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. e du/thir dc ir c uit_1998/213Filed 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 Distri ct 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 present ed, which arises out of Evans' judgment of sentence, is whether the district court erred in conditioning his superv ised release on reimbursement of the cost of court-appoi nted 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 o f the inadequacy of the district court's findings support ing 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 ind ictment against Evans and eleven other individuals. Evans w as

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1. Additionally, Evans submits that plain error was committed by the seating of a juror who purportedly expressed an ina bility to be fair, and the wasting of a peremptory challenge on another ju ror who also purportedly expressed an inability to be fair. Thes e contentions are unfounded. Alternatively, Evans contends that trial counsel's failure to move to strike either of these jurors constituted i neffective assistance

of
counsel. We will not address this claim on direct a ppeal. See United States v. Cocivera, 104 F.3d 566, 570 (3d Cir. 1996 ) (recognizing that
claims of ineffective assistance of counsel are"ord inarily more appropriate for collateral attack").

2convicted by a jury of nineteen counts of mail frau d in

violation of 18 U.S.C. S 1341; two counts of use of a fictitious name to commit mail fraud in violation o f 18 U.S.C. S 1342; three counts of wire fraud in violat ion of 18 U.S.C. S 1343; and one count of conspiracy in viola tion of
18 U.S.C. S 371. The fraud inhered in a scheme of s taging automobile accidents and then submitting insurance claims for non-existent medical treatment. The scheme, whi ch operated in New York, Pennsylvania, and New Jersey, was masterminded by Alexander Grichener, but Evans play ed an apparently significant role in its Pittsburgh, Pennsylvania operations, particularly those involvi ng the Keystone Medical clinic. Evans was sentenced to for ty-two (42) months imprisonment and three (3) years superv ised release for each count, to run concurrently; a $125 0 special assessment; and payment of $2500 in restitution. Th e supervised release was conditioned upon the reimbursement of the costs of Evans' court-appointe d counsel, in a monthly amount of not less than ten p ercent of his gross monthly income.

During the trial it was revealed that Evans' financ ial 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 a ctual joint income was $104,000. Evans testified that the court clerk filling out the affidavit had asked about joi nt takehome pay ($48,000), not gross pay ($104,000). At th e sentencing hearing the court found that Evans had m ade "material misstatements" in his affidavit, and orde red Evans to repay the cost of his attorney as a condit ion of supervised release. Upon further questioning by Eva ns' counsel, the court explained that the condition was imposed because Evans "had enough income that he wa s not entitled to a Public Defender," and that the co ndition was not punishment for the misrepresentation.

The presentence investigation report stated that th e 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 t estified at the sentencing hearing that he had calculated th e amount of loss based on insurance company

3reimbursement checks deposited to the bank accounts of

the eleven medical clinics and supply companies inv olved in the scheme. On cross-examination, the agent indicat ed that he did not know whether every deposit was associate d with a staged accident. The district court then found"fr om the preponderance of the evidence [at the sentencing he aring]
and the trial . . . that the amount of loss as a re sult 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 2F 1.1(b)(1).2 Evans filed this timely appeal.3

II.

Evans contends that the conditioning of his supervi sed
release on the reimbursement of counsel fees is vio lative of the supervised release statute, 18 U.S.C. S 3583. T his contention was not raised in the district court, an d thus we review it under the familiar plain error standard s et 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 liber ty than is reasonably necessary for the purposes set fo rth in S 3553(a)(2)(B), (a)(2)(C), and (a)(2)(D); a nd

(3) is consistent with any pertinent policy statements issued by the Sentencing Commission pursuant to 28 U.S.C. S 994(a).

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2. Evans' offense level was further increased two l evels, 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 12 91.

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

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

(1) the nature and circumstances of the offe nse and the history and characteristics of the defen dant; [and]

(2) the need for the sentence imposed --

. . .

(B) to afford adequate deterrence to crimina l conduct;

(C) to protect the public from further crime s of t he defendant; and

(D) to provide the defendant with needed edu cation al or vocational training, medical care, or oth er correctional treatment in the most effective manner.

The question before us is whether a reimbursement o rder authorized by the Criminal Justice Act ("CJA"), 18 U.S.C. S 3006A, which permits a court to order repayment o f fees for appointed counsel whenever it finds that funds are available,4 satisfies the requirements of the super vised release statute. This is a question of first impres sion for us. The only other court of appeals to have addressed t his 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 supervi sed
release statute because it was not related to the d efendant'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 Unit ed States v. Lorenzini, 71 F.3d 1489, 1492-93 (9th Cir. 1995) (relying

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

Whenever . . . the court finds that funds ar e available for payment from or on behalf of a person furnished repr esentation, it may authorize or direct that such funds be paid to the appointed attorney, to the bar association or legal ai d agency or community defender organization which provided the app ointed attorney, . . .

or to the court for deposit in the Treasury as a reimbursement to the appropriation. . . .

5on Eyler to conclude without discussion that

reimbursement of counsel fees is not related to off ense of bank fraud). Evans contends that his reimbursement condition violates the first prong of the supervise d release statute because it is not "reasonably related" to t he nature
and circumstances of his insurance fraud or to his history and characteristics, and does not further the statu tory 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 co nsidered a cognate question in United States v. Spiropoulos, 976 F.3d 155, 165 (3d Cir. 1992), where we held that "[r]eco uping the costs of imprisonment has nothing to do with th e 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 p rofits
attained from the fraudulent insurance scheme in wh ich he was involved, we do not believe that the profitable nature of
an offense alone is sufficient to establish a reaso nable relationship between a reimbursement condition of supervised release and the offense of the defendant

. Otherwise, any financially profitable crime, such a s robbery or drug dealing, would necessarily be related to th e repayment of counsel fees (or any other financial c ondition) merely because of the likely financial gain from th e crime and regardless of the specific "nature and circumst ances" 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 qua lified him for appointment of counsel, are directly relate d to his filing of fraudulent insurance claims because they represent
a continuation of the same criminal conduct. It is possible

6that without the misstatements Evans may not have b een

eligible for court-appointed counsel, 18 U.S.C.S 30 06A(b), or would have otherwise been subject to a reimburse ment 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 t hat the reimbursement condition was not imposed because of Evans' misstatements, but rather because of hisfina ncial ability.

Moreover, even if the district court had imposed th e reimbursement condition because of Evans' misstatem ents, the condition is nonetheless not reasonably related to the statutory goals of S 3553(a)(2)(B)-(D). As in Spiro poulos,
where we found no "reason to believe" that assessin g the costs of imprisonment acts as a deterrent, protects the public, or rehabilitates the defendant, see 976 F.2 d at 165- 66, the government has presented no evidence (nor m ade any argument) that the reimbursement condition woul d serve any of these purposes. We conclude that requi ring the repayment of counsel fees incurred in defending a prosecution would not likely deter crime, protect t he 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. 19 93) (concluding that assessment of imprisonment costs d eters criminal conduct).

B.

The government also relies on cases under the old Federal Probation Act, 18 U.S.C. S 3651 (repealed 1 984),5 in which courts upheld the imposition of repayment of

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5. Section 3651 provided in part:

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

the public as well as the defendant will be serv ed thereby, [the court] may suspend the imposition or execution of s entence and place the defendant on probation for such period and u pon such terms and
conditions as the court deems best.

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

that the reimbursement condition satisfies the supe rvised release statute. The cases are inapposite becauseS 3651 is materially different from the supervised release st atute. The language of S 3651 was "broad and inclusive" and pr ovided the sentencing court with an "exceptional degree of flexibility." United States v. Gurtunca, 836 F.2d 2 83, 288 (7th Cir. 1987) (quoting United States v. Missouri Valley Constr. Co., 741 F.2d 1542, 1552 (8th Cir. 1984) (G ibson, John R., J., concurring and dissenting), and United States v. Alexander, 743 F.2d 472, 479 (7th Cir. 1984)). S ee 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 S tates v. Santarpio, 560 F.2d 448, 455 (1st Cir. 1977) (quoti ng United States v. Alarik, 439 F.2d 1349, 1351 (8th C ir. 1971)).

In contrast, the supervised release statute is limi ted 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 mor e exacting standard. To the extent that the broad lan guage of S 3651 may have been constrained by the same factor s identified in S 3553(a)(2)(B)-(D), see Beros, 833 F .2d at 467 (interpreting S 3651 as granting discretion to impo se conditions reasonably related to rehabilitation of defendant and protection of public), the supervised release s tatute is nonetheless further restricted by S 3553(a)(1). See supra Part II.A. Consistent with these observations, we n ote support for our position in the Guide to Judiciary Policies and Procedures, promulgated by the Administrative O ffice of the United States Courts, which states:

Subsection (f) of [the CJA] does not authori ze a judicial officer to require reimbursement as a condit ion of probation, and the Judicial Conference belie ves that reimbursement of the cost of representation under the Act should not be made a condition of probat ion under any other authority.

8VII Guide to Judiciary Polices and Procedures: Appo intment

and Payment of Counsel P 2.22E (1997). In the conte xt of the judiciary guidelines, we believe there is no di fference between probation and supervised release because conditions of probation are now statutorily restric ted in the same manner as conditions of supervised release. Co mpare 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 clear ly violated the first requirement of the supervised re lease statute when it imposed a condition that had no rea sonable relationship to the factors identified in #8E8E # 3 553(a)(1) and (a)(2)(B)-(D). This, of course, is not to suggest t hat the district court lacks power to order the reimburseme nt of the cost of counsel fees, because the CJA provides for such an order. District courts frequently impose such order s 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 i nstituting contempt proceedings, or by entering a judgment aga inst 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

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6. Although not at issue in this case, the impositi on of conditions under the current probation statute likely also necessita tes a more restrictive analysis than was required under the old statute. S ee 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 reject ing reimbursement of counsel fees as condition of probation).

7. Evans has also relied on United States v. Cottma n, 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 de termined that the condition was "restitution," and as such was govern ed by S 3563(b)(2) permitting "restitution to the victim," but conclud ed that the definition

of "victim" under S 3563(b) was parallel to the defini tion under the Victim

9D.

We must still decide whether the district court's m istake 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 (quot ing United States v. Young, 470 U.S. 1, 15 (1985) (in turn quo ting United States v. Atkinson, 297 U.S. 157, 160 (1936) )). The deviation from a legal rule is "error," and an erro r is "plain"
if it is "clear" or "obvious." Id . at 732-34. In m ost cases, an error affects substantial rights if it is prejudici al, i.e., "affected the outcome of the district court proceed ings." Id. at 734. When such an error exists, "the Court of Ap peals has authority to order correction, but is not requi red to do
so." Id. at 735. We will exercise our discretion an d vacate the sentence if the plain error affecting substanti al 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 or iginal) (quoting Olano, 507 U.S. at 732).

First, the district court clearly violated the supe rvised release statute, and thus committed error. See Olan o, 507 U.S. at 732-34. The government argues that any purp orted error was not plain because we had not yet addresse d the propriety of a reimbursement order as a condition o f supervised release, and because in United States v. Chorney, 63 F.3d 78, 83 (1st Cir. 1995), the First Circuit

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Witness Protection Act, which precluded the governm ent as "victims." Id. Accordingly, we held that the repayment condition w as unlawful. Id. Evans seeks aid from Cottman by arguing that since there is no
authorization for the reimbursement condition under S 3553, the only possible authorization would be from S 3563(b), but that the only possibly applicable S 3563(b) provision is paragrap h (b)(2) permitting "restitution to the victim," which Cottman held di d not apply to the government. The government responds that Cottman i s inapplicable to the case at bar because it involved restitution, wh ereas this case
involves reimbursement. We agree with the government, and ac cordingly do not rest our judgment on Cottman.

10reviewed a similar reimbursement order for complian ce with

the CJA, but did not address the restrictions of th e supervised release statute. These contentions are w ithout merit. Neither the absence of circuit precedent nor the lack of consideration of the issue by another court prev ents the clearly erroneous application of statutory law from being plain error.

This error affects substantial rights because, if E vans fails to reimburse the cost of his attorney, he wou ld be subject to possible incarceration for all or part o f 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 extend s period of restriction on liberty and of governmental supervis ion). Furthermore, imposing a sentence not authorized by law seriously affects the fairness, integrity, and repu tation of the proceedings. Dozier, 119 F.3d at 244-45. Becaus e the plain error standard is met, we will exercise our d iscretion and direct that the district court vacate the porti on of the sentence conditioning Evans' supervised release on the repayment of counsel fees.8

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8. The district court may, as we mentioned above, i mpose a reimbursement order independent of supervised relea se if it "finds that the person is financially able to obtain counsel or to make partial payment for the representation" or "finds that fund s are available for payment from or on behalf of a person furnished rep resentation." 18 U.S.C. S 3006A(c), (f). The focus is on the defenda nt'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 S tates v. Jimenez, 600 F.2d 1172, 1174 (5th Cir. 1979) (recognizing that s tatute is written in present tense).

The burden is on the defendant to prove by a prepon derance of the evidence that he is financially unable to reimburse the cost of representation. United States v. Lefkowitz, 125 F.3 d 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 establi shing financial eligibility for appointed counsel). However, this d oes not relieve the district court of its responsibility to inquire int o the defendant's

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

11III.

Evans also contends that the district court erred i n 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 revi ew of the district court's interpretation of "loss" under S 2 F1.1 is plenary, and our review of the district court's app lication of the guidelines is governed by the clearly erroneous standard. See United States v. Collado, 975 F.2d 98 5, 990 (3d Cir. 1992). Pursuant to S 2F1.1(b), the specifi c offense characteristics provision for fraud-related crimes, a defendant's base offense level is increased by thir teen levels when the amount of loss resulting from the fraudule nt conduct exceeds $2.5 million. The "loss" is the "va lue of the money, property, or services unlawfully taken." U.S .S.G. S 2F1.1, application note 7. Although "the loss nee d not be determined with precision," the court must make a "reasonable estimate of the loss, given the availab le information." U.S.S.G. S 2F1.1, application note 8.

A.

Evans first submits that the court improperly consi dered funds obtained from legitimate insurance claims sub mitted

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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 defend ant's personal and family needs and the liquidity of his finances, Mus eitef 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 Eva ns' counsel fees because it found that Evans had been ineligible for court-appointed counsel at the time of his CJA application. Thisfin ding focused on Evans' prior ability to afford counsel, and therefo re was inadequate to support a reimbursement order. We do not condone Ev ans' deception, intentional or otherwise, and his misstatements cle arly 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), i t should conduct an appropriate inquiry into Evans' current financial a bility to pay for all

or part of his representation.

12on behalf of legitimate accident victims. We addres sed a

similar issue in United States v. Maurello, 76 F.3d 1304 (3d Cir. 1996), where the defendant was convicted of ma il fraud in connection with the unauthorized practice of law . We considered the question whether money paid for satisfactory legal services performed by an unlicen sed attorney should be considered "loss" for purposes o f S 2F1.1. Id. at 1308. We opined that a proper measu rement
of actual loss must take into account the "nature a nd 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 servic es provided by [the] defendant have not harmed their rec ipients, but to the contrary have benefitted them, we conclude that [the] defendant's base offense level sh ould not be

enhanced.

Id. at 1312.

Thus, the actual loss determination must be predica ted upon the harm caused by Evans' offenses. Evans was convicted of fraud and conspiracy in connection wit h 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 w ere legitimate and insurance companies were properly ob ligated 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 t here were any legitimate accidents, the claims were infl ated. 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 t o "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 def endant once the government has made out a prima facie case , the

13ultimate burden of persuasion rests with the govern ment.

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 t o establish the basis for the loss calculation were f or illegitimate or inflated claims. Only when the gove rnment had made such a prima facie showing was Evans requi red 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 sho wing that there were no legitimate claims, or that the f raudulent claims alone exceeded $2.5 million.9 However, despi te the extensive record, the district court did not make a ny findings on the record as to the basis for its conc lusion that the loss exceeded $2.5 million. The district court only made a conclusory one sentence statement regarding its l oss determination. Although the district court's determ ination
need not be exact and can be based on the trial rec ord as well as the sentencing record, see Fed. R. Crim. P. 32(c), we should not be asked to rummage through the entire r ecord without guidance from the district court as to the legal and factual basis for its determination. In light of ou r remand on the supervised release issue, we direct the dist rict court to make findings on the record as to the actual los s incurred from fraudulent claims.10

B.

Evans also claims that since his activity was limit ed to a single clinic, the losses from the other ten clinic s were not
foreseeable and should not be attributed to him. Th e district court, in making adjustments based on spec ific

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9. The government contends that the $2,851,872.42 a mount is a gross underestimation of the actual amount of loss, and t hus even if there were legitimate claims included, the loss still exc eeded $2.5 million.

10. We note that if the district court finds that t he properly calculated loss "does not fully capture the harmfulness and se riousness of the conduct," the court may depart upwards from the nor mal sentencing range. U.S.S.G. S 2F1.1, application note 10; Unite d States v. Kopp, 951 F.2d 521, 536 (3d Cir. 1991).

14offense characteristics, must take into account all conduct

relevant to the offense. See U.S.S.G. S 1B1.3(a). T his includes "all reasonably foreseeable acts and omiss ions of others in furtherance of [a] jointly undertaken cri minal activity." U.S.S.G. S 1B1.3(a)(1)(B). In making the accomplice attribution assessment, the court must c onsiderwhether the loss resulting from the actions of coconspirators was (1) "in furtherance of the jointly undertaken criminal activity," (2) within "the scop e of the criminal activity the . . . defendant agreed to joi ntly undertake," and (3) "reasonably foreseeable in conn ection with that criminal activity." U.S.S.G. S 1B1.3, app lication note 2. In explaining the operation of S 1B1.3 in C ollado, we stated that "it is not enough to merely determine t hat 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 surro unding each defendant's involvement in the conspiracy" in order to "ensure that the defendant's sentence accurately re flects 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 in adequate 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 requ ired. See id. at 991. The conspiracy, which involved elev en medical clinics and supply companies owned and oper ated by Alexander Grichener and Vladimir Shats, was quit e 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,

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11. Evans acted on behalf of Keystone Medical in Pi ttsburgh by opening a bank account and being the signatory on the accou nt, leasing office space, and representing the clinic at a zoning boar d hearing. Evans was a participant in a staged accident in Solebury, Pen nsylvania in May 1993, and submitted fraudulent claims for the accid ent to an insurance company. He also purchased car insurance and recrui ted participants for a November 1993 accident in Brooklyn, New York, and posed as a claimant in a subsequent meeting with an insurance adjuster

15there is no indication that the district court made a

"searching and individualized inquiry" into the ext ent ofEvans' involvement, or the extent to which the coconspirators' conduct was in furtherance of and for eseeable from Evans' undertaking. Consequently, on remand, t he
district court should conduct further individualize d fact finding as to the accomplice conduct attributable t o Evans.

IV.

For the foregoing reasons, we will vacate the judgm ent and remand for further sentencing proceedings consi stent 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 var ious payments during the course of the conspiracy from clinics other tha n Keystone Medical,
and he met with Grichener on various occasions at a New York clinic. However, while the indictment cited twenty staged a ccidents, there does not appear to be evidence of Evans' involvement in more than two.

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