 U.S. at 732). 

First, the district court clearly violated the supervised 

release statute, and thus committed error. See Olano, 507 

U.S. at 732-34. The government argues that any purported 

error was not plain because we had not yet addressed the 

propriety of a reimbursement order as a condition of 

supervised release, and because in United States v.

Chorney, 63 F.3d 78, 83 (1st Cir. 1995), the First Circuit 

_________________________________________________________________ 

Witness Protection Act, which precluded the government as "victims." Id. 

Accordingly, we held that the repayment condition was unlawful. Id. 

Evans seeks aid from Cottman by arguing that since there is no 

authorization for the reimbursement condition underS 3553, the only 

possible authorization would be from S 3563(b), but that the only 

possibly applicable S 3563(b) provision is paragraph (b)(2) permitting 

"restitution to the victim," which Cottman held did not apply to the 

government. The government responds that Cottman is inapplicable to 

the case at bar because it involved restitution, whereas this case 

involves 

reimbursement. We agree with the government, and accordingly do not 

rest our judgment on Cottman. 

 10 
reviewed a similar reimbursement order for compliance with 

the CJA, but did not address the restrictions of the 

supervised release statute. These contentions are without 

merit. Neither the absence of circuit precedent nor the lack 

of consideration of the issue by another court prevents the 

clearly erroneous application of statutory law from being 

plain error. 

This error affects substantial rights because, if Evans 

fails to reimburse the cost of his attorney, he would be 

subject to possible incarceration for all or part of the term 

of supervised release. See 18 U.S.C. S 3583(e)(3); United 

States v. Dozier, 119 F.3d 239, 244 (3d Cir. 1997) (error 

affects substantial right to liberty when it extends period of 

restriction on liberty and of governmental supervision). 

Furthermore, imposing a sentence not authorized by law 

seriously affects the fairness, integrity, and reputation of 

the proceedings. Dozier, 119 F.3d at 244-45. Because the 

plain error standard is met, we will exercise our discretion 

and direct that the district court vacate the portion of the 

sentence conditioning Evans' supervised release on the 

repayment of counsel fees.8 

_________________________________________________________________ 

8. The district court may, as we mentioned above, impose a 

reimbursement order independent of supervised release if it "finds that 

the person is financially able to obtain counsel or to make partial 

payment for the representation" or "finds that funds are available for 

payment from or on behalf of a person furnished representation." 18 

U.S.C. S 3006A(c), (f). The focus is on the defendant's present ability to 

pay for his representation. See 18 U.S.C.S 3006A(c) (referring to person 

that "is" financially able to obtain counsel); 18 U.S.C. S 3006A(f) 

(referring to funds that "are" available); United States v. Jimenez, 600 

F.2d 1172, 1174 (5th Cir. 1979) (recognizing that statute is written in 

present tense). 

The burden is on the defendant to prove by a preponderance of the 

evidence that he is financially unable to reimburse the cost of 

representation. United States v. Lefkowitz, 125 F.3d 608, 621 (8th Cir. 

1997), cert. denied, 118 S.Ct. 1527 (1998); United States v. Harris, 707 

F.2d 653, 660 (2d Cir. 1983). Cf. United States v. Gravatt, 868 F.2d 585, 

588 (3d Cir. 1989) (defendant has burden of establishing financial 

eligibility for appointed counsel). However, this does not relieve the 

district court of its responsibility to inquire into the defendant's 

current 

financial status, see United States v. Fraza , 106 F.3d 1050, 1056 (1st 

 11 
III. 

Evans also contends that the district court erred in 

determining that the amount of loss from fraudulent

conduct, for purposes of S 2F1.1 of the sentencing 

guidelines, exceeded $2.5 million. Evans presented this 

objection in the district court. Therefore our review of the 

district court's interpretation of "loss" under S 2F1.1 is 

plenary, and our review of the district court's application of 

the guidelines is governed by the clearly erroneous

standard. See United States v. Collado, 975 F.2d 985, 990 

(3d Cir. 1992). Pursuant to S 2F1.1(b), the specific offense 

characteristics provision for fraud-related crimes, a 

defendant's base offense level is increased by thirteen levels 

when the amount of loss resulting from the fraudulent 

conduct exceeds $2.5 million. The "loss" is the "value of the 

money, property, or services unlawfully taken." U.S.S.G. 

S 2F1.1, application note 7. Although "the loss need not be 

determined with precision," the court must make a 

"reasonable estimate of the loss, given the available 

information." U.S.S.G. S 2F1.1, application note 8.

A. 

Evans first submits that the court improperly considered 

funds obtained from legitimate insurance claims submitted 

_________________________________________________________________ 

Cir. 1997) (remanding for hearing or findings as to defendant's financial 

ability despite government's evidence of defendant's misrepresentations 

on CJA application), taking into account the defendant's personal and 

family needs and the liquidity of his finances, Museitef v. United States, 

131 F.3d 714, 716 (8th Cir. 1997); United States v. Bracewell, 569 F.2d 

1194, 1199 (2d Cir. 1978). See generally VII Guide to Judiciary Policies 

and Procedures P 2.04. 

The district court ordered the reimbursement of Evans' counsel fees 

because it found that Evans had been ineligible for court-appointed 

counsel at the time of his CJA application. Thisfinding focused on 

Evans' prior ability to afford counsel, and therefore was inadequate to 

support a reimbursement order. We do not condone Evans' deception, 

intentional or otherwise, and his misstatements clearly raise doubts as 

to his purported inability to afford counsel. Thus, if the district court 

on 

remand wishes to consider imposing a reimbursement order 

(independent of the supervised release sentence), it should conduct an 

appropriate inquiry into Evans' current financial ability to pay for all 

or 

part of his representation. 

 12 
on behalf of legitimate accident victims. We addressed a 

similar issue in United States v. Maurello, 76 F.3d 1304 (3d 

Cir. 1996), where the defendant was convicted of mail fraud 

in connection with the unauthorized practice of law. We 

considered the question whether money paid for 

satisfactory legal services performed by an unlicensed 

attorney should be considered "loss" for purposes of 

S 2F1.1. Id. at 1308. We opined that a proper measurement 

of actual loss must take into account the "nature and 

degree of the harm caused by the offense," and that the 

degree of harm, in turn, depends on the quality of services 

rendered. Id. at 1311-12 (quoting 28 U.S.C.S 994(c)(3)). 

Accordingly, we wrote: 

 [t]o the extent that the unauthorized services provided 

 by [the] defendant have not harmed their recipients, 

 but to the contrary have benefitted them, we conclude 

 that [the] defendant's base offense level should not be 

 enhanced. 

Id. at 1312. 

Thus, the actual loss determination must be predicated 

upon the harm caused by Evans' offenses. Evans was 

convicted of fraud and conspiracy in connection with the 

unauthorized and fraudulent submission of insurance

claims. To the extent that this activity harmed the

insurance companies, Evans' sentence should be 

augmented. However, to the extent that any claims were 

legitimate and insurance companies were properly obligated 

to pay them, there was no harm and Evans' sentence 

should not be augmented. 

The government contends that Evans presented no 

evidence of legitimate patients at the time of his 

involvement in the scheme, and that to the extent there 

were any legitimate accidents, the claims were inflated. The 

burden, however, is on the government to prove by a

preponderance of the evidence the facts in support of a 

sentence enhancement; the defendant does not have to 

"prove the negative" to avoid the enhanced sentence. United 

States v. McDowell, 888 F.2d 285, 291 (3d Cir. 1989). 

Although the burden of production shifts to the defendant 

once the government has made out a prima facie case, the 

 13 
ultimate burden of persuasion rests with the government. 

Fed. R. Crim. P. 32(c); United States v. Raven , 39 F.3d 428, 

434-35 (3d Cir. 1994). Accordingly, the burden was on the 

government to prove that bank deposits sufficient to 

establish the basis for the loss calculation were for 

illegitimate or inflated claims. Only when the government 

had made such a prima facie showing was Evans required 

to come forward with evidence tending to cast doubt on the 

government's evidence. See Raven, 39 F.3d at 434-35. 

The evidence of fraudulent claims was considerable, and 

it may be that the government made a sufficient showing 

that there were no legitimate claims, or that the fraudulent 

claims alone exceeded $2.5 million.9 However, despite the 

extensive record, the district court did not make any 

findings on the record as to the basis for its conclusion that 

the loss exceeded $2.5 million. The district court only made 

a conclusory one sentence statement regarding its loss 

determination. Although the district court's determination 

need not be exact and can be based on the trial record as 

well as the sentencing record, see Fed. R. Crim. P. 32(c), we 

should not be asked to rummage through the entire record 

without guidance from the district court as to the legal and 

factual basis for its determination. In light of our remand 

on the supervised release issue, we direct the district court 

to make findings on the record as to the actual loss 

incurred from fraudulent claims.10 

B. 

Evans also claims that since his activity was limited to a 

single clinic, the losses from the other ten clinics were not 

foreseeable and should not be attributed to him. The 

district court, in making adjustments based on specific 

_________________________________________________________________ 

9. The government contends that the $2,851,872.42 amount is a gross 

underestimation of the actual amount of loss, and thus even if there 

were legitimate claims included, the loss still exceeded $2.5 million. 

10. We note that if the district court finds that the properly calculated 

loss "does not fully capture the harmfulness and seriousness of the 

conduct," the court may depart upwards from the normal sentencing 

range. U.S.S.G. S 2F1.1, application note 10; United States v. Kopp, 951 

F.2d 521, 536 (3d Cir. 1991). 

 14 
offense characteristics, must take into account all conduct 

relevant to the offense. See U.S.S.G. S 1B1.3(a). This 

includes "all reasonably foreseeable acts and omissions of 

others in furtherance of [a] jointly undertaken criminal 

activity." U.S.S.G. S 1B1.3(a)(1)(B). In making the

accomplice attribution assessment, the court must consider 

whether the loss resulting from the actions of coconspirators was (1) "in furtherance of the jointly

undertaken criminal activity," (2) within "the scope of the 

criminal activity the . . . defendant agreed to jointly 

undertake," and (3) "reasonably foreseeable in connection 

with that criminal activity." U.S.S.G. S 1B1.3, application 

note 2. In explaining the operation of S 1B1.3 in Collado, we 

stated that "it is not enough to merely determine that the 

defendant's criminal activity was substantial." 975 F.2d at 

995. The sentencing court must conduct "a searching and 

individualized inquiry into the circumstances surrounding 

each defendant's involvement in the conspiracy" in order to 

"ensure that the defendant's sentence accurately reflects 

his or her role" and agreement. Id. 

The district court concluded, without making any 

references on the record to specific evidence, that the losses 

caused by the eleven clinics were "a result of the conspiracy 

. . . and foreseeable" to Evans. This finding is inadequate to 

support the sentence because it appears to focus on the 

scope of the conspiracy as a whole, rather than on the 

scope of Evans' undertaking and involvement as required. 

See id. at 991. The conspiracy, which involved eleven 

medical clinics and supply companies owned and operated 

by Alexander Grichener and Vladimir Shats, was quite 

extensive. There is evidence that clearly indicates that 

Evans was involved with Keystone Medical, and which also 

suggests that Evans was involved with other clinics. 11 But, 

_________________________________________________________________ 

11. Evans acted on behalf of Keystone Medical in Pittsburgh by opening 

a bank account and being the signatory on the account, leasing office 

space, and representing the clinic at a zoning board hearing. Evans was 

a participant in a staged accident in Solebury, Pennsylvania in May 

1993, and submitted fraudulent claims for the accident to an insurance 

company. He also purchased car insurance and recruited participants 

for a November 1993 accident in Brooklyn, New York, and posed as a 

claimant in a subsequent meeting with an insurance adjuster 

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there is no indication that the district court made a 

"searching and individualized inquiry" into the extent of 

Evans' involvement, or the extent to which the coconspirators' conduct was in furtherance of and foreseeable 

from Evans' undertaking. Consequently, on remand, the 

district court should conduct further individualized fact 

finding as to the accomplice conduct attributable to Evans. 

IV. 

For the foregoing reasons, we will vacate the judgment 

and remand for further sentencing proceedings consistent 

with this opinion. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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investigating the accident. Evans also received various payments during 

the course of the conspiracy from clinics other than Keystone Medical, 

and he met with Grichener on various occasions at a New York clinic. 

However, while the indictment cited twenty staged accidents, there does 

not appear to be evidence of Evans' involvement in more than two. 

 16