Court Opinion

ID: 72494
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:32:36+00
Date Added: 2024-06-11T11:50:32.695013
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[PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT

                      ________________________

                             No. 96-5013
                      ________________________

                 D.C. Docket No. 95-6067 CR-NCR

UNITED STATES OF AMERICA,

                                                  Plaintiff-Appellee,

                               versus

RUSSELL G. BARAKAT,

                                                 Defendant-Appellant.

                      ________________________

          Appeal from the United States District Court
              for the Southern District of Florida
                    ________________________

                         December 15, 1997)

Before ANDERSON, DUBINA and CARNES, Circuit Judges.
CARNES, Circuit Judge:

     A jury acquitted Russell G. Barakat of mail fraud conspiracy

involving a kickback scheme but convicted him of filing a false

income tax return in violation of 26 U.S.C. § 7206(1), i.e., tax

evasion.   At his sentencing, the district court determined that

Barakat had a base offense level of eight and a criminal history

category of I, which under the United States Sentencing Guidelines

resulted in a sentencing range of zero to six months. However, the

district court gave Barakat sentence enhancements for: (1) failing

to report more than $10,000 in income from criminal activity (four

levels), see U.S.S.G. § 2T1.1(b)(1); (2) using sophisticated means

to impede the discovery or extent of his offense (two levels), see

U.S.S.G. § 2T1.1(b)(2); and (3) abusing his position of public

trust in a manner which significantly facilitated the commission or

concealment of his offense (two levels), see U.S.S.G. § 3B1.3.

Those   three   enhancements   made       Barakat's   total   offense   level

sixteen, resulting in a sentencing range of 21 to 27 months.              The

district court sentenced him to 21 months in prison.
     Barakat's challenge to the tax evasion conviction is meritless

and requires no discussion.     However, several of his contentions

involving the sentence enhancements applied in this case present

novel issues.    As discussed below, we conclude that the district

court erred in applying two of the three sentence enhancements in

this case, and a remand is necessary for clarification of that

court’s ruling concerning the third enhancement.

                                      2
                                    I. FACTS

     Barakat was the head of the Broward County Housing Authority

(“Authority”)    during    the    late     1980's.        His   contract   with    the

Authority barred him from working for clients other than the

Authority,    and     Florida    law     prohibited       him   from   holding     any

employment or having any contractual relationship with any entity

that did business with his agency.               In the event that Barakat had

outside income exceeding 5 percent of his annual Authority salary,

he was required to file a public disclosure statement.

     During     his    tenure     with     the      Authority,      Barakat    gained

experience working with the United States Department of Housing and

Urban    Development    (“HUD”)     and       the   Federal     Housing    Authority

(“FHA”). He also became acquainted with Frank Daniels, an executive

of   the   Benton     Mortgage    Company.           Benton     Mortgage      financed

$26,600,000 of the Authority's projects while Barakat headed the

Authority. At the same time, Benton Mortgage was seeking to finance

several HUD and FHA projects around the country, including projects

in San Antonio and Los Angeles. In its application to the San

Antonio and Los Angeles housing authorities, Benton Mortgage listed

Barakat as a reference. When representatives of the Los Angeles and

San Antonio authorities contacted Barakat, he gave Daniels and

Benton Mortgage favorable references.                     Both of those housing

authorities thereafter selected Benton Mortgage to help finance

their projects.

     Sometime after Barakat gave those favorable references for

Benton     Mortgage,    Daniels    instructed         a    Benton    Mortgage     loan

                                          3
underwriter to pay E. Lewis Fields, an attorney, a $5,000 “referral

fee.” The underwriter who received those instructions had worked

closely with Daniels on the San Antonio project but he had never

heard of Fields and, as far as he knew, Fields had not performed

any legal work on the project.

     In 1990, a federal investigation began to focus on Fields' law

firm. Investigators discovered that Fields had received large fees

on at least two bond issues and that those fees were deposited into

his firm's trust account instead of an operating account.       In

reviewing documents subpoenaed from Fields' law firm, investigators

came across five checks that had been drawn on Fields' trust

account and made payable to Barakat in 1989.   The total amount of

these five checks was $9,666.

     The government interviewed Barakat in connection with its

investigation of Fields. During his interview, Barakat told the

government that in 1989 he had done some consulting work for Fields

on projects “located in San Antonio . . . and Los Angeles.” He had

been hired, he claimed, based on his experience in dealing with HUD

and FHA.   After further questioning, he admitted that he had done

the consulting work for Benton Mortgage and Frank Daniels, for

which he had received $15,000. According to Barakat, Fields had

initially received the $15,000 but the funds were thereafter split,

with two-thirds going to Barakat and one-third being kept by

Fields.

     The government investigated Barakat's story.     Bank records

revealed that Benton Mortgage had written two checks to Fields.

                                 4
The first, for $5,000, was deposited in Fields' trust account on

December 30, 1988.           The second, for $10,000, was deposited in

Fields' trust account on January 31, 1989. On January 10, 1989, a

check drawn on Fields' trust account for $3,333 was made payable to

Barakat. On February 16, 1989, Barakat received a second check, for

$5,000, drawn on that account.                Later in 1989, Barakat received

three additional checks from the trust account in the amounts of

$700, $333, and $300. The government determined that Barakat had

not reported any of the money he received from Fields’ trust

account     as income in 1989.
                      II.    DISTRICT COURT PROCEEDINGS

       Based   on   its     investigation,       the    government      obtained   an

indictment of Barakat for conspiracy to commit mail fraud and

income tax evasion. The government introduced the evidence of

Barakat's relationship with Benton Mortgage, the recommendations

made   by   Barakat    to    the   Los    Angeles      and    San   Antonio   housing

authorities,    the    suspicious        payments      from   Benton    Mortgage   to

Fields' trust account, and the payments from Fields' trust account

to Barakat.     Apparently, the government’s position was that these

activities were part of an illegal “kickback” scheme, in which

Barakat aided Benton Mortgage in obtaining business by using his

position at the Authority in return for money.                      A jury acquitted

Barakat on the mail fraud conspiracy charge, but convicted him on

the income tax evasion charge.

       The United States Probation Office prepared a Presentence

Investigation Report (“PSI”) for Barakat and, in accordance with

                                          5
the jury's verdict that the tax loss did not exceed $5,000,

calculated Barakat's base offense level at eight.      See U.S.S.G. §

2T1.1.     The PSI recommended that Barakat receive a four-level

sentence enhancement because he “failed to report or correctly

identify the source of income exceeding $10,000 in any year from

criminal   activity.”   See   U.S.S.G.   §   2T1.1(b)(1).   For   that

enhancement to apply, as the PSI noted, the district court would

have to consider conduct pertaining to the mail fraud conspiracy

charge, for which Barakat had been acquitted.     The PSI recommended

three additional sentence enhancements: two levels because Barakat

used “sophisticated means” to impede the discovery of the existence

or extent of the offense, see U.S.S.G. § 2T1.1(b)(2); two levels
because Barakat was the organizer, leader, manager or supervisor of

the criminal activity, see U.S.S.G. § 3B1.1(c); and two levels for

Barakat's abuse of his position of public trust; see U.S.S.G. §

3B1.3.   Adding these enhancements to Barakat's base offense level

of eight, the PSI concluded that Barakat had a total offense level

of eighteen, which corresponded to a sentencing range of twenty-

seven to thirty-three months.

     At his sentencing hearing, Barakat objected to the PSI on

several grounds: (1) that the income he did not report was not

derived from criminal activity; (2) that he did not receive more

than $10,000 in any year; (3) that the government failed to

establish that he had abused a position of trust; (4) that the

government failed to establish that he had used sophisticated means

to commit the offense of income tax evasion; and (5) that he should

                                 6
not be given an enhancement for being “an organizer or leader” of

the criminal activity.

     At the sentencing hearing, IRS Special Agent Steven Musgrave,

who was stipulated to be an expert on tax matters, testified that

Barakat should have reported $15,000 in income rather than $9,666.

Musgrave testified that the entire $15,000 was income to Barakat

and that the $5,334 Barakat “paid” to Fields could not be deducted

as an “ordinary and necessary expense.”

     The district court found that the evidence concerning the tax

count and the mail fraud conspiracy count were “inextricably

intertwined,” because the court could not distinguish between the

acquitted conduct and the conduct underlying the tax evasion count.

However, the court stated that even if it did manage to separate

the evidence concerning of tax evidence from the evidence of mail

fraud conspiracy, it would still determine that Barakat's base

offense level was twelve, because Barakat had received more than

$10,000 in income from criminal activity in one year. The court

found that Fields was just a “conduit,” and therefore rejected

Barakat's suggestion that he should not be held accountable for the

full $15,000 in payments. The court also held that Barakat had used

“sophisticated means” in committing the offense, and therefore

deserved a two-level enhancement. However, the court rejected the

PSI's recommendation that Barakat be given a two-level enhancement

for being an “organizer or leader” of criminal activity.   Finally,

the court found that it was “rather obvious” that Barakat had

abused the public trust. The court therefore determined that

                                7
Barakat's total offense level was sixteen and sentenced him to

twenty-one months in prison.
                           III. STANDARD OF REVIEW

        We review de novo the district court's interpretation and

application of the United States Sentencing Guidelines (“Sentencing

Guidelines”).      See United States v. Lewis, 115 F.3d 1531, 1536

(11th Cir. 1997).         In the context of applying enhancements to

specific offense characteristics, this Court has held that our

review is de novo.        See United States v. Taylor, 88 F.3d 938, 942

(11th Cir. 1996); cf. United States v. Scroggins, 880 F.2d 1204,
1206 n.5 (11th Cir. 1989)(holding that the misapplication of

guidelines to undisputed facts raises a question of law subject to

de novo review).        However, we review the district court's factual

findings related to the imposition of sentencing enhancements only

for clear error.     See Lewis, 115 F.3d at 1536 (citing United States

v. Dukovich, 11 F.3d 140, 141 (11th Cir. 1994)).

                                IV. DISCUSSION

     Barakat challenges each of the three sentence enhancements

that the district court applied, and we will discuss each one in

turn.

   A. THE §2T1.1(b)(1) ENHANCEMENT FOR FAILURE TO REPORT MORE
        THAN $10,000 FROM CRIMINAL ACTIVITY IN ONE YEAR.

     The district court found that Barakat had failed to report

more than $10,000 that he received from criminal activity. Barakat

contends    that   he    did   not   receive   the   unreported   income   from
                                        8
criminal activity.   He argues that because he was acquitted of the

mail fraud count, the money he received from Fields' trust account

and did not report on his tax return was not income from “criminal

activity.”   Moreover, he argues that the government failed to

establish that the checks from Fields' trust account represented

the proceeds of criminal activity, with the result being that the

district court clearly erred in determining the money he received

was obtained from criminal activity.       Furthermore, he says, it

would be “unfair” and violative of his Fifth Amendment Double

Jeopardy and Due Process rights to consider conduct for which he

was acquitted when enhancing his sentence.

             1. Whether the Court Erred In Considering
                      the Mail Fraud Evidence

     Relevant   conduct   of   which   a   defendant     was   acquitted

nonetheless may be taken into account in sentencing for the offense

of conviction, as long as the government proves the acquitted

conduct relied upon by a preponderance of the evidence. See United
States v. Watts, --- U.S. ----, ---, 117 S. Ct. 633, 636, reh'g

denied, --- U.S. ----, 117 S. Ct. 1024 (1997);         United States v.

Frazier, 89 F.3d 1501, 1506 (11th Cir. 1996); United States v.

Averi, 922 F.2d 765, 766 (11th Cir. 1991).     Courts have uniformly

rejected the Double Jeopardy and Due Process arguments Barakat

makes, because “the defendant is punished only for the fact that

the present offense was carried out in a manner that warrants

increased punishment.”    Watts, 117 S. Ct. at 636.       Moreover, the

                                  9
burden of proof the government carries in a sentencing hearing is

the preponderance of the evidence standard, not the “beyond a

reasonable doubt” standard.          See id.      at 637 (citing Witte v.

United States, 515 U.S. ---, ---, 115 S. Ct. 2199, 2207-08 (1995)).

Therefore, the district court was free to consider Barakat's

conduct which formed the basis of the mail fraud conspiracy charge

as long as it was established by a preponderance of the evidence.

                 2. Whether Barakat Received More Than
                     $10,000 From Criminal Activity

      The record before us indicates that the finding that Barakat

had failed to report more than $10,000 in income from criminal

activity was not clearly erroneous, either.             Much of the evidence

at trial was directed at proving that Barakat illegally received

the income.      The government introduced evidence of a scheme in

which Barakat helped Benton Mortgage get business, whether by

recommendation or by using his position with the Authority more

directly, and in return he would receive “kickbacks” for that

service.   Although the jury found that the government had not

proven the mail fraud conspiracy count beyond a reasonable doubt,

the   district   court   did   not   clearly      err   in    finding   that   a

preponderance of the evidence proved Barakat had received the

unreported income from criminal activity.

      Furthermore,    the   district      court   did   not    clearly err in

finding that Barakat's unreported criminal income exceeded $10,000.

IRS Special Agent Steven Musgrave testified that the entire $15,000

paid by Benton Mortgage to Fields' trust account was attributable
                                     10
to Barakat.   The district court accepted that testimony, finding

that Fields was merely a “conduit,” so that the entire amount was

income to Barakat.    The district court did not clearly err in

finding that Barakat had received more than $10,000 in income from

his criminal activity.   See Anderson v. City of Bessemer City, 470

U.S. 564, 575, 105 S. Ct. 1504, 1512 (1985)(recognizing that a

trial court's finding based on a decision to credit the testimony

of one of two or more witnesses, which extrinsic evidence does not

contradict, can virtually never be clear error); Krys v. Lufthansa
German Airlines, 119 F.3d 1515, 1523 (11th Cir. 1997).    Whether he

received that amount in any one year is another matter.

        3. Whether Or Not the More Than $10,000 In Income
         From Criminal Activity Was Received In One Year

     Barakat contends that the district court erred by concluding

that he received the $15,000 in “one year.”       He points to the

undisputed evidence that a $5,000 check from Benton Mortgage was

deposited into Fields' trust account in December of 1988 and a

$10,000 check was deposited in January of 1989.    Because Barakat

used a calendar year as his tax reporting period and the checks

arrived in different calendar years, he argues he did not fail to

report more than $10,000 in any one year.

     The government argues that the district court was correct,

because Barakat received the money during a time period of less

than one year, i.e. less than twelve months, even though that time

period spanned parts of two calendar years.   Counting from either

Benton Mortgage's payments to the trust account or from the checks

to Barakat, Barakat did receive all of the money in a twelve-month
                                11
period spanning parts of 1988 and 1989.         Therefore, the government

asserts, he failed to report more than $10,000 in income in one

year.

      The resolution of this issue depends on the definition of a

“year” for the purposes of U.S.S.G. § 2T1.1(b)(1). The language of

the Sentencing Guidelines is to be given its plain and ordinary

meaning. See United States v. Tham, 118 F.3d 1501, 1506 (11th Cir.

1997); United States v. Pompey, 17 F.3d 351, 354 (11th Cir. 1994);

United States v. Wilson, 993 F.2d 214, 217 (11th Cir. 1993); United
States v. Strachan, 968 F.2d 1161, 1163 (11th Cir. 1992).                  The

plain and ordinary meaning of a word depends on its context.                As

Justice Holmes eloquently put it in another case involving income

tax, “a word is not a crystal, transparent and unchanged, it is the

skin of a living thought and may vary greatly in color and content

according to the circumstances and the time in which it is used.”

Towne v. Eisner, 245 U.S. 418, 425, 38 S. Ct. 158, 159 (1918).

      The   §   2T1.1(b)(1)    enhancement     only     applies   to offenses

involving taxation.         See U.S.S.G. § 2T (title and introductory

comment). The measuring rod for tax offenses, especially reporting

offenses, is almost invariably the taxable year.            The taxable year

is   defined    by   26   U.S.C.   §   441.   Because    Barakat,   like   the

overwhelming majority of personal income tax filers, did not keep

accounting records, § 441(g) applied and his “taxable year” was the

calendar year, see 26 U.S.C. § 441(g), a point the government does

not dispute.     26 U.S.C. § 6012 imposes an obligation to file a tax

return each taxable year, and the statute under which Barakat was

                                        12
convicted, 26 U.S.C. § 7206(1), criminalizes willfully making a

false return.    As these statutes applied in this case, Barakat was

convicted   of   making   a   false   return   for   calendar   year   1989.

Therefore, for the purposes of applying § 2T1.1(b)(1), “year” means

taxable year, which in this case is the 1989 calendar year.

     The government concedes that Barakat did not receive more than

$10,000 from criminal activity in 1989.        Therefore, we hold he did

not fail to report more than $10,000 from criminal activity in

calendar year 1989 -- the “one year” for the purposes of §

2T1.1(b)(1).     The district court erred by giving Barakat a four-

level enhancement pursuant to that provision.

  B. THE § 3B1.3 ENHANCEMENT FOR “ABUSE OF A POSITION OF TRUST”

     The district court also gave Barakat a two-level enhancement

pursuant to U.S.S.G. § 3B1.3 for the abuse of a position of trust,

because he used his position at the Authority to help Benton

Mortgage get business.        Barakat contends that the district court

should not have imposed the abuse of trust enhancement upon him,

because any abuse of trust was unrelated to the offense for which

he was convicted, tax evasion.         The government contends that the

district court was correct, because absent Barakat's abuse of his

position of trust, he could not have committed the offense for

which he was convicted.

     The resolution of this issue depends on our delineation of the

boundaries of what is an abuse of trust for the purposes of §

3B1.3. That section of the Sentencing Guidelines provides:

     If the defendant abused a position of public or private
     trust, or used a special skill, in a manner that

                                      13
      significantly facilitated the commission or concealment
      of the offense, increase [the sentence] by two levels.

The commentary provides an elaboration about which abuses of trust

are contemplated by the guideline:

      The position of trust must have contributed in some
      substantial way to facilitating the crime and not merely
      have provided an opportunity that could easily have been
      afforded to other persons. . . .

U.S.S.G. § 3B1.3, comment. (n.1).

      This Court’s case law is lean on the issue of when an abuse of

trust facilitates or contributes in a significant way to the

commission or concealment of an offense.           In    United States v.

Mullens, 65 F.3d 1560, 1566 (11th Cir. 1995), we noted that the

Sentencing Guidelines require that the abuse of trust “must have

contributed in some significant way to facilitating the commission

or concealment of the offense,” but, our holding in Mullens was

based on another ground,          that the defendant's cultivation of

ordinary social relationships did not place him in a “position of

trust.”     See id.      By contrast, in this case it is clear that

Barakat was in a position of trust and that he abused that trust to

obtain the income he did not report on his 1989 tax return.

      Other circuits have addressed the issue now before us more

directly.    In United States v. Broderson, 67 F.3d 452, 456 (2d Cir.
1995), the Second Circuit held that an enhancement for an abuse of

trust requires that the discretion or trust abused must have been

placed with the defendant by the victim.        Because the defendant in

Broderson was placed in a position of trust by his employer but not

by   the   government,    which   was   the   entity    victimized   by   his

                                     14
fraudulent statements, the § 3B1.3 enhancement was held not to

apply.     See id. at 455-56.   Although we do not quarrel with the

result in Broderson, the rule stated in that opinion may be too

broad.    Under that statement of the rule, an enhancement for abuse

of trust might be precluded where a doctor uses his professional

position and medical license to violate the controlled substance

law.     Or perhaps the Second Circuit would hold that that scenario

falls within the Broderson rule, because the victim in such a case

is society as a whole, which has entrusted the doctor with his

professional position and license. In any event, we have held that

a § 3B1.3 enhancement is appropriate in such circumstances.          See
United States v. Hoffer , --- F.3d ---, --- (11th Cir. Nov. 21,

1997).

       The Seventh Circuit has applied the § 3B1.3 enhancement

broadly.    In United States v. Bhagavan, 116 F.3d 189, 190 (7th Cir.

1997), the defendant was convicted of income tax evasion and given

a § 3B1.3 sentencing enhancement.      Bhagavan had stolen money from

the    corporation   he   operated,    thereby   bilking   his   fellow

shareholders out of a substantial amount of money.         See id.   He

failed to report the embezzled funds and was convicted of tax

evasion.    The Seventh Circuit, rejecting Bhagavan's argument that

the government was the only “victim” of tax evasion, held that

because Bhagavan's “overall scheme” was to cheat the shareholders

and not report the income, he could be given an enhancement for

abusing his position of trust with the shareholders to acquire the

income.    See id. at 193.   The Court explained:

                                  15
     It is enough that identifiable victims of Bhagavan's
     overall scheme to evade his taxes put him in a position
     of trust and that his position 'contributed in some
     significant way to facilitating the commission or
     concealment of the offense.'

Id. (citation omitted).

     However,   Judge   Cudahy   dissented   in   Bhagavan,   because   he

recognized that the majority had failed to tie the abuse of trust

closely enough to the offense of conviction.        He explained:

     [A]lthough minority stockholders may be victims of the
     diversion of revenue, they are not victims of the crime
     of conviction -- tax evasion -- or any other crime, for
     that matter.    Thus, there is no nexus between the
     putative victims, the minority stockholders, and the
     crime of conviction, tax evasion.        No nexus, no
     enhancement. . . .

Id. at 194 (Cudahy, J., dissenting).
     We agree with Judge Cudahy's statement, however, we believe it

is more accurate to phrase the required connection as between the

abuse of the position of trust and the offense of conviction.       That

is how the Sentencing Guidelines themselves phrase it.          They say

that the defendant's abuse of trust must “significantly facilitate

the commission or concealment of the offense.”        U.S.S.G. § 3B1.3.

In this context, “offense” must be read as “offense of conviction”

in order to maintain consistency with the definition of relevant

conduct in U.S.S.G. § 1B1.3(a)(sentencing courts can only consider

“relevant conduct,” which is conduct related to the offense of

conviction).

     The Sentencing Guidelines provide examples of what constitutes

“significant facilitation”:

     This adjustment, for example, would apply in the case of
     an embezzlement of a client's funds by an attorney
                                   16
       serving as a guardian, a bank executive's fraudulent loan
       scheme, or the criminal sexual abuse of a patient by a
       physician under the guise of an examination.

U.S.S.G.     §     3B1.3     comment.    (n.1).         In     the   three      Sentencing

Guidelines scenarios, the person in the position of trust has an

advantage in committing the crime because of that trust and uses

that advantage in order to commit the crime.                    It is much easier for

an attorney who has been entrusted with a client's money to steal

that money than for an ordinary criminal to do so.

       Applying the concept drawn from those examples to this case,

it    is   clear      that   Barakat    did       not   use    an    advantage       he,   as

distinguished from an ordinary criminal, had in order to commit the

crime of tax evasion.            The government's contention that Barakat

abused his position of trust to obtain the income he did not report

would broaden the crime of tax evasion to include the manner in

which the income was obtained.                However, the law prohibiting tax

evasion is neutral as to the method by which the defendant obtained

the   income,      caring     not   whether       it    was    ill-gotten       or   richly

deserved.     The crime of tax evasion is simply the willful filing of

a return known to be false.             See 26 U.S.C. § 7206(a).             Anyone with

any kind of taxable income can do that.                       Barakat did not use his

particular position of trust to give him an advantage in the

commission       or    concealment      of    the       offense      of   tax     evasion.

Therefore, we conclude that the district court should not have

given Barakat a sentencing enhancement for abuse of a position of

trust.

 C. THE § 2T1.1(b)(2) ENHANCEMENT FOR USE OF SOPHISTICATED MEANS

                                             17
      The district court also gave Barakat a two-level enhancement

pursuant to U.S.S.G. § 2T1.1(b)(2) for using “sophisticated means,”

channeling the payments from Benton Mortgage through Fields' trust

account, in order to impede discovery of the existence or extent of

the offense.       Barakat challenges this enhancement, arguing that:

(1)   the    use    of     an    attorney's      trust     account    could    not    be

“sophisticated means” as a matter of law; and (2) because the use

of the trust account was related to the mail fraud count, it was

outside     the    scope    of    the    “relevant   conduct”        which    could   be

considered in sentencing him for his tax evasion conviction.

                                1. Standard of Review

      This Court has addressed the issue of what “sophisticated

means” are once before, and then only briefly.                 In United States v.

Paradies, 98 F.3d 1266, 1292 (11th Cir. 1996), we held that the

district court did not clearly err in enhancing the defendant's

conviction for tax evasion where the evidence showed that the

defendant routinely transferred money through shell corporations.

Although reaching that conclusion in Paradies, we did not discuss

in any detail the standard by which this Court would review the

district     court's        application         of   the     sophisticated       means

enhancement.

      The Sentencing Guidelines explain that “sophisticated means .

. . includes conduct that is more complex or demonstrates greater

intricacy or planning than a routine tax-evasion case.”                       U.S.S.G.

§ 2T1.1 comment. (n.4).                 This inquiry necessarily involves a

comparison between the present case and the “routine” tax evasion

                                           18
case, a comparison identical in nature to the inquiry a district

court makes in determining whether a mitigating or aggravating

factor takes a case out of the heartland thereby justifying a

sentencing departure.            Compare U.S.S.G. § 2T1.1 comment.(n.4) with

U.S.S.G. § 5K2.0 (“An offender characteristic or other circumstance

that is not ordinarily relevant in determining whether a sentence

should be outside the applicable guideline range may [be used if

it] distinguishes the case from the 'heartland' cases covered by

the guidelines. . . .”).               Therefore, we will take the standard of

review prescribed by the Supreme Court in Koon v. United States, --
-   U.S.   ---,    116     S.    Ct.    2035    (1996),     for    reviewing   §    5K2.0

departures     and       use    it     in    reviewing      a     sophisticated     means

enhancement.

      In   Koon,     the    Supreme         Court   noted   that    findings   of    fact

relevant to sentencing decisions are to be accepted unless clearly

erroneous.     See id. at 2046.              That is essentially what this Court

did in     Paradies.       See 98 F.3d at 1291 (accepting the district

court's finding that the defendant had used shell corporations to

conceal his income because it was not clearly erroneous).                             The

Supreme Court did note in Koon that if the district court makes a
ruling of law in its sentencing decisions, the court of appeals

“need not defer to the district court's resolution of the point.”

116 S. Ct at 2047.             Therefore, we will review any rulings of law

made by the district court in conjunction with the sophisticated

means enhancement de novo.

                                       2. Discussion

                                               19
     Barakat argues that in committing the offense of tax evasion,

his only act was to misrepresent his 1989 income on his tax return.

He asserts that because everyone fills out a tax form, his means of

committing tax evasion are no different than the means used by

anyone   else,    and   therefore   he    cannot    be   said   to   have   used

“sophisticated means” to commit the offense of tax evasion.                 That

contention misses the mark, because it focuses on the use of

sophisticated means to commit a tax offense, while the enhancement

focuses on the use of sophisticated means to conceal the tax

offense.   See U.S.S.G. § 2T1.1(b)(2) (“If sophisticated means were
used to impede the discovery of the existence or extent of the

offense, increase by 2 levels.”).

     Barakat also relies on United States v. Stokes, 998 F.2d 279

(5th Cir. 1993), to argue that he did not use “sophisticated means”

to conceal his tax evasion.     In Stokes, the Fifth Circuit held that

the defendant's concealment of income from her accountant could not

be “sophisticated means” for the purposes of § 2T1.1(b)(2).                  See

id. at 282.      With the Stokes holding in hand, Barakat argues that

the use of attorney Fields’ trust account was no more complex than

concealing income from an accountant.              We do not think that the

holding of Stokes is applicable in this case.              First, it is not

clear that the Stokes court, which made its decision before Koon

was decided, used the same standard of review that we use today.

Because our review is for clear error, we give greater deference to

the district court's finding that Barakat used sophisticated means

                                     20
than the Stokes court appears to have given the district court’s

finding in that case.

     Second, we do not think that merely failing to report income

to an accountant, which is all that was involved in Stokes, is

analogous to using an attorney's trust account.       As the government

points out, because Benton Mortgage paid the $15,000 to Fields'

trust account, no IRS Form 1099 (used to report payments to non-

employees) was generated.        As a result, Barakat could fail to

disclose the Benton Mortgage payments knowing that, in the absence

of a Form 1099, it was unlikely the IRS would ever become aware of

that income.   Therefore, based on the evidence, we could not say

that the district court clearly erred in finding that Barakat had

used “sophisticated means” to conceal his tax evasion if we were

convinced the district court’s reasoning was untainted by any error

of law.

     However, more analysis is required. While this is essentially

a factual issue, which is entrusted primarily to the district

court, see Koon, 116 S. Ct. at 2047, Barakat asserts that the court
committed   legal   error   by   taking   into   consideration   conduct

pertaining to the mail fraud conspiracy count when deciding whether

to apply the § 2T1.1(b)(2) enhancement. If the district court took

into consideration conduct which does not directly relate to the

offense of conviction, it made an error of law.        As noted above,

see supra at 16-17, a district court is limited by § 1B1.3 to

considering only conduct pertaining to the offense of conviction.

Unless the use of sophisticated means significantly facilitates the

                                   21
defendant’s concealment of his tax evasion from the IRS, it is not

relevant conduct for the purposes of § 2T1.1(b)(2).    See Stokes,

998 F.2d at 282.

     The district court stated that, had it considered only the

evidence relating to the tax count, it would not have given Barakat

an enhancement for either an abuse of trust or use of sophisticated

means.   We read that statement to mean the district court found

that Barakat had used sophisticated means to conceal his mail fraud

conspiracy, but not his tax evasion.      If that is the district

court’s holding, it is error.     However, it is unclear how the

district court could consider only evidence relating to the tax

count when it noted that the evidence relating to the mail fraud

conspiracy and tax evasion charges was “inextricably intertwined.”

Given this uncertainty, and because the issue of   whether the use

of a trust account in these circumstances is a “sophisticated

means” of concealing tax evasion is a close question,1 we vacate
the district court's imposition of this enhancement and remand for

a reconsideration in light of our holding that only evidence

relating to the tax evasion count may be considered in making the

§ 2T1.1(b)(2) decision.
                          V. CONCLUSION

     1
      Compare United States v. Rice, 52 F.3d 843, 849 (10th Cir.
1995)(sophisticated means enhancement inappropriate); Stokes, 998
F.2d at 282 (same), with United States v. Whitson, 125 F.3d 1071,
1075 (7th Cir. 1997)(sophisticated means enhancement appropriate);
United States v. Furkin, 119 F.3d          1276, 1285 (7th Cir.
1997)(same); United States v. Lewis, 93 F.3d 1075, 1083 (2d Cir.
1996)(same).

                                22
      Barakat's conviction for tax evasion is AFFIRMED.         We VACATE

his   sentence   and   REMAND   to   the   district   court   for   further

proceedings consistent with this opinion.

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