IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-60825

Cons. w/ No. 08-60106

UNITED STATES OF AMERICA

Plaintiff-Appellee

v.

ROBERT C ARLEDGE

Defendant-Appellant

Appeal from the United States District Court 

for the Southern District of Mississippi

Before KING, DeMOSS, and PRADO, Circuit Judges.

PRADO, Circuit Judge:

In this appeal, Robert Arledge (“Arledge”) challenges his conviction for

lack of sufficient evidence, alleges that the district court’s failure to admit key

pieces of evidence deprived him of the ability to present a defense, disputes the

admission of evidence related to charges of which he was later acquitted, and

maintains that the use of the 2006 Sentencing Guidelines violated the Ex Post

Facto Clause of the Constitution. He also challenges the district court’s

restitution order by asserting that the record did not support the district court’s

calculation of the amount of “loss,” argues that the restitution order violated the

Eighth Amendment, maintains that the district court did not take into account

United States Court of Appeals

Fifth Circuit

F I L E D

December 22, 2008

Charles R. Fulbruge III

Clerk
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requisite statutory factors, and asserts that the restitution order sets forth an

unclear payment schedule. We affirm his conviction and sentence, vacate the

restitution order, and remand for further proceedings consistent with this

opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

A jury convicted Arledge of conspiracy and fraud for his involvement in

filing fraudulent claims to recover from the Diet Drug Qualified Settlement

Funds I and II (collectively the “Settlement Fund”), funds set up to compensate

victims of the diet drug Fen Phen. In December 1999, a jury awarded five

Mississippi plaintiffs $150 million in damages arising from their use of American

Home Products’s (“AHP”) diet drugs Pondimin and Redux, commonly known as

Fen Phen. AHP entered into a settlement agreement to pay $399 million to

approximately 1500 claimants. This settlement, known now as “Fen Phen I,”

relied upon the claimants’ attorneys to gather proof that their clients had taken

Fen Phen. The settlement required these attorneys to submit proof of injury, if

any, and releases of AHP from liability to the lead attorney in the Mississippi

case, Michael Gallagher (“Gallagher”). Gallagher then submitted the

information to a court-appointed administrator, Butch Cothren (“Cothren”), who

determined the amount of the claimants’ awards based upon predetermined

criteria related to each claimant’s medical injury. In December 2000, AHP

entered into a second settlement, known as “Fen Phen II,” in which it agreed to

pay $350 million to an additional 1500 claimants. This settlement was

processed in the same manner as the Fen Phen I settlement, with the exception

that AHP received copies of the proof that each claimant had taken the drugs.

Both settlements provided that claims with proof of usage were worth much

more than claims without such proof. 
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Arledge was a lawyer in the law firm of Schwartz & Associates (“S&A”)

and head of the mass torts section of the firm. Arledge was one of several

attorneys across the country who entered into a fee-splitting and referral-fee

agreement to recruit clients for both Fen Phen settlements. The settlement

agreements provided for a contingency fee of 40%. After deducting expenses and

other costs, Gallagher, the lead attorney in the Fen Phen settlement cases,

received 37.5% ofthe attorneys’fees, another law firm,Langston,Frazier, Sweet

& Freese, received 37.5%, and S&A received 25%. Arledge and Richard

Schwartz (“Schwartz”) agreed to split equally the attorneys’ fees collected by

S&A. Thus, Arledge received 12.5% of the total contingency fee.

AHP, after reviewing the proof of usage provided by claimants in the Fen

Phen II settlement, discovered numerous instances where the proof was

identical for multiple claimants and where the proof of usage extended beyond

the time when the drug was removed from the market. AHP wrote letters to

Gallagher on February 12, 2001, and February 15, 2001, identifying eighty-two

potentially false claims and directing that those claimants not be paid. All the

claims originated from S&A. Gallagher met with Schwartz and Arledge on

February 26, 2001, and distributed a list of suspect claims and the related

fraudulent documentation. Arledge sent Gallagher a letter on May 18, 2001,

notifying Gallagher that he was conducting an independent investigation into

the false claims.

B. The Fraud

S&A had employed Greg Warren (“Warren”) to solicit clients, obtain the

client’s proof of usage, and perform various other tasks to assist Arledge in filing

claims with the Settlement Fund. Eventually, it was revealed that Warren and

a handful of others connected to him manufactured documents to prove that

particular claimants used Fen Phen. Warren built a network of people to help
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him locate claimants and assist him in preparing false claims, including Regina

Green (“Green”) and Florine Wyatt (“Wyatt”). Both Green and Wyatt testified

that they, with Warren’s knowledge, created false records for their friends and

family so that they could benefit from the Settlement Fund even though the

claimants had not taken Fen Phen. Because AHP paid the claimants more if

they had actual proof that they had used Fen Phen, both Wyatt and Green

created fraudulent prescriptions to maximize the amount that the claimants

could receive from the Settlement Fund.

Warren, Green, and Wyatt solicited the clients, provided them with false

documentation indicating that they had used the drugs, and then sent these

claims to Arledge. Arledge sent these fraudulent claims to the Settlement Fund.

This fraud—which resulted in a loss to the Settlement Fund of

$6,710,334.90—formed the basis of the criminal charges filed against Arledge.

C. Procedural Background

For his participation in the Fen Phen fraud, Arledge was convicted of one

count of conspiracy in violation of 18 U.S.C. § 371 (count 1), four counts of mail

fraud in violation of 18 U.S.C. § 1341 (counts 2–5), and two counts of wire fraud

in violation of 18 U.S.C. § 1343 (counts 6–7). Arledge was found not guilty of one

count of wire fraud and sixteen counts of money laundering.

Arledge was sentenced to sixty months’ imprisonment for each of counts

1 through 3, to run concurrently, and eighteen months’ imprisonment for each

of counts 4 through 7, to run concurrently with each other and consecutively

with his sentence for counts 1 through 3. This resulted in a total sentence of

seventy-eight months’ imprisonment. In addition, he was sentenced to three

years of supervised release on each of the counts of conviction, to run

concurrently, and ordered to pay a $700.00 special assessment. In an Amended
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Judgment, he was ordered to pay restitution in the amount of $5,829,344.90 and

a forfeiture of $375,000.00. 

On February 15, 2008, Arledge filed an appeal of his conviction and later

filed an appeal from the restitution order. This court consolidated the appeals.

We have jurisdiction pursuant to 28 U.S.C. § 1291.

II. DISCUSSION

A. Sufficiency of the Evidence

Arledge argues thatthere was insufficient evidence to sustain a conviction

for conspiracy, mail fraud, or wire fraud. He argues, first, that the government

did not prove that he knowingly participated in the scheme to defraud, obviating

his conspiracy conviction; second, that there was insufficient evidence to prove

that the mailings underlying the mail fraud counts were sent pursuant to the

scheme to defraud; and third, that the wiring underlying the wire fraud count

occurred after the completion of the scheme to defraud. When evaluating the

sufficiency ofthe evidence, we must view the evidence in the light mostfavorable

to the government, and we will sustain the conviction if “a rational trier of fact

could have found that each element of the charged criminal offense was proven

beyond a reasonable doubt.” United States v. Arnold, 416 F.3d 349, 358 (5th Cir.

2005); United States v. Stephens, 779 F.2d 232, 235 (5th Cir. 1985).

1. Count 1: Knowing Participation

Arledge was convicted of one count of conspiracy. To sustain a conspiracy

conviction under 18 U.S.C. § 371, the government must prove:

(1) an agreement between two or more person[s] to pursue an

unlawful objective; (2) the defendant’s knowledge of the unlawful

objective and voluntary agreement to join the conspiracy; and (3) an

overt act by one or more members of the conspiracy in furtherance

of the objective of the conspiracy.

United States v. Freeman, 434 F.3d 369, 376 (5th Cir. 2005) (internal quotation

marks omitted). Arledge disputes only the second element, which the
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1 Here, the district court cautioned the jury that it should treat accomplice testimony

with great care and should not convict the defendant based solely upon that testimony unless

it believed the testimony beyond a reasonable doubt. Arledge did not challenge this instruction

or suggest that it was inadequate in any way.

6

government can meet by showing actual knowledge of or deliberate indifference

to the scheme to defraud. Id. at 378–79. At trial, the government presented

evidence to show that Arledge had actual knowledge of the Fen Phen I fraud and

that Arledge was deliberately indifferent to the Fen Phen II fraud.

The primary evidence of Arledge’s actual knowledge of the Fen Phen I

fraud was testimony from his alleged accomplice, Green. Generally, we “will not

disturb (the jury’s) verdict[or] weigh the credibility of witnesses.” United States

v. Garner, 581 F.2d 481, 485 (5th Cir. 1978) (citing United States v. Vomero, 567

F.2d 1315, 1316 (5th Cir. 1978)) (internal quotation marks omitted); see United

States v. Cravero, 530 F.2d 666, 670 (5th Cir. 1976). And while we have

expressed some trepidation about relying upon accomplice testimony alone, we

have found that a conviction will more easily be upheld if the district court

provides the jury with an instruction about the dangers of basing its conviction

solely upon uncorroborated accomplice testimony.1 See United States v. Hinds,

662 F.2d 362, 370 (5th Cir. Unit B Nov. 1981) (“The policy behind the giving of

an accomplice instruction is no more than a commonsense recognition that an

accomplice may have a special interestin testifying, thus casting doubt upon his

veracity.” (internal quotation marks omitted)).

A conviction, especially one accompanied by an accomplice instruction,

may be sustained on the uncorroborated testimony of an accomplice so long as

“the testimony is not incredible or otherwise insubstantial on its face.” United

States v. Osum, 943 F.2d 1394, 1405 (5th Cir. 1991) (citing United States v.

Carrasco, 830 F.2d 41, 44 (5th Cir. 1987)). Testimony will be found incredible

only if it is “unbelievable on its face” or the witness testifies to events that she
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“physically could not have possibly observed or events that could not have

occurred under the laws of nature.” Cravero, 530 F.2d at 670.

Green testified that Arledge had actual knowledge of the scheme to

defraud the Fen Phen I settlement. The evidence showed that when Green

became concerned that she might be caught fabricating the prescriptions and

expressed a desire to stop her illegal activity, she contacted Warren. Warren

tried to convince Green to continue fabricating the prescriptions, but Green was

not assuaged. Warren told Green that he would have Arledge contact her to help

reassure her that she would not be caught. Green testified that Arledge

persuaded her to continue:

[Arledge] told me—I may not remember the exact words, but he told

me that he had talked to [Warren] and [Warren] told him I was

afraid to do any more ofthe prescriptions because I was afraid I was

going to get in trouble. And he said we were—I wasn’t going to get

in any trouble because like [Warren] said, they were going to box all

those files up, put them away, and never be seen again. And like I

say, I don’t remember the whole conversation, but I remember that

he convinced me to go on and do more.

A rational trier of fact could conclude that this testimony was evidence of three

things: (1) Arledge knew that the prescriptions Green had created were

fabricated; (2) Arledge was in an agreement with Warren and Green to defraud

the Settlement Fund; and (3) Arledge’s conversation with Green was in

furtherance of that scheme to defraud.

Arledge maintains that this evidence alone was not sufficient to support

the verdict because the testimony was from an alleged accomplice and the

government failed to corroborate Green’s testimony with phone records of this

conversation or additional testimony. There is no evidence to suggest that

Green’s testimony was either incredible or insubstantial; Green’s testimony was

consistent with other evidence adduced at the trial. In fact, Warren confirmed
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In opaque terms, Arledge challenges the deliberate indifference jury instruction. His

condemnation of the deliberate indifference standard is not sufficient to raise the argument

and thus he has waived it. See FED. R. APP. P. 28(a)(9) (requiring an appellant to state its

“contentions and the reasons for them, with citations to the authorities and parts ofthe record

on which the appellant relies”); United States v. Lindell, 881 F.2d 1313, 1325 (5th Cir. 1989).

Arledge suggests no reason why the deliberate indifference standard should not apply here,

when the law is clear that a deliberate indifference instruction can satisfy the “knowingly”

element for conspiracy. See, e.g., Freeman, 434 F.3d at 377–79; United States v. Gray, 105

F.3d 956, 967–68 (5th Cir. 1997). The instruction submitted to the jury is modeled on the Fifth

Circuit Pattern Jury Instruction, which this court has upheld numerous times. See, e.g.,

United States v. Nguyen, 493 F.3d 613, 618–19 & n.1 (5th Cir. 2007).

8

that Green expressed her concern to him about providing more prescriptions and

that he spoke with Arledge about Green’s concern.

Next, we examine whether there was sufficient evidence for a rational trier

of fact to conclude that, at a minimum, Arledge was deliberately indifferent to

the Fen Phen II fraud. To prove deliberate indifference, the government had to

prove beyond a reasonable doubt that “(1) the defendant was subjectively aware

of a high probability of the existence of illegal conduct; and (2) the defendant

purposely contrived to avoid learning of the illegal conduct.” United States v.

Scott, 159 F.3d 916, 922 (5th Cir. 1998).2

We conclude that the evidence showed that Arledge was deliberately

indifferent to the fraud that occurred in the Fen Phen II cases. The government

provided evidence that Arledge was “subjectively aware of a high probability of

the existence of illegal conduct.” See Scott, 159 F.3d at 922. As noted above, a

rational trier of fact could have concluded that Arledge had actual knowledge of

the Fen Phen I scheme—as evidenced by Green’s testimony—and that he was

aware that Warren had recruited Green. The trier of fact could also infer that

Arledge’s knowledge of Warren’s involvement in the Fen Phen I fraud,

specifically Arledge’s knowledge that Warren had worked with Green to create

fraudulent documents, would have put Arledge on notice to suspect any claims

that derived from Warren’s recruitment efforts, including Warren’s solicitation
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of clients in the Fen Phen II cases. Thus, a rational trier of fact could have

concluded that Arledge was aware thatthere was a high probability thatthe Fen

Phen II claims might also be manufactured.

The government also provided sufficient evidence for a rational trier of fact

to conclude that Arledge “purposely contrived to avoid learning of the [fraud].”

See id. Despite Arledge’s assertions otherwise, there is little evidence that

Arledge conducted an investigation of the fraudulent claims, even after one of

his employees, Christy Clay, suggested to him that the documents appeared

fraudulent. Arledge never reported any fraudulent claims to the Settlement

Fund and never uncovered any fraud himself. Instead, he filed these claims

despite concerns about their veracity.

A rational trier of fact also could have found that Arledge attempted to

cover up the fraud after Gallagher notified him that AHP believed that several

of the claims filed by S&A were fabricated. Arledge taped a conversation

between Warren and him in which they discussed Warren’s role in recruiting

claimants. The transcript of that conversation suggests that Arledge prepared

his questions to lead Warren to answer them in a manner that would relieve

both Warren and him of liability. In every instance, Arledge asked Warren a

leading question, requiring only a yes or no answer. When Warren tried to

answer in a way that might implicate himself or Arledge, Arledge rephrased the

answer to eliminate any liability for both of them.

We therefore hold that there was sufficient evidence for a rational trier of

fact to find that the government had proved beyond a reasonable doubt that

Arledge was deliberately indifferent to the Fen Phen II fraud.

In sum, viewing the evidence in the light most favorable to the

government, there was sufficient evidence to show that Arledge had actual

knowledge of the Fen Phen I fraud and was deliberately indifferent to the Fen
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Phen II fraud. Accordingly, we hold that there was sufficient evidence to

support the conspiracy conviction.

2. Counts 2–5: Mailings

Next, Arledge contends there was insufficient evidence that the mailings

underlying counts 2–5 were directly related to the execution of the scheme to

defraud. A conviction for mail fraud under 18 U.S.C. § 1341 requires proof of

“(1) a scheme to defraud; (2) the use of the mails to execute the scheme; and

(3) the specific intent to defraud.” United States v. Bieganowski, 313 F.3d 264,

275 (5th Cir. 2002).

The government based the mail fraud charges on four checks for attorneys’

fees sentthrough the mailto Arledge. Each check contained fees stemming from

Arledge’s representation of Fen Phen claimants. The government has not

identified specific instances of fraud that resulted in the attorneys’ fees

contained in the checks, acknowledging that each check contained fees stemming

from legitimate claims. Arledge argues that the government failed to prove the

second element of the mail fraud statute—the use of mails to execute the

scheme—and thatthe government’s failure to provide a clear nexus between the

fees received and the fraudulent claims is fatal to the government’s case.

In support, Arledge principally relies upon United States v. Tencer, 107

F.3d 1120 (5th Cir. 1997), in which an owner of a chiropractic clinic was

convicted of multiple counts of mail fraud after filing fraudulent claims for

services never rendered, id. at 1126–27. In Tencer, we specifically “decline[d] to

endorse a broad reading of § 1341’s mailing requirement that would relieve the

government ofthe burden of proving that mailings underlying mail fraud counts

are related to the fraud being perpetrated.” Id. at 1126. We held that the

government’s failure to produce any evidence that connected the specific checks,

upon which the convictions were based, to the fraudulent claims was fatal to the
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government’s case. Id. at 1126–27. In addition, the government, in that case,

had failed to explain how the “payment of legitimate claims had furthered the

scheme to defraud.” Id. at 1126 n.1. Thus, we held that a rational trier of fact

could not have found Tencer guilty without evidence that the checks underlying

the mail fraud counts contained fraudulent proceeds. Id. at 1127.

Despite this strong language, the Tencer court also noted that “‘innocent’

mailings can sometimes support mail fraud convictions.” Id. (citing Schmuck v.

United States, 489 U.S. 705, 714–15 (1989)). In Schmuck, the Supreme Court

found that innocent mailings could supply the mailing element for mail fraud

and held that “[t]he relevant question at all times is whether the mailing is part

of the execution of the scheme as conceived by the perpetrator at the time.”

Schmuck, 489 U.S. at 715. Thus, the government need only provide sufficient

evidence that the innocent or legitimate claims were incidental to an essential

part of the scheme to defraud. See id. at 710–11 (“It is sufficient for the mailing

to be incident to an essential part of the scheme, or a step in [the] plot.” (internal

quotation marks and citation omitted)).

Here the government presented sufficient evidence for the jury to conclude

that all claims Arledge submitted were part of the scheme to defraud, because

the legitimate claims were used as a smoke screen to conceal the fraudulent

ones. The evidence showed that the fraudulent claims were easily identified if

laid next to one another. The district court noted that the method of falsifying

the documents was

a rather artless and somewhat simpleminded and easily detectable

matter of falsifying prescriptions and medical records by the use of

a computer and a copy machine. All you had to do was look at it and

see the same form was used time and time and time and time again.

By mixing the nearly identical fraudulent claims with the legitimate ones,

Arledge was able to drastically lower the chances of detection. In fact, the sheer
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number of claims aided the fraud because the chances of success were increased

by virtue of the number of claims that had to be processed. A rational trier of

fact could have concluded that the fraud was possible because the legitimate

claims hid the clearly fabricated prescriptions.

The scheme to defraud also depended upon the maintenance of a

harmonious relationship between Arledge, Gallagher, and the SettlementFund.

We have held that mailings pursuantto a scheme to defraud, which extends over

a long period of time and depends upon a good relationship between the victim

and the defendant, are often incidental to an essential part of the scheme, thus

satisfying the mailing element of the mail fraud offense. See United States v.

Mills, 199 F.3d 184, 189–90 (5th Cir. 1999) (holding that a scheme involving the

issuance of numerous fraudulent checks over the course of thirteen months was

not a one-shot operation and that the success of the venture depended upon the

continued harmonious relationship with the victims of the fraud); see also

Schmuck, 489 U.S. at 711–12 (upholding a jury verdict because “a rational jury

could have concluded that the success of the [defendant’s] venture depended

upon his continued harmonious relations with, and good reputation among, [the

victims]”).

A rational trier of fact could have concluded that the concealment of the

fraudulent claims allowed Arledge to continue to submit additional fraudulent

and legitimate claims. There was testimony from Gallagher that, had he been

aware that Arledge was filing false claims, he would not have allowed Arledge

to continue to receive any attorneys’ fees. Thus, the success of the ongoing

fraudulent venture depended upon continued harmonious relations between

Arledge and Gallagher. Cf. Schmuck, 489 U.S. at 711–12 ; United States v.

Strong, 371 F.3d 225, 230–31 (5th Cir. 2004) (recognizing that mailings which

lullthe victims of fraud have been found to fall under 18 U.S.C. § 1341—the mail
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fraud statute). For these reasons, a rational trier of fact could have found that

Arledge used the “innocent” mailings to concealthe “easily detectable”fraud and

the mailings were incidental to the scheme to defraud. The government did not

have to establish thatthe checks contained attorneys’ fees for fraudulent claims;

all of the mailings were essential to the fraud. Accordingly, we hold that there

was sufficient evidence to support the mail fraud convictions.

3. Count 7: Wire Fraud

Arledge also contends that the evidence was insufficient to support a

conviction on count 7. Count 7, the wire fraud count, involved the transmission

of a fax, sent from Gallagher’s office to a paralegal working at S&A, which

contained a chart of claimants’ names and settlement amounts and a requestfor

releases. These attorney releases had to be sent before Arledge could obtain his

share of the attorneys’ fees. Arledge maintains that this fax was sent after the

scheme to defraud had been completed because the claimants had already been

paid. In United States v. Maze, 414 U.S. 395 (1974), the Supreme Court held

that a scheme to defraud is complete when “‘[t]he persons intended to receive the

money had received it irrevocably,’” id. at 400 (quoting Kann v. United States,

323 U.S. 88, 94 (1944)). As far as Arledge was concerned, the scheme was not

complete until Arledge received attorneys’ fees for his participation in the

scheme to defraud. Because a rational trier of fact could have found that there

was sufficient evidence that the wirings were sent pursuant to the scheme to

defraud, we find that the conviction as to count 7 was proper.

B. Evidentiary Rulings

Arledge maintains that he was prevented from offering evidence that

would have aided his defense. The district court’s decision to exclude evidence

is reviewed for abuse of discretion, so long as the defendant made a timely

objection at trial. United States v. Pace, 10 F.3d 1106, 1115 (5th Cir. 1993). If
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there is an abuse of discretion, the court then decides whether the exclusion

affected a substantial right of the complaining party or was harmless error.

United States v. Skipper, 74 F.3d 608, 612 (5th Cir. 1996). Arledge objected to

the exclusion of several defense exhibits; we consider each in turn. We then

consider whether the cumulative effect ofthe exclusions denied Arledge the right

to present his defense.

1. Defense Exhibit 32

The district court excluded Defense Exhibit 32, a multi-page list of names,

phone numbers, and addresses titled “Arledge Accepted Cases.” The document

was produced pursuantto the business record exception to the hearsay rule. See

FED. R. EVID. 803(6). David Gaylon, an employee of S&A, verified that the

document was a record of regularly conducted activity. However, the defense

was unable to provide a witness who could testify to the purpose of the

document. In addition, the document contained handwritten notations from two

individuals, and some of the names on the list had been scratched out. Arledge

argues that the document could have shown that Arledge had refused clients

because they failed to provide sufficient proof of usage. In addition, he argues

that the district court could have redacted the notations by the unknown second

person, which, he argues, would have eliminated any concerns about the

trustworthiness of those notations and permitted the jury to examine the rest

of the document.

Contrary to Arledge’s argument, however, the district court did not abuse

its discretion when it refused to admit Defense Exhibit 32. The district court is

permitted to exclude documents that “indicate a lack of trustworthiness.” FED.

R. EVID. 803(6). The document showed only names on a page, and without more

testimony, the significance of the document was mere conjecture. In addition,

the district court refused to admit the document without testimony identifying
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the second set of notations because it was concerned about the document’s

trustworthiness absent clarifying testimony. Arledge submitted no reason why

he failed to present evidence at trial that would have relieved the district court’s

concerns about trustworthiness, nor has he given us reason to believe that the

evidence was inherently trustworthy. Finally, the district court’s failure to

redact the document sua sponte is not grounds for reversal. See United States

v. Dotson, 817 F.2d 1127, 1134 (5th Cir. 1987) (holding that a district court did

not abuse its discretion when it did not redact, sua sponte, those portions of a

document which were prejudicial to the defense).

2. Defense Exhibit 222

Arledge also challenges the exclusion of Defense Exhibit 222, a document

prepared by FBI Agent Bill Stokes (“Agent Stokes”), which contained a table of

names of Fen Phen claimants who had falsified documents in order to receive

compensation from the Settlement Fund. Arledge asserts that this document

established that 60 of the 165 claimants listed were not Arledge’s clients. The

defense sought to introduce the documentto prove that Arledge was notthe only

lawyer who had represented fraudulent claimants.

The trial court held a sealed hearing outside the presence of the jury to

discuss this document. At that hearing, Agent Stokes admitted that the

documentidentified several false claims made by claimants who Arledge did not

represent, but he also stated that the document incorrectly identified individuals

as having made false claims which later proved to be legitimate. Thus, Agent

Stokes stated that this document simply reflected his investigation at that time

and was no longer accurate.

The district court is permitted to exclude evidence if it is concerned that

the information will mislead the jury or if the evidence is cumulative of

argument presented at trial. See FED. R. EVID. 403. Arledge has not provided
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sufficient reasons for believing that this document was reliable or presented

testimony that would call into question Agent Stoke’s contention that this was

simply an investigatory document that the facts no longer supported. The trial

court ordered the government to tell the jury that Arledge had not represented

all the fraudulent plaintiffs, which the government did. The defense used this

information to its advantage, noting in both the defense’s opening and closing

statements that other attorneys had represented fraudulent claimants.

Accordingly, the district court did not err in its exclusion of Defense Exhibit 222.

3. Defense Exhibits 163–165

The defense also sought to introduce evidence that Dennis Sweet

(“Sweet”), whose firm received 37.5% of the attorneys’ fees in the Fen Phen

cases, was the attorney for many fraudulent claimants. The exhibits at issue

related to four claims that Cothren, the court-appointed administrator of the

Settlement Fund, had denied because he believed that they were fraudulent.

Sweet had contested Cothren’s denial and the claims had been referred to

arbitration, where three were denied and one was approved. The district court

refused to allow the defense to introduce exhibits detailing Sweet’s

representation of fraudulent claimants, finding that the exhibits were irrelevant

and so voluminous that they would mislead or confuse the jury. 

“[A] judge is permitted to exclude relevant evidence if he finds that its

probative value is substantially outweighed by the danger of ‘unfair prejudice,

confusion of the issues, or misleading the jury.’” Brumley Estate v. Iowa Beef

Processors, Inc., 704 F.2d 1351, 1356 (5th Cir. 1983) (quoting FED. R. EVID. 403).

Evidence that a similarly-situated attorney had pursued what turned out to be

false claims has no bearing on whether Arledge had either actual knowledge of

the fraud or was deliberately indifferent to the fraud. That another attorney

may also have been engaged in fraud or been deliberately indifferent to fraud
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would not eliminate Arledge’s liability. The district court therefore did not abuse

its discretion when it excluded a large number of documents not directly related

to the charges, especially given the court’s beliefthatthe evidence would mislead

the jury.

4. Defense Exhibits 97, 103, and 130–155

Defense Exhibits 97, 103, and 130–155 were copies of the fraudulent

claimants’ files maintained by Gallagher. The defense sought to introduce these

files to prove that Gallagher had, in his files, the same documents that Arledge

did. Arledge alleges that the fact that Gallagher saw the files and yet did not

detect the fraud would have proved that the fraud was not easily detected and

refuted the assumption that, as a lawyer, Arledge must have known ofthe fraud.

In addition, Arledge maintains that Gallagher’s job was to screen the claims and

that Gallagher’s failure to notice the fraud proves that Arledge’s similar failure

was neither unique nor criminal. 

The district court is permitted to exclude evidence that is cumulative of

evidence already in the record. See FED. R. EVID. 403; Winans v. Rockwell Int’l.

Corp., 705 F.2d 1449, 1456 (5th Cir. 1983) (finding that it was harmless to

exclude documentary evidence that was cumulative to direct testimony).

Gallagher testified that he received the same documentation as Arledge. He also

testified that he had no knowledge of the fraud despite having received the same

documentation. Because the same information was introduced through

Gallagher’s testimony as would have been introduced by the admission of

Gallagher’s business records, the district court did not abuse its discretion in

excluding this evidence as cumulative.

5. Cumulative Effect of Exclusions

Arledge maintains that the cumulative effect of these exclusions was to

deny him a fair trial. In support of his defense, Arledge argued to the jury that
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he was not criminally liable because other similarly-situated attorneys had not

discovered any fraudulent claims submitted by their clients and that their lack

of knowledge was evidence that Arledge also was not aware of the fraud being

conducted by his clients. Arledge maintains that the district court’s evidentiary

rulings prevented him from providing support for this argument to the jury.

However, this argument is not relevant to whether Arledge had actual

knowledge ofthe fraud and had knowingly participated in the scheme to defraud;

therefore, it was properly excluded. See FED. R. EVID. 402 (“Evidence which is

not relevant is not admissible.”) As we explained earlier, a rational trier of fact

could have found that Arledge had actual knowledge of the Fen Phen I fraud.

This actual knowledge put him on notice of the Fen Phen II fraud in a way that

other similarly-situated attorneys were not. Therefore, evidence that other

similarly-situated attorneys had not discovered the fraud is not relevant to

Arledge’s actual knowledge of or deliberate indifference to the fraud. Thus, the

district court did not abuse its discretion in its evidentiary rulings.

C. Admission of Evidence Pertaining to Money Laundering Counts

Arledge argues that the district court abused its discretion in admitting

evidence of his lavish spending to prove several money laundering charges; the

government withdrew some of those counts and the jury acquitted him of the

remaining money laundering charges. He asserts that the admission of this

evidence resulted in a “spillover” to the rest of the counts against him and thus

was highly prejudicial, because jurors likely did not share Arledge’s lifestyle and

likely found it offensive.

The Supreme Court has recognized that prosecutorial appeals to class

prejudice are highly improper and can be prejudicial. United States v. SoconyVacuum Oil Co., 310 U.S. 150, 237–39 (1940). However, the evidence of

Arledge’s lavish spending was properly admitted to prove the money laundering
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3 Arledge also asserts that this evidence was inadmissible to prove the money

laundering charges, and that its admission violated his due process and fair trial rights. The

district court allowed the prosecution to reopen its case after the defense moved to dismiss the

money laundering charges based on the prosecution’s failure to prove every element of the

charges. Arledge maintains that the district court should not have permitted the prosecution

to reopen its case to prove the elements of money laundering and that doing so both violated

his right to a fair trial and amounted to double jeopardy. A trial court’s decision to reopen a

case is reviewed for abuse of discretion. United States v. Walker, 772 F.2d 1172, 1177 (5th Cir.

1982); United States v. Wilcox, 450 F.2d 1131, 1143 (5th Cir. 1971); United States v. Duran,

411 F.2d 275, 277 (5th Cir. 1969).

Here, the district court reopened the case to hear testimony to explain documentary

evidence already before the jury. The trial court stated, “it is the opinion of this court [that]

the information that the government is eliciting from its agent is on the record.” The

additional testimony was solely for the purpose of assisting the jury to understand the

implications of the facts and figures already in the record. The district court did not abuse its

discretion in reopening the case when the defense was given a chance to rebut the conclusions

of the witness and the testimony was specifically limited to facts already in the record.

19

counts;3thus, we must consider whether there was any spillover to the other

counts. “Generally, this court uses the term ‘spillover’ in discussing whether a

district court abused its discretion in denying a motion for severance.” United

States v. Edwards, 303 F.3d 606, 639–40 & n.20 (5th Cir. 2002) (citing United

States v. Holzer, 840 F.2d 1343, 1349 (7th Cir. 1988) (“No rule of evidence is

violated by the admission of evidence concerning a crime of which the defendant

is acquitted, provided the crime was properly joined to the crime for which he

was convicted and the crimes did not have to be severed for purposes of trial. It

makes no difference, moreover, whether the jury acquits on some counts or the

trial or reviewing court sets aside the conviction.”)). Arledge has not asserted

that he was improperly denied severance. Instead, Arledge asks for a new trial

based on the alleged prejudice arising from the admission of evidence to prove

the money laundering charges.

In Edwards, we considered whether evidentiary “spillover from invalid

claims can be a basis for granting a new trial.” Id. at 639. The court stated that

to make such a claim, “[a]t a minimum, . . . defendants must show that they
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experienced some prejudice as a result of the joinder of invalid claims, i.e., that

otherwise inadmissible evidence was admitted to prove the invalid fraud claims.”

Id. at 640. We have stated that Edwards requires the defendant demonstrate

both that the “evidence was inadmissible and [that it was] prejudicial.” Fiber

Sys. Int’l, Inc. v. Roehrs, 470 F.3d 1150, 1170 nn.18 & 19 (5th Cir. 2006) (citing

United States v. Cross, 308 F.3d 308, 319 (3d Cir. 2002) (recognizing that courts

must “conduct two distinct inquiries. First, was there a spillover of evidence

from the reversed count that would have been inadmissible at a trial limited to

the remaining count? Second, if there was any spillover, is it highly probable

that it did not prejudice the jury’s verdict on the remaining count, i.e., was the

error harmless?”)). Thus, Arledge must demonstrate prejudice from the

introduction of the evidence. See Edwards, 303 F.3d at 640.

Regardless of whether the evidence would have been admitted in a trial

solely on the remaining counts, Arledge has failed to prove that the evidence

prejudiced him. Arledge has not identified any instances in which the

prosecution inappropriately used the evidence of Arledge’s wealth or lavish

spending to prejudice or bias the jury. See FED. R. EVID. 403 (excluding evidence

in which the “probative value is substantially outweighed by the danger of unfair

prejudice”); see also id. advisory committee’s note (defining “unfair prejudice” as

“an undue tendency to suggest decision on an improper basis, commonly,though

not necessarily, an emotional one.”).

In addition, the jury was discerning, despite the introduction of evidence

of Arledge’s wealth, in its acquittal of Arledge on all the remaining money

laundering counts and one count of wire fraud. Arledge was found not guilty on

all money laundering counts, demonstrating thatthe jury did not believe beyond

a reasonable doubtthat he had participated in any activity that would fall under

the statute. The jury’s acquittal suggests that it did not allow any potential bias
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against Arledge to sway its verdict. See United States v. Arzola-Amaya, 867F.2d

1504, 1514 (5th Cir. 1989) (“The jury’s ability to discern a failure of proof of guilt

on some of the alleged crimes indicates a fair minded consideration of the

issues.”). Arledge has provided no evidence that would suggest otherwise.

Accordingly, we find that the jury was not improperly prejudiced and deny

Arledge’s request for a new trial.

D. Sentencing

Arledge asserts that the district court’s use of the 2006 Sentencing

Guidelines violated the Ex Post Facto Clause of the Constitution. U.S. CONST.

art. I, § 10, cl. 1. Specifically, Arledge contends that the district court erred in

applying the 2006 Sentencing Guidelines rather than the 2001 Sentencing

Guidelines for the acts he committed. We review the district court’s

interpretation of the sentencing guidelines de novo and its findings of fact for

clear error. United States v. Washington, 480 F.3d 309, 317 (5th Cir. 2007).

The Ex Post Facto Clause forbids Congress from enacting a law that

“‘imposes a punishment for an act which was not punishable at the time it was

committed; or imposes additional punishment to that then prescribed.’” Weaver

v. Graham, 450 U.S. 24, 28 (1981) (quoting Cummings v. Missouri, 71 U.S. 277,

325–26 (1866)). In most instances, the Sentencing Guidelines in effect at the

time of conviction apply. However, the Guidelines provide that if their

application would violate the Ex Post Facto Clause, the court must use the

Guidelines in effect on the date the offense of conviction was committed. U.S.

SENTENCING GUIDELINES MANUAL § 1B1.11(b)(1) (2006). For the Sentencing

Guidelines to apply ex post facto, they must apply to events occurring before

their enactment and must disadvantage the offender affected by their

application. See Wallace v. Quarterman, 516 F.3d 351, 354 (5th Cir. 2008); see

also Miller v. Florida, 482 U.S. 423, 430 (1987).
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It is undisputed that the application of the 2006 Sentencing Guidelines

rather than the 2001 Sentencing Guidelines disadvantaged Arledge; Arledge

received a higher sentence than he would have under the 2001 Guidelines. The

critical question for this case is whether Arledge committed any overt acts and

thereby extended the scheme to defraud to a time after Congress changed the

definition of “loss” in the Sentencing Guidelines on November 1, 2001. Arledge

argues that every fraudulent claim was filed with the Settlement Fund before

November 2001, and thatthe only countthat alleges any acts after that date was

count 7. In so arguing, Arledge incorrectly assumes that the scheme to defraud

was complete when the claimants received their settlement payments. As stated

above, this court has found that a conspiracy continues until the defendant

“realizes fully his anticipated economic benefits.” United States v. Girard, 744

F.2d 1170, 1172–73 (5th Cir. 1984).

The government provided evidence that the scheme to defraud continued

beyond November 1, 2001. The indictment alleged that at least one overt act,

committed as part of the conspiracy alleged in count 1, occurred after November

1, 2001: Overt Act 44 alleged that on January 7, 2002, Arledge caused a

$275,000 check to be sent from Gallagher to Arledge for attorneys’ fees related

to Fen Phen I. Thus, the conspiracy continued at least until January 7, 2002.

In addition, Arledge was convicted of one act of wire fraud that occurred after

November 1, 2001. Count 7 concerned a fax of a letter enclosing a list of

claimants for whom releases were needed to process attorneys’ fees. The fax was

sent on November 12, 2001. As discussed above, the government presented

sufficient evidence for the jury to convict Arledge on count 7. Because Arledge

committed at least one overt act and was convicted of one count of wire fraud

that occurred after November 1, 2001,the application ofthe 2006 Guidelines did

not violate the Ex Post Facto Clause.
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E. Restitution

This court reviews the legality of a restitution order de novo and the

amount of the restitution order for an abuse of discretion. United States v.

Adams, 363 F.3d 363, 365 (5th Cir. 2004). Arledge does not dispute that a

restitution order was permitted by law; he contests only the amount and

schedule of repayment. Accordingly, this court reviews the propriety of this

particular award for an abuse of discretion. Id.

Arledge raises three challenges to his restitution order. First, he asserts

that the district court miscalculated the amount of loss used to determine the

restitution award. Second, he argues that the restitution award is not

proportional to the amount of gain he received from his alleged illegal conduct

and thus it violates the Eighth Amendment. Finally, he argues that the district

court did not properly consider the requisite statutory factors in setting the

restitution schedule and that the restitution schedule was ambiguous, leaving

too much discretion to the Probation Department to enforce it. We address each

challenge in turn.

1. Amount of Loss

The district court ordered Arledge to pay restitution in the amount of

$5,829,334.90, without interest, to the Settlement Fund pursuant to the

Mandatory Victims Restitution Act of 1996 (“MVRA”), 18 U.S.C. § 3663A.

Arledge disputes the calculation used to determine the amount of loss, claiming

that the government did not sufficiently prove that the Settlement Fund had

paid false claims arising from Arledge’s illegal conduct. Specifically, he objects

to the calculation of losses related to the Fen Phen II settlement.

The “general rule is that a district court can award restitution to victims

of the offense, but the restitution award can encompass only those losses that

resulted directly from the offense for which the defendant was convicted.”
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United States v. Maturin, 488 F.3d 657, 660–61 (5th Cir. 2007) (citing Hughey

v. United States, 495 U.S. 411, 413 (1990)). The pre-sentence report attributed

forty-seven fraudulent claims to the offenses for which Arledge was convicted.

There were three categories of evidence used to substantiate the government’s

assertion that these claims resulted from Arledge’s illegal conduct: (1) the

testimony of Wyatt, an employee of S&A, who created fraudulent documents;

(2) the testimony of two pharmacists who testified that specific prescriptions

allegedly from their pharmacies were, in fact, manufactured; and

(3) representations by AHP that the claims were fraudulent. Arledge and the

government agree that the claims identified by Wyatt were part of the count 1

conspiracy; she identified seventeen of the claims totaling $2,192,000.00.

Arledge disputes the remaining thirty.

The district court concluded that the evidence presented was sufficient to

find thatthe claims listed in the pre-sentence report were fraudulent. We affirm

the district court’s finding for all but the three claims discussed below. As to the

other claims, there was evidence that the documents were manufactured and

false. For eight of the claims, pharmacists Larry Thomas and Cindy Parker

provided testimony that the claims were fraudulent. This manufactured

evidence, combined with the fact that in all instances Arledge was the attorney

of record for the claimants, was enough to indicate a scheme to defraud in the

manner described in count 1. AHP identified the rest of the claims as

fraudulent, and Arledge was the attorney of record for the claimants. Arledge

makes no convincing argument regarding why the identification by AHP is not

sufficient or how the district court abused its discretion in relying upon the

representations by AHP. Thus, it was not an abuse of discretion for the court to

award restitution that encompassed those losses resulting from the creation of
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fraudulent documents in furtherance ofthe scheme to defraud for which Arledge

was convicted.

However, there are three claims for which the government concedes that

there was no proof of falsity: Florestine Baker ($18,000), Shirley E. Blakely

($18,000), and Lou Savage ($18,000). Without evidence that the claims were

fraudulent, it is unclear that the Settlement Fund suffered any loss by paying

these claims. The district court’s decision to include these three claims, totaling

$54,000, without any evidence of fraud was an abuse of discretion.

The government argues that we should disregard this discrepancy because

the total amount of these claims, $54,000, is less than 1% of the total restitution

order. It also asserts that it would be able to provide, on remand, proof of an

additional false claim that was not originally included in the district court’s

restitution order, which resulted in a loss of $488,000. Accordingly, the

government asks this courtto find thatthe failure to provide proof of these three

claims was harmless error.

This court has never applied a harmless error analysis to restitution. We

have stated repeatedly that an order of restitution must be limited to losses

caused by the specific conduct underlying the offense of conviction. See United

States v. Griffin, 324 F.3d 330, 367 (5th Cir. 2003) (holding that restitution is

restricted to the limits ofthe offense); Tencer, 107 F.3d at 1135–36. Accordingly,

we decline the government’s request to adopt a harmless error analysis for the

calculation of loss under the MVRA, and we remand for a recalculation of actual

loss based upon the evidence in the record.

2. Proportionality

Arledge also asserts that the restitution award violated the Eighth

Amendment, because itis disproportionate to require him to pay the full amount

of the calculated loss attributable to the fraud when he received only a very
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small share of the proceeds from the fraud, estimated to be 12.5% of the total

attorneys’ fees.

We have held that the amount of the award must be tied to the losses

suffered by victims of the defendant’s crime, not the defendant’s gain from his

illegal conduct. See Tencer, 107 F.3d at 1135 (“An order of restitution must be

limited to losses caused by the specific conduct underlying the offense of

conviction.”); United States v. Jiminez, 77 F.3d 95, 99–100 (5th Cir. 1996); see

also 18 U.S.C. § 3664(f)(1)(A) (“In each order of restitution, the court shall order

restitution to each victim in the full amount of each victim’s losses as determined

by the court and without consideration of the economic circumstances of the

defendant.”). Thus, so long as the government proved that the victim suffered

the actual loss that the defendant has been ordered to pay, the restitution is

proportional. United States v. Butler, 137 F.3d 1371, 1371 (5th Cir. 1998) (per

curiam) (citing United States v. Dean, 949 F. Supp. 782, 786 (D. Or. 1996)

(“Where the amount of restitution is geared directly to the amount ofthe victim’s

loss caused by the defendant’s illegal activity, proportionality is already built

into the order.”)). The district court need not consider the gain to the defendant

by his illegal conduct; only the victim’s loss is relevant to the calculation of the

restitution award. Here, the award reflects the losses to the Settlement Fund

from payments made to fraudulent claimants who participated with Arledge in

the scheme to defraud the Settlement Fund. Because the restitution order was

tied directly to losses sustained by the victim, it is proportional.

Further, the district court ordered Arledge’s restitution award to be “joint

and several” with eleven other persons who have already been convicted of fraud

related to the Fen Phen I and II settlements. Thus, he may seek contribution

from his co-conspirators to pay off the restitution award and reduce the amount

he personally owes. The district court’s failure to order restitution for others
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4 Arledge argues that the district court’s failure to enhance his sentence with a role-inthe-offense enhancement means that it could not have concluded that Arledge played a large

role in the fraud or that his culpability was large enough to justify holding him accountable for

the entire loss of the victim. However, he has waived that argument for failure to brief

adequately. See FED. R. APP. P. 28(a)(9); Lindell, 881 F.2d at 1325.

27

who might have participated in the scheme is of no consequence. See United

States v. Ingles, 445 F.3d 830, 839 (5th Cir. 2006) (finding that “a district court

may consider the relative degrees of responsibility of co-defendants in imposing

restitution obligations and therefore, the simple fact that like punishment was

not imposed on [the co-defendants] does not offend the constitution” (emphasis

added) (internal quotation marks and citations omitted)).4 Accordingly, there is

nothing to suggest that the district court abused its discretion or violated the

Eighth Amendment when it ordered Arledge to pay the full amount of the

victim’s loss, subject to the three claims discussed above.

3. Restitution Schedule

Once a court has set the amount of restitution owed to the victim, it must

then provide a schedule for payment of the award, considering the factors listed

in 18 U.S.C. § 3664(f)(2). These factors are:

(A) the financial resources and other assets of the defendant,

including whether any of the assets are jointly controlled;

(B) projected earnings and other income of the defendant; and

(C) any financial obligations of the defendant; including obligations

to dependents.

Id. Because Arledge failed to object to the district court’s setting of the payment

schedule, we review for plain error. United States v. Miller, 406 F.3d 323, 327

(5th Cir. 2005).

The repayment schedule provides,

The Court orders immediate payment of $500,000 restitution

payable within one month of the date of the filing of this Order. The

balance of [$]5,329,334.90 is to be paid immediately and during the
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5 Arledge argued in his brief that he provided evidence that

(a) his expenses far exceeded his income; (b) his assets were depleted by the

$375,000 forfeiture; (c) he likely would be disbarred for conviction of a felony; (d)

he was to serve a 78 month sentence; and (e) it was improbable that he would

have any immediate income or any appreciable income in the future.

In addition, he protested that the court below included projected earnings (when he had none)

and his assets (a house on which the mortgage exceeded its value).

28

period of incarceration, with any remaining balance upon release to

be paid in not less than 34 equal monthly installments.

It further provides that upon release from prison, Arledge should make

arrangements with the U.S. Probation Office to make monthly payments of

$14,000 for a minimum ofthirty-four months beginning thirty days after release

from imprisonment.

Arledge makes two challenges to the district court’s repayment schedule.

First, he argues that his financial circumstances do not allow him to make

payments according to the repayment schedule.5 The pre-sentence investigation

report alleged that Arledge had assets of over $1 million and a net worth of close

to $1 million. The report also stipulated that he had minimal income and large

monthly expenses, but that he still had sufficient assets to pay at least partial

restitution immediately and to pay monthly installments. The district court

explicitly considered this evidence of the defendant’s resources and mentioned

it all on the record before concluding that the evidence showed that Arledge

would have the ability to pay. Accordingly, the district court’s decision to require

an immediate payment followed by several monthly payments was not plain

error.

Second, Arledge argues that the district court’s order was internally

inconsistent by ordering both immediate repayment of the full amount and

repayment in monthly installments after Arledge’s period of incarceration. He

argues that the Probation Department must reconcile this inconsistency, which
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is an improper delegation of the court’s authority. This court, in United States

v. Albro, 32 F.3d 173 (5th Cir. 1994) (per curiam), found that the district court

must designate the timing and amount of payments, id. at 174. In Albro, a

probation officer was charged with creating a payment schedule to govern the

amount the defendant had to pay in restitution to third parties. Id. We held

that such ungoverned delegation affects the defendant’s substantial rights and

constitutes plain error. Id. at 174 n.1.

Unlike in Albro, the district court in the present case provided explicit

instructions for repayment. The district court ordered Arledge to pay $500,000

within one month. The district court also recognized that Arledge may begin

repayment while incarcerated, but it did not require any specific amount to be

paid immediately beyond the $500,000. Finally, the district court ordered any

remaining balance to be paid in not less than thirty-four monthly installments

of $14,000 upon release from imprisonment. Because both the timing and the

amount of payments was clear on the face of the restitution order, the district

court did not delegate the setting of payments to the Probation Office or violate

Arledge’s substantial rights.

III. CONCLUSION

We find that there was sufficient evidence to support the jury’s verdict as

to all counts. We also affirm the district court’s rulings on all evidentiary issues

and the application of the 2006 Sentencing Guidelines. We hold that the

restitution award does not violate the Eighth Amendment and that the

repayment schedule was proper. However, we remand for a recalculation of the

restitution award consistent with this opinion. Accordingly, we AFFIRM in part,

VACATE in part, and REMAND for further proceedings consistent with this

opinion.

AFFIRMED in part, VACATED in part, and REMANDED.