PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v. No. 95-5420

TIMOTHY R. WALKER,

Defendant-Appellant.

Appeal from the United States District Court

for the District of South Carolina, at Columbia.

Dennis W. Shedd, District Judge.

(CR-94-892)

Argued: December 6, 1996

Decided: April 25, 1997

Before RUSSELL and MOTZ, Circuit Judges, and

MICHAEL, Senior United States District Judge

for the Western District of Virginia,

sitting by designation.

Affirmed by published opinion. Judge Russell wrote

the opinion, in which Judge Motz and

Senior Judge Michael joined.

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COUNSEL

ARGUED: Gregory Poole Harris, Columbia, South Carolina, for

Appellant. John Michael Barton, Assistant United States Attorney,

Columbia, South Carolina, for Appellee. ON BRIEF: J. Preston

Strom, Jr., United States Attorney, Columbia, South Carolina, for

Appellee.

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OPINION

RUSSELL, Circuit Judge:

Timothy Walker, a disbarred attorney, operated as an insurance

agent representing several insurance companies in South Carolina.

In

the course of his business he received large amounts of money from

his customers for the purchase of lump-sum annuities. Walker, evidently dissatisfied with his normal sales commissions, diverted the

funds into his own personal bank account. To perpetuate the scheme,

he used the United States mail to send fictitious purchase

confirmations, account statements and interest payments to his defrauded

customers. The total amount of money involved was $850,913.59.

In late 1994, a grand jury indicted Walker on nine counts of mail

fraud1 and three counts of money laundering. 2 Pursuant to a plea

agreement, Walker pleaded guilty to all twelve counts. The plea

agreement required him to aid the government in identifying and

recovering his assets. In return, the Government agreed to make a

non-binding recommendation that Walker receive a three-level downward adjustment in his offense level for acceptance of

responsibility.3

The Government's obligations, however, were contingent upon

Walker being "fully truthful and forthright" concerning his assets

and

Walker's promise to use those assets "to make restitution as

directed

by the Court."

The Presentence Investigation Report calculated Walker's offense

level at 26 with a criminal history category of I, resulting in a

Sentencing Guidelines range of 63-78 months imprisonment. The offense

level, however, included the downward adjustment for acceptance of

responsibility. Additionally, the report stated that the district

court

could consider Walker's past illegal acts as an attorney, none of

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1 18 U.S.C.A. § 1341 (West Supp. 1997).

2 18 U.S.C.A. § 1956(a)(1)(A)(i) (West Supp. 1997).

3 U.S. Sentencing Guidelines Manual ("U.S.S.G.") § 3E1.1(a) & (b)

(1994).

2
which had resulted in a criminal conviction, as a factor in

departing

upward in his criminal history category. 4

During the seventy-five days between his guilty plea and his sentencing hearing, Walker increased his credit card debt by almost

$48,000. At the sentencing hearing, the Government, believing that

Walker had breached the plea agreement by failing to use all of his

assets for restitution, argued against a downward adjustment for

acceptance of responsibility. Walker testified that the

expenditures

were for professional service bills and necessities for his family.

The

district court found that Walker's conduct was inconsistent with an

acceptance of responsibility and refused to grant the downward

adjustment.

The Government then moved for an upward departure in criminal

history category because of Walker's prior illegal conduct. The

district court granted the motion and departed to criminal history

category III. Based on the recalculated Sentencing Guidelines range of

108-135 months, the district court sentenced Walker to 120 months

imprisonment.

On appeal, Walker complains that the Government breached the

plea agreement, the district court erroneously departed upward to

criminal history category III, and the district court miscalculated

his

offense level. Having failed to raise any of these issues below,

Walker

is only entitled to relief upon a showing of plain error. 5

I.

Walker seeks a remand for resentencing because the Government

failed to recommend, and in fact argued against, a downward adjustment for acceptance of responsibility as promised in the plea

agreement. In order to be entitled to the recommendation, Walker had to

assist with the identification, marshalling and distribution of all

of his

assets for the purpose of restitution. The transcript of the guilty

plea

hearing reveals that Walker was aware of his obligation. The

district

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4 Id. at § 4A1.3(e).

5 United States v. Fant, 974 F.2d 559, 565 (4th Cir. 1992).

3

court specifically informed Walker that he was being released on

bond only because the court was "very interested in having the

people

who were defrauded get their money back one way or the other."

Instead of fully engaging in the restitution process, Walker chose

to use his credit cards to pay off various unrelated creditors.

This violation of the plea agreement was sufficient to release the

Government

from its promise to recommend a downward adjustment.

Walker also claims, in a one-sentence statement in his brief, that

the district court was required to give him notice that it did not

intend

to grant the downward adjustment. Unfortunately, Walker seems to

have confused a departure from the Sentencing Guidelines with an

adjustment under the Sentencing Guidelines. Although a district

court's decision to depart based on a previously unidentified

ground

requires notice,6 we have held that a district court is not

required to

give notice of its eventual withholding of an acceptance of

responsibility adjustment.7

II.

The Presentence Investigation Report stated that Walker's prior

illegal conduct as an attorney could establish the basis for an

increased criminal history category. At the sentencing hearing, the

district court upwardly departed from category I to category III.

Walker raises two separate claims concerning the upward departure. First, he contends that the district court erred by failing

to consider category II in making its determination. We have stated that

a

sentencing court should depart "first to the next higher category

and

. . . move on to a still higher category only upon a finding that

the

next higher category fails adequately to reflect the seriousness of

the

defendant's record."8 The sentencing hearing transcript, however,

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6 Burns v. United States, 501 U.S. 129, 138 (1991); United States

v.

Maddox, 48 F.3d 791, 799 (4th Cir. 1995).

7 United States v. White, 875 F.2d 427, 431-32 (4th Cir. 1989).

8 United States v. Rusher, 966 F.2d 868, 884 (4th Cir. 1992). This

language is dicta, see Rusher, 966 F.2d at 890 (Luttig, J., concurring
in part,

concurring in judgment in part, and dissenting in part), but in

United

States v. Cash, 983 F.2d 558, 561 (4th Cir. 1992), we confirmed

that it

identified the proper approach.

4
establishes that the district court did hear arguments concerning

criminal history category II. The Government sought a two-level upward

departure based on forgery, obstruction of justice, and

embezzlement,

all allegedly committed by Walker while he was a practicing

attorney.

After discussing the specifics of Walker's prior conduct, the

district

court directed the Government to "[m]ake your argument again for

me on why [Category] II... doesn't apply." The Government

reiterated its position that category II is intended for defendants with

only

minor past criminal conduct. Based on this exchange, we find that

the

district court adequately considered the appropriateness of

category

II.

Second, Walker argues that his credit card use was the real reason

behind the district court's upward departure to criminal history

category III. Walker, however, misconstrues some of the district

court's

remarks in order to support his claim. As discussed above, the

record

establishes that the district court based its upward departure on

Walker's prior instances of uncharged criminal activity.

III.

Walker pleaded guilty to both mail fraud and money laundering.

For the purpose of determining his base offense level under the

Sentencing Guidelines, the district court grouped the counts together

pursuant to U.S.S.G. § 3D1.2(d) and applied the higher base offense

level

for money laundering pursuant to U.S.S.G. § 3D1.3(b). Along with

other adjustments, Walker received a four-level specific offense

characteristic increase under the money laundering guideline because

the

fraudulent scheme involved between $600,000 and $1,000,000. 9

Walker claims this was a miscalculation. He argues that in

determining his specific offense characteristic the district court should

have

considered only the $5051.01 in fictitious interest payments

specifically identified in the money laundering counts of the indictment.
The

Government counters that all of the allegations in the mail fraud

counts, which Walker concedes involved $850,913.59, were incorporated into the money laundering counts by the grand jury. Furthermore, the facts of the case establish that the mail fraud and money

laundering crimes were interrelated.

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9 U.S.S.G. § 2S1.1(b)(2)(E).

5
The first step in analyzing this issue is to determine if the

counts

were properly grouped. Under § 3D1.2(d), counts involving substantially the same harm shall be grouped "when the offense level is

determined largely on the basis of the total amount of harm or loss

. . . or some other measure of aggregate harm, or if the offense

behavior is ongoing or continuous in nature and the offense guideline is

written to cover such behavior." Application Note 6 to § 3D1.2

states

that "[c]ounts involving offenses to which different offense

guidelines

apply are grouped together under subsection (d) if the offenses are

of

the same general type and otherwise meet the criteria . . . ."

Subsection (d) expressly permits the grouping of offenses under the fraud

and money laundering guidelines, but any grouped offenses must be

"closely related."10

In United States v. Porter, this court addressed the grouping of

offenses under § 3D1.2(d) in a case where the defendant pleaded

guilty to money laundering and gambling charges. 11 Although we

found that the grouping of offenses in Porter was inappropriate

because the offenses were "completely unrelated," we noted that

"[o]ne could envision an illegal enterprise which generated monies

through illegal... activities and simultaneously laundered those

monies as part of the same continuing transaction or common

scheme."12

Walker's money laundering was part of his fraudulent scheme

because the funds were used to make fictitious interest payments.

In

effect, Walker conceded the offenses were closely related when he

pleaded guilty to money laundering under the particular provision

of

the statute that forbids conducting financial transactions

involving the

proceeds of a specified unlawful activity "with the intent to

promote

the carrying on of [the] specified unlawful activity."13 Following

our

analysis in Porter, we find that the offenses were properly grouped

together.14

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10 United States v. Porter, 909 F.2d 789, 792-93 (4th Cir. 1990).

11 Id. at 791.

12 Id. at 793.

13 18 U.S.C.A. § 1956(a)(1)(A)(i).

14 See United States v. Mullens , 65 F.3d 1560, 1564 (11th Cir.

1995)

cert. denied, 116 S.Ct. 1337 (1996) (grouping mail fraud and money

laundering offenses under § 3D1.2(d)). But see United States v.

Johnson,
971 F.2d 562, 576 (10th Cir. 1992) (mail fraud and money laundering

offenses cannot be grouped under § 3D1.2(d)).

6
Next, we must determine whether the Sentencing Guidelines permitted the district court to use the amount of money Walker

obtained

through mail fraud as the basis for calculating his specific

offense

characteristic under the money laundering guideline. Application

Note 3 to § 3D1.3 states that a sentencing court should

"[d]etermine

whether the specific offense characteristics . . . apply based upon

the

combined offense behavior taken as a whole." In United States v.

Mullens, the Eleventh Circuit examined a similar grouping of

closely

related mail fraud and money laundering counts and found that in

determining the specific offense characteristic under the money

laundering guideline a court is "`required to consider the total amount

of

funds that it believed was involved in the course of criminal

conduct.'"15

We agree and hold that the district court correctly calculated

Walker's

offense level.

IV.

For the foregoing reasons, Walker's sentence is affirmed.

AFFIRMED

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15 Mullens, 65 F.3d at 1564 (quoting United States v. Barrios, 993

F.2d

1522, 1524 (11th Cir. 1993))

7