Opinion ID: 195935
Heading Depth: 2
Heading Rank: 4

Heading: Sentencing Guidelines Errors

Text: 55 Newman argues that the district court wrongly applied the sentencing guidelines. Specifically, the district court allegedly erred: (1) in enhancing the sentence for abuse of a private trust; (2) in enhancing the sentence for violation of a consent order; and (3) in imposing restitution in the amount of $489,779.
56 Newman argues that the district court erred in enhancing his sentence under U.S.S.G. Sec. 3B1.3 for abuse of a position of private trust. 9 The district court found that the insurance industry is heavily regulated and that persons in control of insurance companies occupy a position of trust which obligates them to act in the interests of their policyholders and employees. The district court found that, by diverting RPLIC's funds for his own use, Newman abused this position of trust. Newman argues, however, that the enhancement does not apply since he never legally occupied a position of trust. Newman argues that he technically never obtained legal control of RPLIC, having failed to obtain approval of the purchase from the DBR as required under Rhode Island law. At most, Newman argues, the evidence suggests that he committed an ordinary fraud. Never having occupied the position legally, Newman argues, he cannot be subject to the enhancement. 10 57 While Newman may never have legally occupied the position, he indisputably had de facto control over the company and thus in fact occupied a position of trust. The application note to the sentencing guidelines in effect at the time of sentencing provides that: [t]he position of trust must have contributed in some substantial way to facilitating the crime and not merely have provided an opportunity that could as easily have been afforded to other persons. U.S.S.G. Sec. 3B1.3 comment. (n. 1) (1991). Newman's position and his effective discretionary control over the company enabled him to transfer the funds for his own use. This is exactly the type of behavior that the enhancement was aimed at. It would be perverse to allow the lack of formal, legal control, for which Newman was responsible by failing to file the appropriate forms, to insulate him from the consequences of his breach of trust. Cf. United States v. Innamorati, 996 F.2d 456, 489-90 (1st Cir.), (former state registry police officer subject to enhancement where prior position of trust facilitated his crime), cert. denied, --- U.S. ----, 114 S.Ct. 409, 126 L.Ed.2d 356 (1993). 58 Newman also argues that the enhancement cannot apply to him since his acquisition of the position of trust was itself a part of the crime. Drawing an analogy to cases dealing with enhancements under Sec. 3B1.3 for abuse of special skills, see United States v. Young, 932 F.2d 1510, 1513-14 (D.C.Cir.1991), he argues that the enhancement applies only to the abuse of a preexisting position of trust, and therefore cannot apply to him. However, even assuming arguendo that this theory has validity, Newman misconstrues the crimes of which he was convicted. He was not convicted of the fraudulent acquisition of an insurance company. Rather, he was convicted of wire fraud and interstate transport of stolen property, crimes which were substantially facilitated by his prior acquisition of control over the insurance company. His abuse of the position was precisely the behavior targeted by the enhancement. We find no error in the application of this sentence enhancement.
59 Newman further argues that the district court erred in imposing a two-level increase under U.S.S.G. Sec. 2F1.1(b)(3)(B) for a knowing violation of the consent order. 11 Newman argues that the enhancement applies only when a defendant violates an order directed at the defendant personally or at an entity that is controlled by the defendant. Newman argues that the order was not directed at him personally nor was he a party to the order, as it was entered into prior to his purchase of the company. Newman further argues, as above, that he never legally controlled RPLIC, since the DBR never approved the sale. Accordingly, Newman argues, the enhancement could not apply to him. 60 We find no error in the district court's application of this enhancement. The commentary to the guidelines provides: If it is established that an entity the defendant controlled was a party to the prior proceeding, and the defendant had knowledge of the prior decree or order, this provision applies even if the defendant was not a specifically-named party in that prior case. U.S.S.G. Sec. 2F1.1, comment. (n. 5) (1991). Even though not a party to the order, Newman was subject to the enhancement if he controlled the company and knew of the prior order. As already said, Newman had de facto control of the company. Moreover, he was aware of the consent order and could be found to have acted in deliberate contravention of it. Newman's violation of the order was thus subject to enhancement under Sec. 2F1.1. (b)(3)(B). 12
61 Newman argues that the district court erred in ordering, as a condition of his supervised release, restitution in the amount of $489,179 under the Victim and Witness Protection Act, 18 U.S.C. Sec. 3663-3664 (1988). Newman first argues that the court erred when it failed to consider Newman's inability to pay restitution. In fashioning a restitution order, a court must consider the amount of the loss sustained by any victim as a result of the offense, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant's dependents, and such other factors as the court deems appropriate. 18 U.S.C. Sec. 3664(a) (1988). Newman argues that nothing in the district court opinion indicates that the court considered Newman's financial resources. Newman points to his presentence report which indicates that he is currently indigent, has a negative net worth, and has little current ability to pay a fine. 13 Newman further argues that he has no reasonable prospect of paying the restitution in the future. Accordingly, he argues, the district court's imposition of restitution despite evidence of his inability to pay evinced a lack of adequate consideration of the statutory factors and constituted abuse of discretion. See United States v. McIlvain, 967 F.2d 1479, 1481 (10th Cir.1992); United States v. Ramilo, 986 F.2d 333, 336 (9th Cir.1993). 62 Although the district court did not explicitly consider Newman's ability to pay the restitution, the court was not required to make specific findings of fact. See United States v. Savoie, 985 F.2d 612, 618 (1st Cir.1992). Rather, it is sufficient if the record on appeal reveals that the judge made implicit findings or otherwise adequately evinced his consideration of those factors. Id. Here, the record is sufficient to indicate that the district court considered the requisite factors in arriving at the restitution amount. The district court considered and explicitly adopted the findings in the presentence report, which included information about Newman's financial condition, earning ability, and ability to pay. Although we agree that the evidence in the presentence report may not be able to support a finding that Newman has the ability to pay restitution in that amount, the statute does not require such a finding; it requires only that the district court consider the defendant's financial resource as a factor in arriving at the figure. See United States v. Lombardi, 5 F.3d 568, 573 (1st Cir.1993). Newman's possible future ability to pay may also be sufficient to support a restitution order. See United States v. Brandon, 17 F.3d 409, 461 (1st Cir.) (imposing $500,000 restitution order, even though defendant had no current ability to pay, based on defendant's future prospects of employment), cert. denied, --- U.S. ----, 115 S.Ct. 80, 130 L.Ed.2d 34 (1994); Lombardi, 5 F.3d at 573. Here, the presentence report stated that once [Newman's] legal matters are resolved, he would be in a position to secure gainful employment. Thus, we cannot say that it was an abuse of discretion for the district court to impose restitution. See Lombardi, 5 F.3d at 573 (While the judgment requiring restitution may be fruitless, it may also be of some use if [the defendant] ever secures new assets....  In all events, the statute merely requires the court to 'consider' financial condition, among other factors; there is no requirement that the defendant be found able to pay now.) (citations omitted). 63 Newman further argues that, even if the district court adequately considered his ability to pay, the court erred in fixing the amount of restitution at $489,179, as that amount far exceeds the unlawful transfers for which he was convicted. Newman notes that, in this circuit, restitution under the pre-November 1990 version of Sec. 3663(a) is limited only to loss caused by the conduct for which the defendant has been convicted. United States v. Cronin, 990 F.2d 663, 666 (1st Cir.1993). 14 The $489,179 represents all of the sums paid out by RPLIC as a result of Newman's fraudulent scheme. However, the indictment charges Newman only with the diversion of $184,300. Thus, Newman argues, the court erred in charging Newman with the entire sum. 64 We agree. Under the law in this circuit, the district court should have fixed the amount of restitution at $184,300, the amount that Newman was convicted of diverting. See Cronin, 990 F.2d at 666. The government concedes that under Cronin restitution is limited to that lesser sum, but urges nonetheless that we adopt the alternative position, taken by a minority of circuits, under which a court may award restitution for all of the harm caused by the scheme to defraud, not simply the specific harm for which the defendant was convicted. See, e.g., United States v. Stouffer, 986 F.2d 916, 929 (5th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 115, 126 L.Ed.2d 80 (1993). In most circumstances, a panel in this circuit is bound to adhere to precedent established by a prior panel unless departure is mandated legislatively or by the Supreme Court. The en banc court alone can reconsider circuit precedent. We follow our precedent in Cronin.