In the

United States Court of Appeals

For the Seventh Circuit

No. 00-1241

United States of America,

Plaintiff-Appellee,

v.

Laurence Seward,

Defendant-Appellant.

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 97 CR 851--Blanche M. Manning, Judge. 

Argued January 12, 2001--Decided November 15, 2001 

 Before Easterbrook, Diane P. Wood, and

Williams, Circuit Judges.

 Diane P. Wood, Circuit Judge. Until his

death at age 83, Wendell O’Neal was a

boarder in Laurence Seward’s house, and,

so he may have thought, a friend of

Seward. After O’Neal died, however,

Seward proved himself to be far less than

a faithful companion. Instead, Seward

embarked on a scheme to appropriate

O’Neal’s assets. He began by forging a

number of bank signature cards and using

the cards to transfer funds from O’Neal’s

accounts into his own accounts. The

trustee of O’Neal’s estate caught on to

what was happening rather soon, but that

did not stop Seward. He promptly forged a

will in which O’Neal supposedly left his

entire estate to Seward, and he attempted

to force the forged will through probate.

Reality overtook him, however, and he was

eventually convicted of one count of bank

fraud in violation of 18 U.S.C. sec.

1344, one count of wire fraud in

violation of 18 U.S.C. sec. 1343, one

count of mail fraud in violation of 18

U.S.C. sec. 1341, and two counts of money

laundering in violation of 18 U.S.C. sec.

1957. The district court sentenced Seward

to concurrent terms of 53 months on each

count and ordered him to pay $209,050 in

restitution. Seward appeals various

aspects of his conviction and sentence.

We affirm Seward’s conviction but vacate

his sentence and remand for a new
sentencing hearing.

I

 According to Seward, he and Wendell

O’Neal were long-time friends and

business partners. At the time of his

death on June 20, 1994, O’Neal was living

in a rented room in Seward’s home. O’Neal

was not in regular contact with any of

his relatives, and at the time of his

death Seward was not aware that O’Neal

had left a will. After O’Neal died,

Seward wasted no time in starting his

campaign to steal O’Neal’s assets. On the

very day O’Neal died, Seward deposited a

forged check for $65,000 drawn on

O’Neal’s account at First National Bank

of Chicago (First National) into one of

Seward’s own accounts. The next day, he

presented Bell Federal Savings Bank with

forged signature cards that purported to

change O’Neal’s individual account at

that bank into a joint account in

O’Neal’s and Seward’s names. Seward also

deposited another forged check drawn on

the First National account, this time for

$14,000, into one of Seward’s own

accounts. A few days later, on June 24,

Seward opened a joint account in his and

O’Neal’s names at Commercial National

Bank (CNB). He then called Harris Bank,

where O’Neal had a certificate of deposit

(CD), and, impersonating O’Neal, had the

bank transfer the proceeds of the CD to

the new joint account at CNB. Finally, on

June 30, Seward deposited a cashier’s

check made out to O’Neal, on which

O’Neal’s signature had been forged, into

a joint account in both their names.

 At the same time he was busy

appropriating O’Neal’s money, Seward

notified O’Neal’s next of kin, three

sisters living in Texas, that O’Neal had

died. He waited until June 22 to do so,

and even then he merely sent a letter by

regular mail. O’Neal’s relatives thus

learned of O’Neal’s death on June 24. On

that date, O’Neal’s nephew, Carl Taylor,

called Seward, and Seward assured Taylor

that there was no need to rush to Chicago

because Seward was "taking care of

things." Nevertheless, Taylor arrived in

Chicago on June 28 and advised Seward

that he (Taylor) was the executor of

O’Neal’s will. After a brief

investigation into O’Neal’s finances,

Taylor uncovered Seward’s scheme and

discovered the fraudulent transfers from
O’Neal’s accounts. Through Taylor’s quick

action, the banks were able to reverse

many of Seward’s fraudulent transactions,

and the estate was able to recover all

but $79,050 of the over $260,000 of

O’Neal’s money that Seward had tried to

acquire.

 When Taylor first arrived in town,

Seward expressed surprise that O’Neal had

left a will. One might have thought that

Seward would have had the sense to

abandon his effort to plunder the estate

at that point, but either greed or a lack

of good sense kept him going. Noting that

the will Taylor had filed was executed in

1983, Seward produced a competing will,

purportedly executed in 1989, in which

O’Neal left his entire estate to Seward.

Seward filed the alleged 1989 will with

the probate court, which forced Taylor

into a legal battle to defend the 1983

will. Taylor filed motions with the

probate court arguing that the 1989 will

was a forgery and seeking sanctions

against Seward for advancing the false

will. Seward filed a response in which he

swore that the 1989 will was genuine and

attached a copy of the purported will

along with several other documents, all

apparently forged, which Seward argued

demonstrated Seward’s close business and

personal relationship with O’Neal. Seward

also mailed a copy of this pleading and

the attached documents to Taylor in

Texas, and this mailing formed the basis

of the mail fraud count against

him.Ultimately, the probate court found

that the 1989 will was false, accepted

the 1983 will, and ordered Seward to pay

$105,000 in legal fees, $25,000 in

executor’s fees, and $50,000 in punitive

damages to O’Neal’s estate. This

prosecution followed in time, leading to

Seward’s convictions.

II

 On appeal, Seward challenges the

sufficiency of the evidence against him

on both the mail fraud and money

laundering counts. He faces the usual

stringent standard of review: if the

evidence presented at trial, taken in the

light most favorable to the prosecution,

can support the jury’s conclusion, his

effort must fail. See United States v.

Irorere, 228 F.3d 816, 822 (7th Cir.

2000). And, as even the facts we have

already recounted suggest, this case was
not a close one for the prosecution.

 To convict Seward of mail fraud under 18

U.S.C. sec. 1341, the government had to

prove (1) that the defendant participated

in a scheme to defraud; (2) that the

defendant intended to defraud; and (3)

that the defendant used the mails in

furtherance of the scheme. United States

v. Montani, 204 F.3d 761, 769 (7th Cir.

2000). Seward apparently concedes the

sufficiency of the government’s evidence

on the first two elements, but he argues

that the government did not meet its

burden of proving the third element, use

of the mails in furtherance of the

scheme. 

 The mail fraud count rested entirely on

Seward’s mailing of his response to

Taylor’s motions for sanctions in

theprobate court to Taylor’s home in

Texas. Seward argues that he mailed these

documents to Taylor nearly seven months

after his scheme ended, and accordingly,

that the mailing could not have been made

"for the purposes of executing the

scheme," as the mail fraud statute

requires. United States v. Castor, 558

F.2d 379, 384 (7th Cir. 1977). Seward is

correct that the mail fraud statute does

not reach every single use of the mails

that is in any way remotely related to a

scheme to defraud. See United States v.

Maze, 414 U.S. 395, 399-402 (1974). The

mailing must, at the least, be incidental

to an essential part of the scheme or be

a step in the plot. Schmuck v. United

States, 489 U.S. 705, 710-11 (1989). In

other words, the success of the scheme

must in some measure depend on the

mailing. Maze, 414 U.S. at 402. Seward’s

argument works only if the jury had to

define the scheme in question as one that

was limited to his initial withdrawals of

money from O’Neal’s accounts through the

use of the forged signature forms and

checks--an enterprise that we can assume

ended in July 1994 when Taylor discovered

it and began reversing the transactions.

The indictment was not so limited,

however: it charged O’Neal more broadly

with a fraudulent scheme that lasted from

June 20, 1994 until April 23, 1996. The

specific allegations in the indictment

covered both the efforts to withdraw mon

ey from O’Neal’s accounts and the effort

to grab the entire estate by obtaining

the probate court’s acceptance of the

forged will. When Seward mailed his
response to Taylor’s motion for sanctions

to Taylor in Texas and attached to it the

forged will and various forged documents

purporting to show the close business and

personal relationship between O’Neal and

himself, Seward was still trying to

convince Taylor that the forged will was

legitimate and that Taylor should drop

the probate fight (and, not

coincidentally, relinquish his status as

executor of the estate). Had that effort

been successful, Seward would have

succeeded in defrauding O’Neal’s estate

out of every last cent. The jury could,

and apparently did, believe the

government’s theory as to Seward’s

intentions when he mailed the response,

and we find that the evidence of the

mailing to Texas was sufficient to

sustain Seward’s conviction for mail

fraud.

 Seward also challenges the sufficiency

of the evidence against him on the two

money laundering counts. In order to

convict him of money laundering, the

government had to prove that Seward

derived property from a specified

unlawful activity and that he engaged in

a monetary transaction involving that

property. See 18 U.S.C. sec. 1957. The

transaction or transactions that created

the criminally-derived proceeds must be

distinct from the money-laundering

transaction, because the money laundering

statutes criminalize "transaction[s] in

proceeds, not the transaction[s] that

create[ ] the proceeds." United States v.

Mankarious, 151 F.3d 694, 705 (7th Cir.

1998). Seward argues that the government

did not allege that he engaged in any

money-laundering transactions that were

distinct from the bank, mail, and wire

fraud scheme that the government alleged

in the first three counts of the

indictment.

 The government based the moneylaundering counts on the following facts:

On June 24, 1994, about four days after

O’Neal’s death, Seward went to CNB and

used forged signature cards to open a

joint account in his and O’Neal’s names.

Shortly after he opened the account,

Seward called Harris Bank and,

impersonating O’Neal, asked that Harris

Bank liquidate a CD that O’Neal held

there and transfer the proceeds to the

new joint account at CNB. Harris Bank

complied with the request and transferred
$84,447.27 into the CNB account. This was

the first deposit into the CNB account. A

few days later, Seward wrote two checks

on the CNB account: one for $34,000 to

pay down Seward’s home equity line of

credit, and one for $21,000 which Seward

deposited in a friend’s bank account.

Each of these checks formed the basis for

one of the money laundering counts. 

 These transactions demonstrate both

unlawful activity and distinct

transactions in the criminally derived

proceeds. When Seward impersonated O’Neal

and defrauded Harris Bank into

transferring O’Neal’s CD proceeds to the

CNB account, Seward committed bank and

wire fraud. That act of fraud was

complete, and Seward had control over the

proceeds of the fraud, once the money was

placed in the CNB account. The checks

Seward then wrote on the account were,

therefore, transactions in the proceeds

of the bank fraud. Seward argues that

these transactions could not be used to

support the money laundering conviction

because the government included the two

checks drawn on the CNB account in a list

set forth in the indictment of

transactions in furtherance of the mail,

wire, and bank fraud schemes. According

to Seward, the indictment language shows

that under the government’s own

conception of the case, the two checks

were a part of Seward’s fraud scheme.

Therefore, Seward reasons, those same

transactions could not also be

transactions in the proceeds of the

schemes. 

 This argument misunderstands the

applicable law. Although it is true that

the defendant must have control of the

proceeds of a fraudulent transaction

before he can engage in money laundering

with those proceeds, there is no

requirement that the entire fraudulent

scheme be complete before the defendant

starts laundering the proceeds from early

portions of the scheme. See United States

v. Butler, 211 F.3d 826, 830 (4th Cir.

2000) (funds are "criminally derived if

they are derived from a completed phase

of an ongoing offense"); United States v.

Morelli, 169 F.3d 798, 804 (3d Cir. 1999)

(proceeds of a completed phase of an

ongoing offense can be laundered "even if

the money laundering transaction can also

be considered a part of the continuing

specified unlawful activity"). In fact,
this court has noted that money

laundering can be a critical element in a

complex fraud scheme because it helps

keep the scheme afloat and helps disguise

the source of the fraud proceeds. See

United States v. Wilson, 98 F.3d 281,

282-83 (7th Cir. 1996). Thus, there is no

reason that the government could not have

viewed the checks drawn from the CNB

account both as Seward’s attempt to

launder the proceeds of the early,

already completed phases of his

fraudulent scheme, and as part of his

ongoing effort to defraud O’Neal’s estate

and to conceal his fraud. The evidence

was also sufficient to sustain Seward’s

conviction for money laundering.

III

 Having determined that Seward has

presented no reason why his convictions

should be reversed, we turn to his

challenges to his sentence. Seward raises

three challenges to the way in which the

district court applied the Sentencing

Guidelines to his conduct. In addition,

Seward challenges the amount of

restitution the district court ordered

him to pay. We find that some of these

arguments have merit, and thus have

concluded that we must vacate the

sentence in its entirety and remand the

case for new sentencing proceedings

consistent with this opinion. In so

doing, we note that, on remand, the

district court will be writing on a clean

slate with respect to sentencing and will

be free to address all the issues

pertinent to sentencing that the parties

have briefed in this appeal as well as

any other relevant considerations not

inconsistent with this opinion. See

United States v. Young, 66 F.3d 830, 836

& n.4 (7th Cir. 1995).

A.

 Seward first argues that the district

court erred in increasing his Guideline

offense level by two levels for

obstruction of justice. The Sentencing

Guidelines permit a two-level enhancement

if the defendant "willfully obstructed or

impeded, or attempted to obstruct or

impede, the administration of justice

during the investigation, prosecution, or

sentencing of the . . . offense."

U.S.S.G. sec. 3C1.1. The obstruction

enhancement is not warranted merely
because the defendant took the stand and

the jury did not believe his testimony;

the enhancement is warranted, however, if

the court finds that the defendant

committed perjury. A finding of perjury

in turn is proper if, while under oath or

affirmation, the defendant gave false

testimony concerning a material matter

with the willful intent to provide false

testimony. United States v. Dunnigan, 507

U.S. 87, 94 (1993). If the obstruction

enhancement is based on the defendant’s

perjury and the defendant objects to the

enhancement at sentencing, as Seward did,

the district court must make a finding of

obstruction of justice that encompasses

all of the factual predicates for a

finding of perjury (false testimony,

materiality, and willful intent); it is

preferable, although not absolutely

required, for the court to address each

element of the alleged perjury in a

separate and clear finding. Id. at 95;

see also United States v. Webster, 125

F.3d 1024, 1037 (7th Cir. 1997).

 The district court’s findings at

Seward’s sentencing unfortunately fell

below the standards set out in Dunnigan.

Seward’s sentencing hearing took place in

two phases, separated by about three

weeks. At the first hearing, the district

court stated that Seward’s trial

testimony was "incredible" and "obviously

peppered with untruths," but ultimately

the court decided to "give [Seward] the

benefit of the doubt" and not to impose

an obstruction of justice enhancement.

The judge explained that even though

Seward’s testimony "sounded incredible to

the Court," she thought it possible that

Seward "thought he was telling the

truth," and that his testimony was

"simply contrary to the Government’s tes

timony." She therefore did not sentence

Seward at that time, choosing instead to

continue the hearing to give Seward a

chance to file a "Defendant’s Version"

explaining his view of the evidence. A

few weeks later, Seward filed his

Defendant’s Version, against the advice

of counsel. The document vehemently

reiterated Seward’s position that he and

O’Neal were business partners, that

everything he did was pursuant to

O’Neal’s wishes, and that none of the

documents he presented was forged. At the

second sentencing hearing, after reading

the Defendant’s Version, the district

court returned to the obstruction of
justice issue. This time, the court

reiterated its earlier position that it

"found much of what Mr. Seward testified

to at trial to be incredible" and that

Seward’s testimony "appeared to be

peppered with untruths." The court then

held that, although it did not make a

formal finding that Seward had lied at

the first hearing, the fact that Seward

continued to insist on his version of the

story in the Defendant’s Version

"solidifie[d]" the court’s belief that

Seward was being untruthful. Therefore,

the court stated that it was "now making

a finding of fact that [Seward] has, in

fact, and is, in fact, being untruthful."

The court based the obstruction

enhancement on this finding.

 The district court’s bare holding that

Seward was "being untruthful" falls short

of even a liberal application of

Dunnigan. Although the district court’s

ruling certainly indicates that the court

found one element of perjury, false

testimony, and read generously, could

also indicate a finding that Seward’s

false testimony was willful, the district

court gave no indication that it

considered the false testimony material

to any of the matters before the court.

Indeed, although the court found that

Seward’s testimony was "peppered with

untruths," it did not identify any

particular statements it believed were

false. This makes it nearly impossible

for us to assess whether the district

court’s errors were harmless in the end,

because we cannot assess the materiality

of any of the lies the court found Seward

was telling.

 This is not to say that Seward’s

sentence could not properly have been

enhanced for obstruction of justice. To

the contrary, the government presented

ample evidence of particular statements

that Seward made, both at trial and in

the Defendant’s Version, which the

government contends amount to perjury. On

remand, the district court should

consider the government’s contentions and

make the explicit findings required by

Dunnigan. If after making such findings,

the district court is convinced that an

obstruction enhancement is appropriate,

the court will of course be free to

include that enhancement in Seward’s new

sentence calculation.
B.

 Seward next challenges the district

court’s calculation of the actual and

intended loss that resulted from his

scheme. The Sentencing Guideline for

fraud crimes, U.S.S.G. sec. 2F1.1, keys a

defendant’s offense level, and hence his

sentence, to the amount of loss the

defendant’s scheme, if successful, would

have caused to his victims. See U.S.S.G.

sec. 2F1.1, Application Note 8. In

addition, 18 U.S.C. sec. 3663A instructs

the district court to assess restitution

based on the amount of actual loss caused

by the defendant’s offense. See United

States v. Brierton, 165 F.3d 1133, 1139

(7th Cir. 1999). Applying these

provisions, the district court calculated

the intended loss from Seward’s scheme at

$390,558.41, which included $79,050 in

actual losses from the fraudulent bank

transactions, $181,508.41 in intended

losses from the additional fraudulent

transactions that Taylor was able to

reverse, and $130,000 in attorneys’ and

executor’s fees that the probate court

assessed against Seward after it

determined that the 1989 will was

fraudulent. The court also assessed

$209,050 in restitution to compensate

O’Neal’s estate for the $79,050 in actual

losses from the fraudulent transactions

and for the $130,000 in attorneys’ and

executor’s fees. 

 Seward asserts that the district court

should not have included the attorneys’

and executor’s fees in the loss

calculations. Because, as he points out,

these are consequential or incidental

damages, we agree with him that they are

not properly included in the total. In

calculating both the intended loss amount

for the Sentencing Guidelines and the

actual loss amount for restitution, the

district court should include in the

calculation all direct damages, but not

include consequential or incidental

damages. See United States v. Green, 114

F.3d 613, 618 (7th Cir. 1997) (loss

calculation); United States v. Simmonds,

235 F.3d 826, 833 (3d Cir. 2000)

(restitution); United States v.

Mikolajczyk, 137 F.3d 237, 245 (5th Cir.

1998) (same); see also United States v.

Arvanitis, 902 F.2d 489, 497 (7th Cir.

1990) (considering restitution prior to

the enactment of 18 U.S.C. sec. 3663A).

Attorneys’ fees incurred in fighting a
fraudulent scheme are properly classified

as consequential, not direct, damages, as

we held in Arvanitis, 902 F.2d at 497.

For this reason, it was clear error for

the district court to include the

attorneys’ and executor’s fees in its

calculation of the intended loss and the

restitution amount. On remand, the court

should recalculate the intended loss and

restitution amounts without reference to

these fees. 

 Before leaving this subject, however, we

note that we are somewhat puzzled as to

why Seward raised this issue in his

appeal, because it appears that the

district court actually calculated the

intended loss from his scheme at an

amount lower than the loss that Seward’s

scheme, if successful, would have caused.

According to the government’s version of

this case, Seward’s scheme had two

distinct phases: the fraudulent bank

transfers and the attempt to force the

1989 will through probate. We have no

quarrel with the district court’s

calculation of the intended loss from the

first phase of the scheme. We do not

understand, however, why the second phase

did not place at risk the entire estate,

given that success would have left Seward

as the sole inheritor. On remand, the

government is free to argue that the

appropriate amount of intended loss from

that portion of the scheme was the full

value of the estate; Seward may respond,

if any response is possible. The record

does not reveal the full value of

O’Neal’s estate, and it is of course

possible that that amount will turn out

to be lower than the district court’s

initial calculation. The restitution

amount should be set at the $79,050 of

actual loss that Seward caused through

the fraudulent bank transactions.

C.

 Seward’s final argument is that the

district court erred in applying the

"vulnerable victim" enhancement found in

U.S.S.G. sec. 3A1.1(b) to his sentence.

Seward did not object to the vulnerable

victim enhancement at his sentencing

hearings, and the government argues that

we should therefore consider the argument

waived. The government is correct that in

some cases we have found that a defendant

who states at sentencing that he has no

objections to a presentence report has
waived any objections and cannot raise

them for the first time on appeal. See,

e.g., United States v. Staples, 202 F.3d

992, 995 (7th Cir. 2000). In other cases,

depending on the exact words used and the

circumstances, we have held that a

failure to object to a presentence report

results merely in a forfeiture of the

objections, and that we can review the

objections on appeal under a plain error

standard of review. See, e.g., United

States v. Perry, 223 F.3d 431, 433 (7th

Cir. 2000). The record here might look

more like the waiver cases than the

forfeiture cases, but as we are remanding

for full resentencing in any event and

this issue will arise again, we say a

word about it here.

 The "vulnerable victim" enhancement

provided by the Guidelines reflects the

fact that some potential crime victims

have a lower than average ability to

protect themselves from crime. Those who

prey on them incur reduced risks and

costs in committing their crimes, which

necessitates a higher than average

punishment to deter the criminal

behavior. See United States v. Grimes,

173 F.3d 634, 637 (7th Cir. 1999). In

this case, the presentence report

identified two categories of vulnerable

victims. First, the report found that

O’Neal himself was a victim of the fraud,

because Seward’s fraud interfered with

O’Neal’s wishes for the disposition of

his estate. Because O’Neal was dead at

the time of the fraud, he was obviously

unable to do anything to discover or

thwart the fraud. Second, the report

noted that O’Neal’s sisters, his heirs,

were vulnerable because of their advanced

ages, the long distance between their

residences and Seward’s arena of

operations, and because they were

initially unaware that O’Neal had left a

will naming them as his beneficiaries.

The district court accepted the

recommendation in the presentence report

and found that both O’Neal and the

sisters could be considered vulnerable

victims of Seward’s fraud.

 We cannot accept the idea that the

Guidelines go so far as to recognize the

deceased for purposes of the vulnerable

victim enhancement. It is the estate in

the first instance, and ultimately the

living heirs, whose interests took over

at the moment of O’Neal’s death. Although
the sisters did not have an immediate

interest in O’Neal’s assets until after

the probate court concluded its

proceedings and the assets were ready for

distribution, they were the ones who

would have been injured in the end if

Seward’s scheme had succeeded. In that

sense, we believe they can be considered

as victims of Seward’s fraud, even if the

estate was the technical victim during

probate. See United States v. McCall, 174

F.3d 47, 52 (2d Cir. 1998) (noting need

to evaluate particular characteristics of

estate to assess vulnerability).

 The difficult question here is whether

we ought to be looking at the sisters,

who we are satisfied were vulnerable, or

at Taylor, who appears to have been a

competent manager of the estate. If

Taylor’s role as executor had been secure

regardless of Seward’s machinations, then

we would be inclined to say that the

sisters were too far removed from

Seward’s actions to qualify as the

immediate victims. So, for example, if

the sisters had been shareholders of a

closely held corporation and Taylor its

manager, the sisters would not be the

victims of a person trying to defraud the

company. But two reasons here persuade us

that the sisters were indeed Seward’s

intended victims for this purpose. First,

Taylor was not even on the scene between

June 20 and June 28, the date when he

arrived in Chicago. Seward had been

moving quickly and effectively, and even

though Taylor was able to undo many of

his transfers, $79,050 of loss remained

from that period. Second, as we have

stressed in other contexts for this case,

Seward’s fraud included his effort to

throw out the 1983 will, and along with

it, Taylor’s appointment as executor of

the estate pursuant to that will. Had he

succeeded in that effort, there would

have been little thereafter that the

three sisters could have done to stop him

from looting the entire estate.

 For these reasons, we do not find any

clear error in the district court’s

decision that the sisters, elderly and

distant as they were, were particularly

unlikely to detect or thwart Seward’s

crime, and therefore vulnerable for

purposes of the enhancement. See United

States v. Gill, 99 F.3d 484, 486 (1st

Cir. 1996); United States v. Stewart, 33

F.3d 764, 771 (7th Cir. 1994) (elderly
may be vulnerable victims of fraud when

faced with issues of grief and

mortality). Thus, on remand, the district

court may apply the vulnerable victim

enhancement once again.

 For the foregoing reasons, we Affirm

Seward’s conviction, Vacate Seward’s

sentence, and Remand the case to the

district court for resentencing

consistent with this opinion.