Court Opinion

ID: 197191
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:24:16+00
Date Added: 2024-06-11T13:09:23.667153
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UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT
                                         

No. 96-1132

                  UNITED STATES OF AMERICA,

                          Appellee,

                              v.

                      RICHARD GOLDBERG,

                    Defendant, Appellant.

                                         

                         ERRATA SHEET

At page 16, line 15, delete ", Michael  Kendall," and at page  17,

line 2, substitute "the prosecutor in question" for "Kendall".

                UNITED STATES COURT OF APPEALS

                    FOR THE FIRST CIRCUIT

                                         

No. 96-1132

                  UNITED STATES OF AMERICA,

                          Appellee,

                              v.

                      RICHARD GOLDBERG,

                    Defendant, Appellant.

                                         

         APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. Douglas P. Woodlock, U.S. District Judge]
                                                                 

                                         

                            Before

                    Boudin, Circuit Judge,
                                                     

                Bownes, Senior Circuit Judge,
                                                        

                  and Lynch, Circuit Judge.
                                                      

                                         

Morris  M. Goldings  with  whom  David  R. Kerrigan  and  Mahoney,
                                                                              

Hawkes & Goldings were on brief for appellant.
                         

Michael  Kendall,  Assistant  United  States Attorney,  with  whom
                            

Donald K.  Stern,  United  States  Attorney, and  Kevin  J.  Cloherty,
                                                                             

Assistant United States Attorney, was on brief for the United States. 

                                         

                       February 3, 1997

                                         

     BOUDIN, Circuit Judge.   Richard Goldberg was  convicted
                                      

of two counts  of conspiracy to defraud the  Internal Revenue

Service,  18 U.S.C.    371,  and eight  counts of  aiding and

assisting the filing of false income tax returns, 26 U.S.C.  

7206(2).  Goldberg's  appeal is now before  us.  We  begin by

describing  the factual  background  and  proceedings in  the

district court.

     In the years prior to  his indictment in 1995,  Goldberg

was involved in several businesses in and around Boston.  His

ventures  included a billboard company, Logan Communications,

and a partial interest in a "Park 'N Fly" lot located in East

Boston near Logan Airport.   Goldberg also owned and operated

Liverpool Lumber,  Inc., which Goldberg used  as a management

company for various of his other enterprises.

     In  or  around  1988,  Goldberg became  aware  that  the

Commonwealth of Massachusetts  planned to take all or part of

the East  Boston Park 'N Fly lot by eminent domain as part of

its Third Harbor Tunnel project.  The planned taking not only

threatened Goldberg's profitable  parking business, but  also

his billboard company,  since many of its signs  were located

on  the  parking  lot's  land.   Goldberg  began  an  intense

lobbying  effort  against the  proposal  in  1988, eventually

spending  over $1 million of  his and his  partners' money to

oppose the tunnel plans.

                             -2-
                                         -2-

     Two  of  those hired  to  oppose  the project--community

activist  Robert A. Scopa  and consultant  Vernon Clark--were

named as co-conspirators in the two separate conspiracies for

which Goldberg was ultimately convicted.  Taking the evidence

most favorable  to the verdict,  the facts pertaining  to the

two different conspiracies were as follows.

     Scopa Conspiracy.  From  1990 to 1995, Goldberg employed
                                 

Scopa to help organize the East Boston  community against the

tunnel project and to  perform other services.  But  Goldberg

never  paid Scopa in Scopa's own name.  Instead, Goldberg had

his   Liverpool  Lumber  company  issue  paychecks  to  three

successive  "straw"   employees,  none  of  whom  worked  for

Goldberg  and all  of whom agreed  to hand the  money over to

Scopa.  

     To reflect the "wages"  of the straw employees, Goldberg

directed  his  bookkeeper  at  Liverpool  Lumber  to  prepare

various W-2,  W-3, and  W-4 reporting statements,  which were

then filed with the  IRS.  These documents falsely  described

wage  payments  to  straws  who  had performed  no  work  for

Liverpool  Lumber.  The straws, in turn, falsely included the

phantom wages from Liverpool on their own individual returns.

Reporting the money on the straws' returns instead of Scopa's

resulted  in a  loss of  about $150  to the  Internal Revenue

Service.

                             -3-
                                         -3-

     The  government claimed  at  trial that  the scheme  was

devised  so that Scopa would  seem to be  unemployed and thus

could continue to collect monthly benefits under a disability

insurance policy.  Evidence  also indicated that Scopa sought

to hide the  payments in order to  preserve his status  as an

"independent" activist  in the  East Boston community  and to

prevent an  extramarital affair from being  discovered by his

wife.  The  district court  later found that  Scopa, but  not

Goldberg, was motivated by all of these objectives.  

     Clark Conspiracy.  In  the course of opposing  the Third
                                 

Harbor Tunnel project, Goldberg also retained Vernon Clark, a

lobbyist in  Washington, D.C., who performed various services

to this  end.  Goldberg's companies owed  Clark a substantial

sum of money in 1991 for  work performed in opposition to the

tunnel project.  Rather  than pay the bill directly,  the two

men  agreed  with others  to  a more  complicated  method for

Goldberg to discharge his debt to Clark.

     At the time,  Clark was  having a secret  affair with  a

woman named  Patricia McNally.   The pair  occasionally spent

time in a Maine beach house of which  McNally was part owner.

Clark  sought to fund an expansion of the beach house without

his  wife's knowledge.  Goldberg  agreed to pay  the money he

owed to Clark to  a landscaping company owned by  John Lango,

McNally's  brother-in-law, who  would  in turn  construct the

beach house expansion.

                             -4-
                                         -4-

     Goldberg arranged for  the preparation  of two  separate

$10,000 invoices to Park 'N Fly from Lango, dated October 15,

1991 and  January 1, 1992,  respectively.  The  invoices were

ostensibly for landscaping services, although Lango performed

no work for any  of Goldberg's companies.  The  invoices were

paid  by  Park 'N  Fly.   Lango testified  at trial  that the

payments were structured  in two installments so as to reduce

his taxes on the transaction.

     The triangular  flow of money and  services involved the

preparation and filing  of several false  tax documents.   At

Goldberg's direction,  Park 'N Fly sent  forms 1099-MISC, one

for each $10,000 payment, to the IRS and to Lango.  The forms

falsely listed  the payments as non-employee  compensation to

Lango.  Lango in turn reported  the payments as income on his

own income  tax returns  in  1991 and  1992.   Clark did  not

report the money.   The foreseeable tax loss to the IRS based

on this scheme was about $3,000.

     A federal  grand jury indicted Goldberg on April 6, 1995

for  offenses   relating  to  the  above   activities.    The

indictment charged Goldberg with  two counts of conspiring to

defraud  the  United  States  government, 18  U.S.C.     371,

several counts of  aiding and assisting  the filing of  false

income tax returns,  26 U.S.C.   7206(2),  and several counts

of mail fraud  based on  his alleged efforts  to conceal  his

                             -5-
                                         -5-

employment of Scopa from the latter's disability insurer.  18

U.S.C.   1341.

     After moving  unsuccessfully to dismiss  the indictment,

Goldberg waived his  right to  a trial by  jury.   Goldberg's

trial  before the  district  judge took  eight  days, and  on

September 6,  1995, the court  announced its  findings.   The

court  found Goldberg  guilty  of conspiring  to defraud  the

government and of aiding and assisting in  the preparation of

false  tax  returns,  but acquitted  him  on  the  mail fraud

charges on the  ground that  his motive to  help defraud  the

insurer had not been proved beyond a reasonable doubt.

     At Goldberg's  sentencing in December 1995, the district

court made guideline calculations  (described below) but then

departed downward  two levels  and sentenced Goldberg  at the

bottom of the range.   The result was a  ten-month sentence--

five  months to  be served  in prison  and five  in community

confinement--as well as three years of supervised release and

a  $20,000  fine.    Goldberg now  appeals,  challenging  his

convictions and sentence.

     The most important and difficult issues on appeal relate

to Goldberg's conviction for conspiracy under 18 U.S.C.   371

to defraud  the IRS.  This  type of conspiracy is  known as a

Klein  conspiracy,  taking  its  name from  an  earlier  case
                 

involving a complex scheme designed to escape taxes.   United
                                                                         

States  v.  Klein, 247  F.2d 908  (2d  Cir. 1957).   Goldberg
                             

                             -6-
                                         -6-

argues  that  the district  court  misunderstood  the crime's

"purpose" element  and that  the evidence did  not support  a

conviction.

     The defraud  clause  of  Section  371  criminalizes  any

conspiracy  "to  defraud the  United  States,  or any  agency

thereof in any manner or for  any purpose."  18 U.S.C.   371.

Such conspiracies to  defraud are not limited to those aiming

to deprive the government of  money or property, but  include

conspiracy to  interfere  with government  functions.    See,
                                                                         

e.g., United States v. Tarvers, 833 F.2d 1068, 1075 (1st Cir.
                                          

1987).  The crime with which Goldberg was charged, therefore,

was  that   he  conspired   to  interfere  with   the  proper

functioning  of  the IRS,  through  the filing  of  false tax

documents.

     It  is commonly said that in such a conspiracy the fraud

has  to be  a purpose  or object  of the conspiracy,  and not
                                            

merely  a  foreseeable  consequence  of   the  conspiratorial

scheme.  Dennis v. United States, 384 U.S. 855, 861 (1966); 1
                                            

Sand et al., Modern Federal Jury Instructions   19.02 (1990).
                                                         

Consider,  for example, the case  of a band  of bank robbers.

All know that the  agreed-upon robbery will generate "income"

that  none of  the  robbers will  report.   Yet  it would  be

straining to describe interference with  the IRS as a purpose

or  object of the conspiracy.   E.g., United  States v. Vogt,
                                                                        

910 F.2d 1184, 1202 (4th Cir. 1990).

                             -7-
                                         -7-

     This  requirement  of  purpose  accords  generally  with

conspiracy doctrine, United States v. Alvarez, 610 F.2d 1250,
                                                         

1256 (5th  Cir. 1980), but  it is especially  important under

the  defraud clause  of  section 371.    There are  not  many

financial   crimes  without   some  implications   for  false

reporting in someone's tax filings, if not for  tax liability

itself.     If   section  371   embraced  every   foreseeable

consequence  of  a conspiracy,  many  joint  financial crimes

having no other federal nexus--and perhaps  many non-criminal

acts as well--would automatically become federal conspiracies

to defraud the IRS.

     The "purpose" requirement, however,  is easier to  state

than  to apply.  The  laundering of drug  money, for example,

normally involves  the deliberate concealment of  the money's

origin.   The  primary  purpose  is almost  always  to  avoid

detection of the underlying  crime; but can a jury  also find

an  implied secondary  objective to  conceal income  from the

IRS?  We have held, on specific facts, that a jury could draw

such an inference and  also find a violation of  section 371.

E.g., United States v.  Cambara, 902 F.2d 144, 147  (1st Cir.
                                           

1990); Tarvers, 833 F.2d at 1075-76.
                          

     Such cases  are the source of  Goldberg's first argument

on this issue.  He argues, inventively, that the conspirators

either  must  have  as  their  primary  purpose  the  aim  of

frustrating  the IRS  or must  be agreeing  to  undertake the

                             -8-
                                         -8-

conduct  in question to conceal some other crime.  An example

of the  first alternative  (primary purpose) is  Klein itself
                                                                  

where a web of shell companies and deceptive arrangements was

devised to evade  taxes; the second  alternative (concealment

of crime) captures the money laundering precedents.

     This view of section 371 might explain a number of cases

and  create a  barrier against  overreaching by  prosecutors.

But  it  makes no  doctrinal sense.    A conspiracy  can have

multiple objects, Ingram v. United States, 360 U.S. 672, 679-
                                                     

80 (1959), and any agreed-upon object can be a purpose of the

conspiracy and  used to  define its character.   The  central

problem,  which  ought  not  be shirked,  is  to  distinguish

rationally  between cases  where interfering  with government

functions  is  a  purpose and  those  where  it  is merely  a
                         

foreseeable effect of joint action taken for other reasons.

     This  effort poses  subtle  problems  in  discriminating

"purpose" from "knowledge" and in separating the objects of a

conspiracy from its more  remote consequences.  Volumes could

be written on these subjects but--for cases like ours--a more

compact  solution is  at  hand: where  the conspirators  have

effectively agreed  to falsify  IRS documents to  misstate or

misattribute  income,  we  think  that  (depending  upon  the

circumstances) the factfinder may  infer a purpose to defraud

the government by interfering with IRS functions in the sense

endorsed by the Supreme Court in Dennis.    
                                                   

                             -9-
                                         -9-

     It may well be that the conspirators in this case had no

subjective desire--primary or secondary--to throw sand in the
                                         

wheels of the  IRS, let alone a subjective aim  to reduce tax

liability.    Goldberg's argument  on  this  point, with  one

qualification as  to the Clark conspiracy,  may be plausible.

But  filing a  number of  false tax  documents misattributing

income  can interfere  so  clearly and  proximately with  IRS

functions--or at least a factfinder  could (but need not)  so

find--that  we see  no  sharp distinction  under section  371

between a purpose  to file  such documents and  a purpose  to

interfere.

     In permitting  a factfinder to equate  the two purposes,

we  leave untouched  the general  precept, namely,  that mere

collateral  effects of  jointly agreed-to  activity, even  if

generally foreseeable, are not  mechanically to be treated as

an object of  the conspiracy.  This would be a different case

if, without  filing false tax documents,  Goldberg had agreed

with  his partners to pay Jones under the table, knowing that

Jones had no intention of reporting the money to the IRS.  If

the difference is in degree, then here the degree matters.

     This  brings us  to the  evidentiary question  raised by

Goldberg  which we  rephrase to  accord with  our just-stated

view of  the law:  does  the evidence in this  case show that

Goldberg and at least one other conspirator shared  a purpose

to interfere with IRS functions by the filing of false income

                             -10-
                                         -10-

reports  with the  IRS?   This  question  must be  asked  and

answered separately  as to  each conspiracy, as  Goldberg was

convicted of two separate  conspiracies under section 371 and

each conviction involves a separate assessment.

     In each conspiracy, the  illicit purpose that gives rise

to  section 371  violation  must be  shared  by two  or  more

conspirators.   Although the government's brief  stresses the

evidence pertaining  to Goldberg's own role  and knowledge, a

conspiracy to  defraud requires at  least two who  share that

aim. Innocent third parties  may be the unwitting instruments

of a conspiracy.   But  when it comes  to characterizing  the

purposes or objects of  the conspiracy, it is those  that are

shared  by  at least  two  co-conspirators that  make  up the

illegal agreement between them.   United States v. Krasovich,
                                                                        

819 F.2d 253, 255 (9th Cir. 1987).

     Here, the  district court  found that  a purpose of  the

conspirators, in  each conspiracy, was to  interfere with the

IRS.   As  we have  said,  such a  purpose  can be  inferred,

depending  upon the facts, where  the very acts  agreed to by

the conspirators included the  filing of false income-related

tax  documents.    This  purpose can  fairly  be  imputed  to

Goldberg  who arranged  for the creation  of several  or more

false  tax  documents  in  each scheme.    The  duration  and

complexity of the schemes, and Goldberg's own sophistication,

add to the inference.

                             -11-
                                         -11-

     There is no evidence  that Goldberg discussed the filing

of false tax documents with other conspirators.  Yet we think

that such  conduct was an  integral and self-evident  part of

each  conspiracy,  permitting the  inference  that other  co-

conspirators  shared in  that purpose.   In  the case  of the

Scopa conspiracy,  false W-2s were  given to the  straws, who

were  participants in  the scheme,  over an  extended period.

Scopa himself signed a  tax return with his wife, who was one

of the straws, that incorporated a false W-2.  

     As  to the  Clark conspiracy,  Lango received  the false

form 1099s, and he in turn  reported the false figures to the

IRS.  Indeed, Lango asked that the amount be  divided so that

it could be reported in two different years, testifying later

that Clark had  made the  suggestion.  This  indicates a  tax

motive  but, in addition, shows  that both men  knew that the

filing of false  tax documents  was an integral  part of  the

scheme,  and both shared in  this purpose with  Goldberg.  In

sum, the  evidence supports the  trial court's findings  of a

common purpose to interfere with IRS functions.

     In  addition to "the danger [of injustice] inherent in a

criminal  conspiracy charge,"  Dennis, 384  U.S. at  860, the
                                                 

defraud clause  of section  371  has a  special capacity  for

abuse because of the vagueness  of the concept of interfering

with  a proper government function.  For that reason, we have

examined with special  care both the concept and the evidence

                             -12-
                                         -12-

in  this case.    But having  done so,  we conclude  that the

conduct and purpose of the defendants, although markedly less

sinister  than in  Klein,  could properly  be  found to  fall
                                    

within the outer bounds of section 371.

     Goldberg next  challenges the admission at  trial of two

out-of-court conversations between Lango  and Clark, in which

they  discussed  the  false   landscaping  invoices  and  the

solicitation  of  Goldberg's  participation  in  the  scheme.

These statements were admitted, over Goldberg's  objection at

trial, pursuant to Fed. R. Evid. 801(d)(2)(E), which provides

that "a statement by  a co-conspirator of a party  during the

course  and   in  furtherance  of  the   conspiracy"  is  not

considered hearsay.  

     Goldberg does not dispute that  Lango and Clark made the

challenged  statements  during  and  in  furtherance  of  the

conspiracy,  but  he  argues  that the  statements  were  not

admissible  against  him because  they  were  made before  he

joined.  He relies heavily on our opinion in United States v.
                                                                      

Petrozziello, 548 F.2d 20 (1st Cir. 1977), where we said that
                        

"if  it is more  likely than not  that the  declarant and the

defendant  were  members of  a  conspiracy  when the  hearsay

statement was made, and that the statement was in furtherance

of the conspiracy, the hearsay is admissible."  Id. at 23.
                                                              

     Although this language has been cited with approval in a

few later cases, e.g.,   United States v. McCarthy,  961 F.2d
                                                              

                             -13-
                                         -13-

972, 976-77 (1st Cir. 1992), it  conflicts with United States
                                                                         

v. Baines, 812 F.2d 41 (1st Cir. 1987).  Baines expressed the
                                                           

traditional notion  that--insofar as hearsay  is concerned--a

late-joining conspirator takes the conspiracy as he finds it:

"a  conspiracy  is like  a train,"  and  "when a  party steps

aboard, he  is part of  the crew,  and assumes  conspirator's

responsibility for the existing freight . . . ."   Id. at 42;
                                                                  

accord United States v. Saccoccia, 58 F.3d 754, 778 (1st Cir.
                                             

1995).

     Frankly,  the underlying co-conspirator exception to the

hearsay rule  makes  little sense  as  a matter  of  evidence

policy.   No  special guarantee  of reliability  attends such

statements,   save  to   the   extent   that  they   resemble

declarations against  interest.   The exception  derives from

agency  law, an analogy that  is useful in  some contexts but

(as  the Advisory  Committee noted)  is "at  best  a fiction"

here.  The most  that can be said is that  the co-conspirator

exception  to  hearsay  is  of  long  standing  and  makes  a

difficult-to-detect crime easier to  prove.  United States v.
                                                                      

Gil, 604 F.2d 546, 549 (7th Cir. 1979).
               

     If  starting afresh,  one  might argue  that the  narrow

Petrozziello version of the exception should be preferred, if
                        

only  because  it  accords  better with  the  companion  rule

imposing  substantive liability  for  other crimes  committed

during the  conspiracy; a  co-conspirator is held  liable for

                             -14-
                                         -14-

foreseeable  acts  of  others  done  in  furtherance  of  the

conspiracy  but  only  if  committed  during the  defendant's

period of  membership.   United States  v. O'Campo,  973 F.2d
                                                              

1015, 1021 (1st Cir. 1992).  Symmetry is at least convenient.

     But we are not starting afresh.  The broader Baines test
                                                                    

describes the  traditional approach, United States  v. United
                                                                         

States Gypsum  Co., 333  U.S. 364, 393  (1948), presumptively
                              

adopted by the Federal  Rules of Evidence.  It is followed in

most circuits.   See 2  Saltzburg, et al.,  Federal Rules  of
                                                                         

Evidence  Manual 219-22  (5th  ed. 1990)  (collecting cases).
                            

Most important,  it is  the test  in most  of our  own recent

cases,  including  Saccoccia,  decided only  19  months ago.1
                                        

This panel  is arguably  not free,  but is in  any event  not

inclined, to depart from Saccoccia.
                                              

     Goldberg's  next claim on appeal is  based on his motion

filed prior to trial asking the district court to dismiss the

indictment  on  the ground  of  selective  prosecution.   The

district  court  denied the  motion  without  holding a  full

evidentiary hearing.   Goldberg claims that  he alleged facts

sufficient  to require a hearing on his complaint, and he now

                    
                                

     1See  Saccoccia, 58  F.3d at 778;  O'Campo, 973  F.2d at
                                                           
1023 n.5; United  States v.  Fields, 871 F.2d  188, 194  (1st
                                               
Cir. 1989); United States v. Murphy,  852 F.2d 1, 8 (1st Cir.
                                               
1988);  United States v. Anguilo, 847 F.2d 956, 969 (1st Cir.
                                            
1988); United  States v. Reynolds,  828 F.2d  46, 47-48  (1st
                                             
Cir.  1987); United States v. Cintolo, 818 F.2d 980, 997 (1st
                                                 
Cir. 1987). 

                             -15-
                                         -15-

asks this court to remand the case so that he may have such a

hearing.   

     The government is allowed "broad discretion" in deciding

whom  to prosecute, Wayte v. United States, 470 U.S. 598, 607
                                                      

(1985), but there  are some limitations.  It is said that the

government  may not  base  its decision  to  prosecute on  an

"unjustifiable standard," including the  defendant's exercise

of protected statutory and constitutional rights.  Wayte, 470
                                                                    

U.S. at  608.  Goldberg bases his selective prosecution claim

on  the  theory that  he was  targeted  by the  government in

response  to  his vigorous--and  constitutionally protected--

lobbying activities in opposition  to the Third Harbor Tunnel

project.

     In seeking an evidentiary hearing, a defendant need only

allege  "some  facts (a)  tending to  show  that he  has been

selectively prosecuted  and  (b) raising  a reasonable  doubt

about the  propriety of  the prosecution's purpose."   United
                                                                         

States v. Saade, 652  F.2d 1126, 1135  (1st Cir. 1981).   But
                           

the court may  refuse to  grant a hearing  if the  government

puts forward adequate "countervailing  reasons" to refute the

charge, id., and if  the court is persuaded that  the hearing
                       

will  not be  fruitful.   Review on  appeal is  for abuse  of

discretion.  United  States v.  Gary, 74 F.3d  304, 313  (1st
                                                

Cir. 1996).

                             -16-
                                         -16-

     Here, Goldberg  alleged that  one of the  prosecutors on

the  case  made a  comment  to  Goldberg's  counsel during  a

preindictment meeting to the effect that Goldberg "should not

have won" his  fight with Frederick  Salvucci, Massachusetts'

secretary of transportation during the tunnel planning stage.

Goldberg  also   claimed  that  the  initials   "D.D."  on  a

prosecution file reflect the  complicity in the investigation

of David Davis, executive director of MassPort.   Finally, he

pointed to  the fact that  several of his  co-conspirators in

the  two  schemes,  including  Clark and  Lango,  were  never

indicted.  

     The  government filed  several affidavits  to  rebut the

claim.   It denied that  the prosecutor in  question made the

alleged statement to Goldberg's  attorney.  It explained that

the  initials  "D.D."  on  the file  that  raised  Goldberg's

suspicion in fact referred  not to David Davis but  to Denise

Doherty,  an  FBI agent  assigned to  the  case.   In another

district court paper, the government described the origins of

its  investigation  into   Goldberg's  activities  and   gave

examples  of other  recent  prosecutions for  mail fraud  and

Klein conspiracies.
                 

     The district court  ultimately denied a hearing,  saying

that Goldberg's claims  were "close to conclusory."   We have

reviewed the complete filings of both sides and  the district

court's  explanation.  What is  involved is a judgment call--

                             -17-
                                         -17-

tempered on appeal by  the deferential standard of review--as

to the force and specificity of the allegations, the strength

of the response, and  the likelihood that a hearing  would be

helpful.   United States v.  Lopez, 71 F.3d  954, 963-64 (1st
                                              

Cir.  1995).   Here,  the district  court  did not  abuse its

discretion.

     The claim of selectivity  was quite weak; the government

largely explained  its choice  mainly to pursue  Goldberg and

Scopa.   And  the rather  modest evidence of  wrongful motive

also melted away, leaving only a single dispute.  As to this,

four prosecutors  denied under  oath that the  alleged remark

had been made.   But it is  in any event too  thin a reed  to

require an evidentiary hearing, given the lack of surrounding

evidence to support a selective prosecution claim.

     Even less need be said about Goldberg's later  new trial

motion,  whose summary  denial is  also cited  as error.   In

substance  Goldberg complained  that  the government  did not

follow its  own internal rules for tax prosecutions or reveal

to  him information  about this  decision.   The government's

procedures do not create substantive rights, United States v.
                                                                      

Michaud, 860 F.2d 495,  499 (1st Cir. 1988), and  there is no
                   

substantial basis for believing that  the government withheld

Brady material,  Brady v. Maryland,  373 U.S. 83  (1963), let
                                              

alone that its actions were prejudicial.

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                                         -18-

     Goldberg's last claim of error  concerns his sentencing.

In   fixing  the  sentence,   the  district   court  enhanced

Goldberg's  base offense  level  of 10,  by four  levels--two

levels  for his role in the offense, U.S.S.G.   3B1.1(c), and

two more levels  for obstruction of justice,  id.   3C1.1--to
                                                             

arrive  at an adjusted offense  level of 14.   (All citations

are  to  the  November   1995  edition  of  the  guidelines).

However, the court departed downward two levels to 12 because

it thought  Goldberg's  conduct was  outside the  "heartland"

contemplated  by the  Klein conspiracy  sentencing guideline.
                                       

Id.   2T1.9.
               

     The  district  judge  stated  that  although  Goldberg's

conduct "as  a matter of law constitutes  a Klein conspiracy,
                                                             

as a matter of  sentencing law, it seems to  me inappropriate

to  apply the  Klein  conspiracy guidelines."    He chose  to
                                

depart downward  two levels because he  thought the guideline

section for aiding and  assisting tax fraud,   2T1.4,  with a

base  offense level  of 8  (when  the tax  loss is  $3,001 to

$5,000), was  more reflective of Goldberg's  conduct than the

Klein conspiracy guideline,   2T1.9, which has a base offense
                 

level of 10.2

                    
                                

     2The ten-month  sentence--five  months to  be served  in
prison and five in community confinement--was the minimum end
of  the resulting guideline range of 12.  U.S.S.G. ch. 5, pt.
A (10-16 months at offense level 12).

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                                         -19-

     The government, sensibly in our view,  has chosen not to

pursue  an appeal from the downward departure.  But Goldberg,

as is his right, challenges  the district court's decision to

impose  a  two-level   enhancement  for  his   managerial  or

supervisory role  in the Scopa  and Clark conspiracies.   The

applicable guideline calls for  an increase if "the defendant

was  an  organizer, leader,  manager,  or  supervisor in  any

criminal activity."  U.S.S.G.    3B1.1(c).  In such a case, a

two-level  increase applies to  joint criminal  activity that

involved fewer  than five participants and  was not otherwise

extensive.  Id.
                           

     Goldberg  says  that  the  only  person  he  managed  or

supervised  was his  bookkeeper, Arlene  Meucci.   Meucci, he

argues, does  not count under  the guideline because  she was

not  a culpable participant.  See United States v. Morillo, 8
                                                                      

F.3d  864,  872 &  n.13 (1st  Cir.  1993); U.S.S.G.    3B1.1,

comment  n.1.    However,  at  the  sentencing  hearing,  the

district court found that Goldberg "had a management role" in

connection with  false payroll and tax documentation directed

to the straw employees in the Scopa conspiracy.  

     We review  a district court's factfinding  at sentencing

under  a  clearly  erroneous  standard.    United  States  v.
                                                                     

Thompson, 32 F.3d 1, 4 (1st Cir. 1994).  On the record before
                    

us,  ample evidence  shows  that Goldberg  superintended  the

straws'  receipt of false tax  documents.  Goldberg says that

                             -20-
                                         -20-

Scopa  and  Clark   were  the   true  leaders   of  the   two

conspiracies.   But a defendant need  not be at the  top of a

criminal scheme to be a manager or supervisor.  United States
                                                                         

v.  Savoie, 985  F.2d  612,  616  (1st  Cir.  1993).    Here,
                      

Goldberg's role was sufficient for the enhancement even if we

assume that  Scopa conceived of  the payroll  scheme and  may

have exercised primary supervision over the straws.

     Affirmed.
                         

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