2008 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-22-2008

USA v. Hawes

Precedential or Non-Precedential: Precedential

Docket No. 06-3334

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 06-3334

 

UNITED STATES OF AMERICA

 v.

BRYAN J. HAWES

a/k/a FINANCIAL MANAGEMENT 

ADVISORY SERVICES, INC.

a/ka/ FINANCIAL MANAGEMENT SERVICES, INC.

Bryan J. Hawes,

 Appellant

 

Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Criminal No. 04-cr-00082)

District Judge: Honorable Donetta W. Ambrose

 

Argued November 1, 2007

Before: RENDELL, WEIS and NYGAARD, Circuit Judges.
2

(Filed: April 22, 2008)

 

James J. Brink, Esq. [ARGUED]

428 Forbes Avenue, Suite 220

Lawyers Building

Pittsburgh, PA 15219

 Counsel for Appellant

 Robert L. Eberhardt, Esq.

Michael L. Ivory, Esq. [ARGUED]

Office of United States Attorney

700 Grant Street, Suite 4000

Pittsburgh, PA 15219 

 Counsel for Appellee

 

OPINION OF THE COURT

 

RENDELL, Circuit Judge.

Brian Hawes appeals from his sentence imposed after a

plea of guilty to two counts of mail fraud in violation of 18

U.S.C. § 1341. He was sentenced to a term of 78 months’

imprisonment. Hawes argues that the District Court improperly

calculated the applicable Guideline range. We agree and will

vacate the sentence imposed by the District Court and remand

for resentencing.
3

I. FACTS AND PROCEDURAL HISTORY

Brian Hawes was a registered investment advisor and

owner and president of two investment advisory services,

Financial Management Advisory Services (“FMAS”) and

Financial Management Services, Inc. (“FMS”). In 1997, he

became an authorized representative of Fidelity Investments

Investment Advisors Group (“Fidelity”). 

From 1988 through 2003, Hawes used his position as an

investment advisor to defraud his clients of monies that they had

entrusted to him. He would agree to purchase annuities on

behalf of his clients, but instead would keep the money for

personal use or buy the annuities as instructed but later liquidate

them for his own use. To conceal his theft, he created false

account statements, indicating higher account balances, and

submitted them to his clients.

In 1998, Hawes persuaded a number of his clients to

move their assets into investment products offered by Fidelity.

For these investment product accounts, Fidelity would mail

account statements at regular intervals directly to a client’s

residence or address of choice. Until 2002, Hawes would also

issue statements to his clients through his investment advisory

service, FMAS, that accurately reflected the Fidelity

investments. As a financial advisor, he was authorized to use

his clients’ social security numbers and other identifying

information to access their Fidelity accounts and did so in the

regular course of business.
4

Beginning in 2002, however, Hawes used his access to

client accounts without his clients’ permission and changed the

addresses to which his clients’ Fidelity account statements were

mailed. In some instances, he mailed change of address forms

to Fidelity Investments, indicating that future statements should

be sent to his office address. In others, he accessed his clients’

online accounts and changed the addresses. Hawes then notified

his clients that Fidelity would no longer be issuing paper

statements and that FMAS would continue to issue paper

account statements reflecting their balances with Fidelity.

Hawes then began to divert and transfer client funds into

an account for his personal use. To avoid discovery of his theft,

he would transfer funds from one client account to another. 

Through FMAS, he would then issue and provide statements to

his clients that did not report the transfers and falsely overstated

the value of the Fidelity accounts. Having ensured that his

clients would not receive accurate account statements from

Fidelity, Hawes was able to hide the fraud from his clients. 

In 2003, after his father’s death, Hawes’ mother

discovered that he had been stealing money that his parents had

entrusted with him for investment and submitting statements to

them that falsely reflected that annuities had been purchased and

were earning money. She threatened to report his crime unless

the money was repaid, and Hawes agreed to repay a total of

$780,000 pursuant to a payment schedule. In order to make the

first payment to his mother, Hawes stole $125,000 from other

clients’ accounts. 

On October 31, 2003, Hawes’ fraud was uncovered and
 The relevant part of the sentencing hearing transcript refers 1

to her as “Angelica Canvann.” However, it appears that this was

a transcription error, Appellant’s Br. 13 n.6, and both the PSR

and other portions of the sentencing hearing transcripts identify

the probation officer as Angelica Banta.

5

his accounts frozen. On April 9, 2004, a two-count information

was filed, alleging two counts of mail fraud in violation of 18

U.S.C. § 1341. On that same date, Hawes pleaded guilty to both

counts. On August 4, 2004, he was sentenced to a term of 98

months’ imprisonment, followed by a three-year period of

supervised release, and ordered to pay restitution in the amount

of $2,601,961.60. In the wake of the Supreme Court’s decision

in United States v. Booker, 543 U.S. 220 (2005), Hawes filed a

motion for summary remand on May 3, 2005, and, on August 9,

2005, this Court affirmed Hawes’ conviction and remanded for

resentencing. The trial court held sentencing hearings on

January 30, March 29, and June 29, 2006. App. 78-417.

During the course of the hearings, the District Court

heard from Angelica Banta, the probation officer who prepared

Hawes’ PSR. She testified that, in her opinion, an identity theft 1

enhancement under U.S.S.G. § 2B1.1(b)(9)(C)(i) was proper

because Hawes used the social security numbers of his clients to

change their addresses so that he would receive the statements

indicating the real balances of their investment accounts.

Obtaining a change of address was regarded by Ms. Banta as

obtaining another form of identification–his clients’ mail–and,

therefore, subject to the identity theft enhancement. Counsel for

the government argued that the name and address was a means
6

of identification and changing an address was producing another

means of identification. Hawes testified that his clients

willingly provided him with certain information, including

name, address, social security number, date of birth, phone

number, and were assigned a unique identification number by

the financial institution. He further testified that he had

discretionary control over the accounts and prior authorization

to engage in any transaction he deemed necessary. Moreover,

after Hawes changed a client’s address online, by fax, or by

email, Fidelity would send a confirmation of the change of

address to the client’s former address. 

At the sentencing hearings, the government presented

testimony as to the appropriateness of a vulnerable victim

sentence enhancement under U.S.S.G. § 3A1.1(b). Clients

defrauded by Hawes were elderly, ill, and unsophisticated. App.

399, 403. In particular, testimony showed that Hawes diverted

$87,500 from an account belonging to Dorothy McKinney who,

as he was aware, was in a nursing home and suffered from

Alzheimer’s disease. He did so in order to repay his mother for

the funds he had stolen and to prevent her from reporting him to

the authorities. 

The District Court ruled that by changing the addresses

of his clients, Hawes did illegally use a means of identification

“to produce or alter duplicate means of identification” and

applied a two-level enhancement under U.S.S.G. §

2B1.1(b)(9)(C)(i). The District Court also applied a vulnerable

victim enhancement under U.S.S.G. § 3A1.1(b) upon finding

that some of the victims were persons with whom Hawes had a

close relationship and others were retired, elderly and suffering
7

from Alzheimer’s. The calculated Guideline Range was 70 to

87 months’ imprisonment.

Hawes was ultimately sentenced to 78 months’

imprisonment, followed by a three-year period of supervised

release, and ordered to pay $2,276,565.31 in restitution to his

victims. Hawes timely appealed his sentence.

II. DISCUSSION

Hawes raises a number of objections to his sentence: (1)

that the District Court erroneously applied a two-level “identity

theft” enhancement to his Base Offense Level under U.S.S.G. §

2B1.1(b)(9)(C)(i); (2) that the District Court erroneously applied

a two-level “vulnerable victim” enhancement to his Base

Offense Level under U.S.S.G. § 3A1.1(b)(1); (3) that his

sentence is unreasonable; and (4) that the District Court did not

consider the factors set forth in 18 U.S.C. § 3663 in determining

the amount of restitution. 

We will consider each of these arguments in turn. We

review the District Court’s application of the Guidelines to the

facts for abuse of discretion. United States v. Cooper, 437 F.3d

324, 327-28 (3d Cir. 2006). To the extent that Hawes argues

that the District Court made a legal error in its interpretation of

the Guidelines, we conduct plenary review. See United States

v. Newsome, 439 F.3d 181, 184 (3d Cir. 2006); United States v.

Moorer, 383 F.3d 164, 167 (3d Cir. 2004). As to contentions

that Hawes did not preserve in the District Court, we use the
This citation is to the 2002 edition of the Federal Sentencing 2

Guidelines Manual, which was used by the District Court and

probation office in sentencing Hawes; this section is now at

U.S.S.G. § 2B1.1(b)(10)(C)(i).

8

more exacting plain error standard. See United States v.

Merlino, 349 F.3d 144, 161 (3d Cir. 2003).

A. The Identity Theft Enhancement

Hawes contends that his conduct in concealing his fraud

does not qualify for a two-level enhancement under U.S.S.G. §

2B1.1(b)(9)(C)(i). To determine whether the District Court

erred in interpreting the identity theft enhancement to include

Hawes’ changing of his clients’ addresses, we begin by looking

to the language of the Guideline and the statutory language

referenced therein. 

Under the Guidelines, a two-level enhancement to a

defendant’s Base Offense Level is appropriate where the offense

involved “the unauthorized transfer or use of any means of

identification unlawfully to produce or obtain any other means

of identification.” U.S.S.G. § 2B1.1(b)(9)(C)(i). The 2

Guideline refers to 18 U.S.C. § 1028(d)(4) (now codified at 18

U.S.C. § 1028(d)(7)), which provides that:

the term “means of identification” means any name or

number that may be used, alone or in conjunction with

any other information, to identify a specific individual,

including any--
 The Commentary to U.S.S.G. § 2B1.1 provides that: “‘Means 3

of identification’ has the meaning given that term in 18 U.S.C.

1028(d)(4), except that such means of identification shall be of

an actual (i.e., not fictitious) individual, other than the defendant

or person for whose conduct the defendant is accountable”

under U.S.S.G. § 1B1.3. This is not at issue in this case as the

means of identification used were of actual individuals, Hawes’

clients.

9

(A) name, social security number, date of birth, official

State or government issued driver’s license or

identification number, alien registration number,

government passport number, employer or taxpayer

identification number;

(B) unique biometric data, such as fingerprint, voice

print, retina or iris image, or other unique physical

representation;

(C) unique electronic identification number, address, or

routing code; or

(D) telecommunication identifying information or access

device (as defined in section 1029(e))3

Hawes contends that “the act of changing a person’s address is

not engaging in the ‘unauthorized transfer or use of any means

of identification unlawfully to alter or duplicate or assemble [an]

alternate hybrid means of identification’ or using a means of

identification to ‘produce an altered duplicate means of
10

identification.’” Appellant’s Br. 21 (quoting United States v.

Newsome, 439 F.3d 181, 185-86 (3d Cir. 2006)).

We begin by asking whether the statute’s plain terms

address the precise question of whether changing an address

constitutes producing or obtaining “any other means of

identification.” As the Court of Appeals for the Ninth Circuit

has observed, “the enhancement is rather awkwardly written.”

United States v. Melendrez, 389 F.3d 829, 832 (9th Cir. 2004).

“Means of identification” is defined both in general terms as

“any name or number that may be used, alone or in conjunction

with any other information, to identify a specific individual” and

in specific terms as an extensive list of particular means of

identification. 18 U.S.C. § 1028(d)(7). The text, however, is

ambiguous as to whether changing an address falls within its

ambit. What is clear is that the statute does not include mail or

an address within the list of means of identification; nor are the

examples easily analogized to a piece of mail or an address.

There is a paucity of helpful case law, largely because

this sentencing enhancement was only enacted in 2000. Neither

we nor any other court has had occasion to address the issue of

whether changing an address constitutes obtaining or producing

a new means of identification. In United States v. Auguste,

however, where the defendant had added herself to another

person’s credit card account as a secondary cardholder and had

changed the account’s address in order to receive the secondary

card, the enhancement applied not because she had changed the

address but because she had taken an account number and added

her own name to it, thereby creating a new means of

identification. 392 F.3d 1266, 1267-68 (11th Cir. 2004). 
11

We have issued only one decision interpreting this

Guideline, United States v. Newsome, 439 F.3d 181 (3d Cir.

2006), which both parties cite and upon which the District Court

relied to conclude that the enhancement applied. In Newsome,

defendants obtained personal contact and account information

of Fleet Bank customers and used it to produce drivers’ licenses

with photographs of defendants and the victims’ information,

which they then used to withdraw funds from the accounts. Id.

at 183. The district court held that “Newsome had illegally used

one means of identification to produce another,” and we agreed

that the enhancement was properly allowed. Id. at 184. The

fraud victim’s information–name, birth date, driver’s license

number, and employee identification number–was a means of

identification under 18 U.S.C. § 1028(d)(7). Id. The question

was whether the information on the new drivers’ licenses

constituted “any other means of identification.” Newsome

argued that what he did was use an existing means of

identification to obtain cash, not to obtain a new means of

identification, like a social security number or a loan account

number. We disagreed, reasoning that U.S.S.G. §

2B1.1(b)(9)(C)(i) can be read as requiring the enhancement for

“the unauthorized transfer or use of any means of identification

unlawfully to alter or duplicate or assemble any alternate hybrid

means of identification.” Id. at 185.

However, in Newsome, the means of identification

produced, a driver’s license, is specifically mentioned in the

commentary to the Guideline. Furthermore, it involved the sort

of “breeding” of means of identification that is targeted by the

enhancement. Id. at 186; see Commentary to U.S.S.G. § 2B1.1,

Background (noting that the enhancement “focuses principally
 See, e.g., United States v. Auguste, 392 F.3d 1266, 1268 4

(11th Cir. 2004) (looking first to application notes and then to

the plain language of the guideline); United States v. Melendrez,

389 F.3d 829, 835 (9th Cir. 2004) (looking to application notes

and reasoning that “[n]either set of examples perfectly matches

Melendrez’s crime, but we conclude that his actions are more

like those in the first set of examples.”). 

12

on an aggravated form of identity theft known as ‘affirmative

identity theft’ or ‘breeding’). Neither of the aspects here, a

person’s mail and address, are specifically mentioned in the

Guidelines, nor is Hawes’ conduct easily categorized as the

breeding of means of identification. 

Faced with ambiguities in the identity theft enhancement,

courts have looked to the application notes, which set forth

examples of the types of conduct to which the identification

enhancement applies or does not apply. Accordingly, we turn 4

to them for guidance. The application notes provide:

(i) In General.--Subsection (b)(10)(C)(i) applies in a case

in which a means of identification of an individual other

than the defendant (or a person for whose conduct the

defendant is accountable under 1.3 (Relevant Conduct))

is used without that individual’s authorization unlawfully

to produce or obtain another means of identification.

(ii) Examples.--Examples of conduct to which subsection

(b)(10)(C)(i) applies are as follows:
13

(I) A defendant obtains an individual’s name and

social security number from a source (e.g., from

a piece of mail taken from the individual’s

mailbox) and obtains a bank loan in that

individual’s name. In this example, the account

number of the bank loan is the other means of

identification that has been obtained unlawfully.

(II) A defendant obtains an individual’s name and

address from a source (e.g., from a driver’s

license in a stolen wallet) and applies for, obtains,

and subsequently uses a credit card in that

individual’s name. In this example, the credit

card is the other means of identification that has

been obtained unlawfully.

( i i i ) N onappl i c a b i l i t y o f S u b sec t i o n

(b)(10)(C)(i).--Examples of conduct to which subsection

(b)(10)(C)(i) does not apply are as follows:

(I) A defendant uses a credit card from a stolen

wallet only to make a purchase. In such a case,

the defendant has not used the stolen credit card

to obtain another means of identification.

(II) A defendant forges another individual’s

signature to cash a stolen check. Forging another

individual’s signature is not producing another

means of identification.

Application Note 9(C) to U.S.S.G. § 2B1.1.
14

The Application Note examples are confined to a

common sense meaning of identity theft through breeding a new

means of identification. The examples of when the

enhancement applies involve the production of a specific form

of identifying information, which is then used for improper

purposes, i.e., taking another’s identity to use as one’s own. In

the first example, the defendant uses the victim’s name and

social security number to obtain a bank loan, the “means of

identification” bred. In the second example, the defendant uses

the victim’s name and address to apply for and obtain a credit

card, another unique “means of identification.” Where courts

have held that the guideline applies to conduct not contained in

these examples, the facts have been closely analogous to the

examples. See, e.g., Melendrez, 389 F.3d at 829. By contrast,

in the examples of when the enhancement does not apply, the

defendant has not generated any additional identifying

information or engaged in the “breeding” targeted by the

enhancement. 

Changing an address is not easily analogous to the

examples in the application notes. In comparison to the facts in

other cases, Hawes’ conduct seems closer to the Application

Note’s examples of conduct that does not constitute identity

theft, such as stealing an existing credit card or cashing a check

from an existing bank account. Discussing these examples in

the application notes, the Court of Appeals for the Sixth Circuit

observed that “while the use of someone’s credit card to make

a purchase is a punishable offense, the nature of the harm is

different from that which results from using someone’s

identifying information to establish new credit.” United States

v. Williams, 355 F.3d 893, 900 (6th Cir. 2003). Similarly,
15

although stealing from client accounts he was authorized to

manage is deserving of punishment, the harm caused by Hawes

was not the breeding of new identification information or

running up new credit, but rather the theft of funds entrusted to

him. The change of address was to thwart the discovery of, not

enable, the illicit activity.

We conclude that Hawes’ conduct does not qualify for

the identity theft enhancement. An address or piece of mail does

not seem to fit the Guideline’s definition of “means of

identification.” The government suggests that the general

definition of “means of identification” includes a name plus any

other piece of information and thus includes a name plus an

address. To take the government’s argument to its logical

conclusion, a name plus shoe size or hair color could constitute

a means of identification. We believe that the statute, as the

language suggests, requires that the means of identification be

just that, a means of identification, not merely an attribute of

one’s identity. 

The examples enumerated in 18 U.S.C. § 1028(d)(7) are

unique means of identification, primarily numbers. A social

security number, account number, and the other examples

provided within the statute specifically and uniquely identify

one particular individual. Accordingly, when addressing the

argument that bank accounts are not means of identification, the

Court of Appeals for the Eighth Circuit found it determinative

that “a bank account number is a unique identification number.”

United States v. Scott, 448 F.3d 1040 (8th Cir. 2006).

At sentencing, the government argued that the name and
Because the statutory meaning is unclear, the legislative 5

history can aid us in discerning the Guideline’s purpose and

interpreting it appropriately. See Patterson v. Shumate, 504 U.S.

753, 761 (1992) (stating that resort to statutory history is

appropriate where language of statute is ambiguous or

confusing); United States v. Pollen, 978 F.2d 78, 85 (3d Cir.

1992). 

16

address was a means of identification because it was “the way

that Fidelity identified clients in this case.” App. 381. From a

common sense standpoint, we find this argument difficult to

accept. Financial institutions identify their clients, not by name

or address (which can be non-unique identifiers), but rather by

account number. As Hawes testified, Fidelity was given certain

information about clients to set up an account and “[t]he way

Fidelity identified a client after that was by the account

number.” App. 384. 

Our conclusion is bolstered by the legislative history of

the Identity Theft and Assumption Deterrence Act of 1998, Pub.

L. No. 105-318, 112 Stat. 3007 (1998) (“ITADA”). The 5

ITADA was enacted to make “fraud in connection with

identification information [not just identification documents] a

crime.” S. Rep. No. 105-274, at 5 (1998) (“Today, criminals do

not necessarily need a document to assume an identity; often

they just need the information itself to facilitate . . . crimes . . .

. [T]his statute can keep pace with criminals’ technological

advances.”). The ITADA provided that although “there exists

no clear definition of identity fraud,” it typically “involves

‘stealing’ another person’s personal identifying information . .
17

. to fraudulently establish credit, run up debt, or to take over

existing financial accounts.” Id. at 7.

In enacting the ITADA, the Sentencing Commission

explained that subsection (b)(10)(C):

focuses principally on an aggravated form of identity

theft known as “affirmative identity theft” or “breeding”,

in which a defendant uses another individual’s name,

social security number, or some other form of

identification (the “means of identification”) to “breed”

(i.e., produce or obtain) new or additional forms of

identification.

Commentary to U.S.S.G. § 2B1.1, Background. As we said in

Newsome, “Congress wanted to provide increased punishment

for identity theft that involved creation of means of counterfeit

identification rather than the plain vanilla type of identity theft

that occurs when person A steals and uses person B’s credit

card. ... This multiplication of means of identification is the type

of identity theft that Congress believed deserved greater

punishment.” Newsome, 439 F.3d at 186. As other courts of

appeals have observed, “[t]he ‘nature of the harm’ meant to be

targeted by this enhancement is, in part, ‘that which results from

using someone’s identifying information to establish new

credit.’” United States v. Oates, 427 F.3d 1086, 1090 (8th Cir.

2005) (quoting United States v. Williams, 355 F.3d 893, 900

(6th Cir. 2003)).

Given the purpose of the enhancement, we will not read

the Guideline to apply to Hawes’ conduct in changing the
 Although the error at issue in Langford concerned a 6

miscalculation of the criminal history level rather than the

offense level, there is no reason to treat one type of

miscalculation of the Guidelines differently from another.

Regardless of the nature of the error, it may affect the Guideline

range chosen and the sentence ultimately imposed.

18

addresses on his clients’ account statements lest we produce

absurd or unintended results “demonstrably at odds with the

intentions of [the statute’s] drafters.” Griffin v. Oceanic

Contractors, Inc., 458 U.S. 564, 571 (1982). Here, Hawes

misused his clients’ accounts and abused their trust. He did not,

however, establish new credit or “breed” new forms of

identification, as contemplated by Congress and the Sentencing

Commission in enacting this enhancement. Hawes’ conduct

does not qualify for the two-level enhancement under U.S.S.G.

§ 2B1.1(b)(9)(C)(i). We therefore find that the District Court

erred in imposing the enhancement. 

B. Harmless Error Analysis and Guideline

Calculation

The government urges us to hold that the erroneous

application of the identity theft enhancement to the calculation

of Hawes’ Guidelines Range was harmless. Our recent decision

in United States v. Langford, 516 F.3d 205 (3d Cir. 2008),

controls our analysis of this issue. For us to uphold Hawes’ 6

sentence, “it must be clear that the error did not affect the

district court’s selection of the sentence imposed.” Id. at 215.

As the party defending the sentence imposed, the government
 In Langford, we noted the possibility that, based on a 7

miscalculation, a District Court might compare a defendant to

others who actually have higher offense levels. That possibility

became a reality here, as the District Court indicated that the

sentence she imposed avoided “impos[ing] a sentence that

would result in disparities among other people who have

engaged in like conduct.” However, given the proper range, the

sentence she imposed resulted in the disparity she was seeking

to avoid.

19

bears the burden of “persuad[ing] the court of appeals that the

district court would have imposed the same sentence absent the

erroneous factor.” Williams v. United States, 503 U.S. 193, 203

(1992). 

In the present case, based on the identity theft

enhancement, the District Court calculated the total offense

level to be 27, instead of 25, which resulted in a Guideline

Range of 70 to 87 months’ imprisonment, rather than 57 to 71

months. The Court acknowledged that the advisory Guideline

range of 70 to 87 months was the starting point for any sentence

she would impose. The judge indicated her belief that “a

sentence within the advisory guideline range does appropriately

concern and address all of the concerns of sentencing” and

stated her intention to “sentence within that range.” App. 411.

On the basis of its evaluation of the § 3553(a) factors, the Court

then imposed a sentence of 76 months in the middle to low end

of the advisory Guidelines range it had calculated. 

7

The government has not met its burden of showing that
20

the error was harmless. It is by no means “unambiguous” that

Hawes’ sentence would be the same regardless of whether the

identity theft enhancement applied. See Langford, 516 F.3d at

217. It is clear from the record that the sentencing court

intended to and did in fact select Hawes’ sentence from the

calculated range. Hawes’ sentence was in the mid- to low- point

of the calculated range. Because the enhancement was

erroneously applied, the Court imposed a sentence outside the

proper Guideline range of 57 to 71 months. In order to impose

a 76-month sentence, the Court would have had to depart

upward from the Guidelines, reasoning through the § 3553(a)

factors and explaining why the defendant merited a greater term

of imprisonment than that contemplated by the Guidelines.

Here, by contrast, the Court made clear that a within-Guidelines

range was appropriate for Hawes based on its § 3553(a)

analysis. 

The miscalculation of the Guideline range by the District

Court also affected the arguments that the parties made at

sentencing. After the Court decided that the enhancement

would apply and the range would be 70 to 87 months, defense

counsel argued for a sentence at the bottom of the Guidelines,

that is, a 70-month sentence. Under the correct range, counsel

would have urged the Court to impose a 57-month sentence

instead.

Because the error was not harmless, we will remand to

the District Court for resentencing in light of the foregoing.
21

C. Hawes’ remaining objections to his sentence

Because we will remand for resentencing, we must

address the other errors that Hawes alleges were committed by

the District Court in calculating his Guideline range. 

1. Vulnerable victim enhancement

Hawes challenges the District Court’s decision to impose

a two-level enhancement under U.S.S.G. § 3A1.1(b)(1), which

provides for such enhancement “[i]f the defendant knew or

should have known that a victim of the offense was a vulnerable

victim....” A vulnerable victim “means a person (A) who is a

victim of the offense of conviction and any conduct for which

the defendant is accountable under § 1B1.3 (Relevant Conduct);

and (B) who is unusually vulnerable due to age, physical or

mental condition, or who is otherwise particularly susceptible to

the criminal conduct.” U.S.S.G. § 3A1.1(b)(1), Application

Note 2. 

Hawes argues that the District Court failed to comply

with our decision in United States v. Iannone, 184 F.3d 214 (3d

Cir. 1999). In Iannone, we set forth a three-factor test to

determine whether conduct merits the application of the

vulnerable victim enhancement:

(1) the victim was particularly susceptible or vulnerable

to the criminal conduct; (2) the defendant knew or should

have known of this susceptibility or vulnerability; and (3)

this vulnerability or susceptibility facilitated the

defendant’s crime in some manner; that is, there was “a
22

nexus between the victim’s vulnerability and the crime’s

ultimate success.”

184 F.3d at 220 (quoting United States v. Monostra, 125 F.3d

183, 190 (3d Cir. 1997). In particular, Hawes argues that the

District Court failed to find that there was “a nexus between the

victim’s vulnerability” and the success of his fraudulent scheme.

The District Court did not cite Iannone in finding that the

vulnerable victim enhancement applied. Its failure to use the

case name during sentencing in open court does not, however,

indicate that the application of the enhancement was error.

Indeed, the record supports the District Court’s finding

that Hawes’ offense qualified for this enhancement. First, the

victims of Hawes’ fraud met the standard for vulnerability. The

District Court referred to the victims’ impact statements and

“the close personal relationship the Defendant has had with

some of his clients, not only his parents, who could not be more

susceptible, but also to other clients who he personally knew or

who were referred to him by friends and relatives.” App. 402.

It also found that “many of these individuals were retired,

elderly, some suffering from diseases.” App. 403. Second,

Hawes knew of his victims’ vulnerability. Many of his clients

were known to him personally or referred to him by friends or

relatives. As regards one of his victims, Dorothy McKinney,

Hawes knew that she was in a nursing home suffering from

Alzheimer’s and was legally blind. Third, there was a nexus

between the vulnerability of the victims and the continued

success of his fraud. The vulnerable status of Ms. McKinney in

particular made it easier to continue the fraud. Specifically,
23

when Hawes’ mother discovered that Hawes had stolen

hundreds of thousands of dollars and demanded that he repay

$125,000 immediately, Hawes procured the bulk of this sum

from Ms. McKinney’s account, knowing that her particular

vulnerabilities made it more likely the theft would go

undetected. Taking this money to pay his mother was meant to

prevent his family from reporting the theft and allow it to

continue. 

We, therefore, find that the District Court did not err in

enhancing Hawes’ offense level under § 3A1.1(b) and affirm its

application of the vulnerable victim enhancement.

2. Failure to consider 18 U.S.C. § 3663 in entering the

restitution order

Hawes contends that the District Court failed to consider

“the financial resources of the defendant, the financial needs and

earning ability of the defendant, and the defendant’s dependents,

and such other factors as the court deems appropriate” as

required by 18 U.S.C. § 3663(a)(1)(B)(i)(II). The parties agree

that Hawes failed to raise this objection at sentencing. We,

therefore, review the order of restitution for plain error. Fed. R.

Crim. P. 52(b); United States v. Lloyd, 469 F.3d 319, 320 (3d

Cir. 2006).

We find no plain error on the record here. Hawes entered

into a plea agreement with the government pursuant to which

the parties agreed to the amount of loss and restitution. The

Second Addendum to the Presentence Report included a

spreadsheet reflecting the agreed-to amounts and was adopted
24

by the District Court when it issued the restitution order. During

the sentencing hearing, the Court was informed that, with the

exception of two victims, the parties had “agreed to what the

restitution is and ... agreed to what the amount of loss

attributable to each victim is.” App. 370. Hawes’ current or

future ability to pay restitution was never before the District

Court. Although the Court was not required to accept the

parties’ agreement as to restitution, the Court committed no

plain error in accepting it. We will therefore affirm the order of

restitution.

3. Reasonableness of Hawes’ sentence

Hawes also argues that his sentence was unreasonable

because the District Court gave presumptive weight to the

guidelines and imposed a sentence greater than necessary to

meet the purposes of sentencing. Because we find that the

miscalculation of the Guideline range was not harmless error,

we cannot review the sentence for reasonableness. See

Langford, 516 F.3d at 214-15, 220. We are confident that the

District Court will not give presumptive weight to the

Guidelines on remand as the Supreme Court has recently made

clear that this is error. Gall v. United States, 128 S. Ct. 586, 597

(2007).

III. CONCLUSION

For the foregoing reasons, we will vacate Hawes’

sentence and remand to the District Court for resentencing.
25

Weis, J., Circuit Judge, Concurring.

I agree that the identification enhancement should not

have been factored into the Guidelines calculation.

The Guidelines are advisory, not mandatory, and an error

in the Guidelines computation may be neutralized by the

overarching scrutiny required by the sentencing court’s

application of 18 U.S.C. § 3553(a).

The sentence here is substantively reasonable. The

District Court set out in detail the factors that affected the

sentence. In her remarks from the bench at the hearing, the

judge said, in part,

“The law requires that I impose a sentence

that is sufficient to but not greater than necessary

to fulfill the purpose of sentencing. . . .

First of all, the nature and seriousness of

the offense. Quite frankly, the offense is awful.

It’s awful. To ruin peoples’ lives, to be held in

trust and to betray. These are serious

offenses. . . .

[T]his is a very serious offense, and just

punishment is required under the law. Because

you have done such a terrible thing to so many

people you have to be deterred and others have to

be deterred who might consider engaging in like

conduct. There is a need to be protected from any
26

additional crimes that you might commit and to

do that it is my belief that you should be provided

with correctional treatment that can most

effectively help you to understand what it is that

you have done and what the repercussions and

consequences are.

The starting point for any sentence . . . is

the advisory guideline range which I have

indicated to you is a level 27, category 1, 70-87

months.”

It is obvious that the district judge intended to impose a

substantial sentence. She then explained, “I believe that a

sentence within the advisory guideline range does appropriately

concern and address all of the concerns of sentencing that I have

mentioned this afternoon.”

In my view, our ruling that the Guidelines calculation

was erroneous has created substantial uncertainty over the

District Court’s intent in sentencing defendant. If the judge

believed, after performing the overall review, that under

§ 3553(a) a sentence of 76 months was the appropriate

punishment regardless of whether that number came within the

Guidelines range, the sentence should be affirmed. On the other

hand, if the judge believed that the appropriate sentence must be

within the correct Guidelines range, whatever that may be, and

did not mean to deviate from it, precedents of this Court would

seem to require a remand.

The District Court may have believed that the appropriate
27

sentence under § 3553(a) was a term of 76-months

imprisonment and, coincidentally, concluded that the figure was

within the erroneous Guidelines computation. The record is

ambiguous on this point.

Because they can override the advisory Guidelines,

district judges should carefully articulate their rationale in

arriving at a sentence under the § 3553(a) calculus in order to

avoid unnecessary resentencing.

Because on the record before us I am unable to determine

the sentencing judge’s intention, I join in the order to remand.