Court Opinion

ID: 2964229
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:22:29.988959+00
Date Added: 2024-06-11T11:42:52.825598
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT
                                 ____________________

        No. 95-1143

                              UNITED STATES OF AMERICA,

                                      Appellee,

                                          v.

                                  C. WILLIAM WESTER,

                                Defendant, Appellant.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Nathaniel M. Gorton, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                Selya, Cyr and Boudin,

                                   Circuit Judges.
                                   ______________

                                 ____________________

            Rhea P. Grossman, P.A. for appellant.
            ______________________
            Ellen  R.  Meltzer,  Special   Counsel,  Fraud  Section,  Criminal
            __________________
        Division, Department of  Justice, with  whom Donald  K. Stern,  United
                                                     ________________
        States  Attorney, and  Pamela  Merchant, New  England Bank  Fraud Task
                               ________________
        Force, were on brief for the United States.

                                 ____________________

                                    July 22, 1996
                                 ____________________

                 BOUDIN,  Circuit  Judge.    Clary   William  Wester  was
                          ______________

            formerly   president,  chairman  of   the  board,  and  chief

            executive officer  of First Service Bank  for Savings ("First

            Service"),   a  federally   insured   bank   in   Leominster,

            Massachusetts.   In the  late 1980s, Wester  arranged various

            transactions at First Service, including a series of loans by

            First Service to Webster's partners in a separate real estate

            venture, made with the  understanding that the partners would

            use  the loaned  funds to  buy out  Wester's interest  in the

            partnership.  At  trial, Wester  was convicted by  a jury  of

            several  different  crimes.    He  now  challenges  the  jury

            instructions and two adjustments to his sentence.

                 Although   Wester  does   not   directly   dispute   the

            sufficiency of the  evidence, one  of his claims  as to  jury

            instructions  can be taken to raise  the issue of sufficiency

            indirectly.  For that reason, we begin by describing what the

            evidence would have permitted the  jury to find. A  reviewing

            court's perspective on the  evidence depends on the claim  of

            error being considered, and for a  sufficiency claim, we take

            the evidence  most favorable  to the verdict.   E.g.,  United
                                                            ____   ______

            States v. Dodd, 43 F.3d 759, 760-61 (1st Cir. 1995).  
            ______    ____

                 In  June 1986,  Wester formed  a partnership  with three

            other men  to construct a condominium  project in Manchester,

            New Hampshire.   The three  others were Robert  Fredo, senior

            vice president at First  Service, Robert George, a developer,

                                         -2-
                                         -2-

            and  Charles  Morgan, a  broker.   Wester and  Fredo supplied

            start-up  money, and  Wester helped  arrange a  $12.4 million

            loan  organized  by  New  England  Financial  Resources, Inc.

            ("NEFR"), a commercial real estate lender not affiliated with

            First  Service.   The  loan was  secured  by land  and future

            improvements and a personal guaranty of the debt from each of

            the partners.

                 Since  Morgan  had been  a  frequent  borrower at  First

            Service,  NEFR  was  concerned  that  Wester's   and  Fredo's

            participation in  the partnership might  create conflicts  of

            interest.    As  a condition  of  the  loan  NEFR required  a

            certificate from  First Service acknowledging that Wester and

            Fredo had  disclosed their  interest  in the  project to  the

            board of directors of First  Service.  The certificate issued

            by First Service stated,  inter alia, that the bank  "was not
                                      _____ ____

            involved  in the  financing of  this project  and  would not,

            without specific  prior approval, grant  any additional loans

            to Messrs. Morgan or George."  

                 In the fall of 1986, Morgan  and George proposed another

            condominium  project,  this  one in  Massachusetts.    Wester

            suggested that First Service participate  in the project as a

            joint  venturer, but  said that  he and  Fredo would  need to

            divest their interests in the  earlier partnership.  The four

            men  agreed that Wester and Fredo  would sell their interests

            to George and Morgan for $425,000 each, and be reimbursed for

                                         -3-
                                         -3-

            additional start-up money they  had provided, all to  be paid

            from future profits  from the New Hampshire project.   Before

            the  details of  the  buyout plan  had  been resolved,  First

            Service (through  a subsidiary)  joined the new  project with

            Morgan and George, and the bank provided a $5 million loan to

            the venture.

                 By June 1987, the New Hampshire project had yet to begin

            earning profits.  Wester grew  impatient and told George  and

            Morgan  that he wanted his buyout payments.  When George said

            this was not feasible  because of cash flow  problems, Wester

            offered to provide  First Service loans to George  and Morgan

            to  fund the buyout payments.  These loans, and the resulting

            buyout  payments,  became the  basis  for most  of  the later

            charges against Wester.  

                 On June 12, 1987, George signed two promissory notes for

            unsecured loans  by First  Service totalling $200,000.   That

            same day, George paid Wester and Fredo $100,000 each.  Morgan

            received  a $300,000  loan  from First  Service  on June  12;

            several days later he paid Wester and Fredo $25,000 each, and

            George and  Morgan (through the partnership)  gave Wester and

            Fredo $250,000 for the start-up money previously contributed.

                 Neither Wester  nor Fredo disclosed the  true purpose of

            these  loans  to  First  Service's  loan  review   committee,

                                         -4-
                                         -4-

            executive committee, or  board of  directors.1   Nor did  the

            supporting  documentation reveal that  the loaned  funds were

            being used  to fund the  buyout.   In one instance,  the loan

            set-up  sheets stated  that the  purpose of  the loan  was to

            "finance acquisition of real property"; in other instances no

            purpose for the loan was provided.  The jury could have found

            that the failure to disclose the purpose of the loans to  the

            loan  review   committee   was  material,   deliberate,   and

            dishonest.  

                 This  process was  repeated  several times  over in  the

            following months,  with Wester  and Fredo arranging  loans or

            letters  of  credit  to   Morgan,  George  or  entities  they

            controlled--and   in   one  instance   George's  father--with

            portions  of the  proceeds returned  to Wester  and Fredo  to

            satisfy the buyout.  The last  such loan was made on March 9,

            1988.   On March 10, 1988, the buyout agreement was executed,

            and Wester's  and Fredo's  interests in the  partnership were

            terminated "retroactive" to January 1, 1987.     

                 There was one more  wrinkle of considerable  importance.

            The  buyout  agreement  included a  provision  for  releasing

            Wester  and  Fredo  from  their personal  guaranties  on  the

                                
            ____________________

                 1Under the bank's rules, all insider loans and all loans
            of over  $5 million had  to be  approved by the  board.   The
            executive committee  had to approve loans  between $1 million
            and  $5 million;  and  the loan  review  committee, on  which
            Wester and Fredo sat with other officers, could approve loans
            up to $1 million.

                                         -5-
                                         -5-

            earlier $12.4 million  loan from  NEFR.   NEFR, however,  was

            concerned  about the  financial health  of the  New Hampshire

            condominium  project.   It  made  clear  that it  would  only

            consent  to the  release if the  partnership obtained  a $2.3

            million bank  loan or  line of  credit to  provide additional

            security for the $12.4 million loan.

                 Ultimately,  Wester and  Fredo arranged  a $2.3  million

            loan  by  First  Service  for the  partnership,  without  any

            disclosure to other bank  officials of the connection to  the

            proposed  release and  without  approval by  First  Service's

            executive  committee or board of directors.  Under the bank's

            rules, approval by the  former was evidently required because

            of the size of the loan.  This loan and  the promised release

            were each specified as offenses in the subsequent indictment.

                 After a portion of the $2.3 million was disbursed to the

            partnership, and  before NEFR formally  executed Wester's and

            Fredo's  releases  from   the  guaranties,  the   FDIC  began

            investigating  the goings-on  at First  Service.   Wester and

            Fredo  were subsequently  fired.   First Service  honored its

            commitment to the partnership and released the balance of the

            $2.3  million  loan  proceeds.     NEFR  never  executed  the

            releases, but neither did it call upon Wester or Fredo to pay

            based on their guaranties.  

                                         -6-
                                         -6-

                 On August 11, 1990, Wester and Fredo were named in a 22-

            count   federal  indictment  charging   them  primarily  with

            conspiracy, 18 U.S.C.   371, misapplication of bank funds, 18

            U.S.C.     656, and  bank  bribery, i.e.,  the  soliciting or
                                                ____

            receiving of bribes or  rewards for the making of  the loans,

            18 U.S.C.    215.  The loans for the  buyout payments and for

            the  release were  charged as  misapplications under  section

            656; the payments and promised release were charged as bribes

            or rewards under section 215.

                 Fredo  pled  guilty before  trial to  one count  each of

            conspiracy,  misapplication, and bank  bribery, and testified

            for  the government at Wester's  trial.  After  a 13-day jury

            trial  in July  1994, Wester  was convicted  of one  count of

            conspiracy, five counts of  misapplication, and six counts of

            bank  bribery.   He  was  acquitted  of  one  count  each  of

            misapplication and bank bribery,  and two tax evasion counts.

            In  December  1994,  Wester  was sentenced  to  46  months in

            prison.   This appeal followed.  For the reasons that follow,

            we affirm the convictions but remand for resentencing.  

                 1.   Wester's  main challenge  to the  trial proceedings

            concerns  the  district  court's  jury  instructions  on  the

            misapplication  counts.   In  relevant part, 18  U.S.C.   656

            provides criminal penalties for "an officer, director, agent,

            or employee  of .  . . national  bank or insured  bank .  . .

            [who]  willfully  misapplies  any  of the  moneys,  funds  or

                                         -7-
                                         -7-

            credits  of  such bank."    Formally, the  dispute  on appeal

            centers around the phrase "willfully misapplies"; in reality,

            Wester's  argument also  presents  the question  whether  the

            evidence was adequate.

                 The problem that has confronted and perplexed the courts

            is that  there  is  no  statutory definition  or  common  law

            heritage  that   gives  content  to  the   phrase  "willfully

            misapplies."  United States  v. Gens, 493 F.2d 216,  221 (1st
                          _____________     ____

            Cir.  1974).   And  to focus  simply  on the  deprivation  of

            property is hardly much  help since it is a  purpose of banks

            to lend money.   In response, the case law  has developed two

            notions  that help  to clarify  and delimit  the statute--one

            relating primarily to conduct and the other to intent.

                 First, "misapplication" has been taken by most courts to

            mean "wrongful" use  of the bank's  moneys.  See  1 Sand,  et
                                                         ___           __

            al.,  Modern Federal Jury Instructions    24.01 (1995).  And,
            __    ________________________________

            second, the courts have uniformly read back  into the statute

            an earlier  requirement, removed by a  careless revisor, that

            the defendant have intended "to injure  or defraud" the bank.

            E.g., United States v.  Angelos, 763 F.2d 859, 861  (7th Cir.
            ____  _____________     _______

            1985).  Of course, the same facts can easily be the basis for

            deeming the conduct to be wrongful and the intent fraudulent;

            but both misapplication and scienter are required.

                 In this  case, the district  court's affirmative  charge

            describing  the offense  of misapplication  was for  the most

                                         -8-
                                         -8-

            part conventional.  What  Wester objects to on appeal  is the

            court's  refusal   to   give  certain   additional   language
                     _______

            specifically requested by Wester.  The language--which Wester

            believes to  have been  required  by our  decision in  Gens--
                                                                   ____

            appears  at   two  different  points  in  Wester's  requested

            instruction no. 37:

                      I  instruct   you  that   a  loan   to  a
                      financially  capable   person  who  fully
                      understands that it is his responsibility
                      to  repay  the loan  does  not constitute
                      misapplication, even if the  bank officer
                      involved with the loan  receives proceeds
                      of  the  loan,  or  some  other  benefit.
                      Thus, in  this case, with respect  to the
                      loans  charged,  if   the  debtors   were
                      financially capable of repaying the loans
                      and  that [sic]  they understood  that it
                      was  their  responsibility  to repay  the
                      loans,  Mr. Wester  must be  acquitted on
                      those counts irrespective  of whether  or
                      not  he received  proceeds, or  any other
                      benefit, from those loans. . . .

                                           . . .

                         Therefore, in this case, for each loan
                      alleged   in   the   Indictment    as   a
                      misapplication  of  bank  funds,  if  the
                      named debtor was  financially capable  of
                      repaying  the  loan  and  recognized  his
                      responsibility to repay  the loan,  there
                      is no misapplication as a matter  of law,
                      even if  proceeds of those loans  or some
                      other  benefits  were  received   by  Mr.
                      Wester.

                 Needless  to say,  such  language would  have been  very

            useful to Wester.  The government, it appears, did not try to

            show   that  any   of   the  designated   borrowers  in   the

            misapplication   counts  (E.g.,   George  and   Morgan)  were
                                      ____

                                         -9-
                                         -9-

            fictitious or financially irresponsible or  had never assumed

            liability for the loan.   Wester suggests that for  bona fide

            loans  to  financially  responsible  borrowers,  there  is no

            serious  risk of harm to  the bank and  therefore, even apart

            from the authority of Gens, no reason to apply the statute.
                                  ____

                 Wester's position is far  from absurd, cf. United States
                                                        ___ _____________

            v.  Dochtery, 468 F.2d 989 (2d Cir.  1972), but in the end it
                ________

            reads  the statute too narrowly.  There is no indication that

            insider loans  are inflexibly  forbidden by federal  law, but

            they obviously create a special set of dangers.  At least one

            danger--quis  custodiet ipsos  custodes--is that  the insider
                    _______________________________

            who approves or fosters the loan  may do so too readily if he

            himself benefits by  it.  Controls  on such loans,  including

            authorizations  and disclosures,  are therefore  pertinent to

            the safety of the bank.  

                 Further, financial  responsibility  on the  part of  the

            borrower is not an absolute  but a matter of degree.   To say

            that  the  nominal  borrower  is at  the  outset  financially

            capable of repayment hardly  proves that the bank  would have

            made the  loan if it had been fully apprised of the risks and

            circumstances.     Here,  two  members  of   First  Service's

            executive  committee  testified  that  they  would  not  have

            approved the loans if Wester  had disclosed that the proceeds

            were  going  to  fund  the  buyout  of  Wester   and  Fredo's

            interests.

                                         -10-
                                         -10-

                 In this  instance, the jury could  reasonably have found

            that Wester caused the loans  to be made for his  own benefit

            without obtaining  approvals from the  executive committee or

            board of directors required under the bank's own rules (as to

            the largest $2.3  million loan) and (as to it and all others)

            because  he deliberately  suppressed or  withheld information

            that the purpose of the loans was one that the bank would not

            have approved.2  This wrongful conduct permitted  the jury in

            turn to  find that Wester had engaged in the "misapplication"

            of bank funds.  All that remained was to find scienter.

                 The   scienter  requirement--an  intent   to  injure  or

            defraud--is  stated  in  the  alternative.   In  the  Supreme

            Court's  classic summary,  "the words  `to defraud'  commonly

            refer `to  wronging one in  his property rights  by dishonest

            means or  schemes,' and  `usually signify the  deprivation of

            something   of   value   by   trick,   deceit,   chicane   or

            overreaching.'"  McNally v. United States, 483  U.S. 350, 358
                             _______    _____________

            (1987) (citation omitted).  Whether or not Wester intended to

            injure  the bank, a jury could properly find that he intended

            to  "defraud"  the bank  by  causing  it through  consciously

            dishonest  means  to  part  with its  property  for  his  own

            benefit.    

                                
            ____________________

                 2The government's  brief conveys the impression that, as
            to  all of the  loans there was a  failure to obtain required
                ___                                              ________
            approvals by a  bank board or  committee.  On our  reading of
            the transcript pages  cited by the government, this  is clear
            only as to the $2.3 million loan.

                                         -11-
                                         -11-

                 This brings us  to Gens.   In that  case, the  defendant
                                    ____

            Gens, a director of the bank, had persuaded others (e.g., one
                                                                ____

            of his friends)  to borrow from the bank and  to transfer the

            funds  to  him;  and  bank  officers  working  with  Gens had

            approved  the loans knowing that  he would obtain  use of the

            funds.  As this court read the  trial court's charge, it told

            the jury that  misapplication had occurred  "if it was  found

            that [the officers] granted  loans to the [nominal borrowers]

            knowing that the proceeds would be turned over to Gens."  493

            F.2d at 221.  The jury convicted Gens and he appealed.

                 On appeal in Gens,  this court rejected the government's
                              ____

            broad  notion that  "willful  misapplication occurs  whenever
                                                                 ________

            bank officials grant loans to parties with the knowledge that

            the proceeds  will go to  a third  party."  492  F.2d at  223

            (emphasis added).  Our  opinion pointed out that most  of the

            pertinent  cases  under the  misapplication  statute involved

            loans   to   borrowers   who   were   fictitious,  unwitting,

            irresponsible or had not assumed liability.  The contrary was

            so in Gens, except arguably as to one borrower; and the count
                  ____

            as  to that borrower  was remanded for a  new trial under new

            instructions.

                 Gens held that  the government's  "whenever" theory  was
                 ____

            overbroad but  Gens did  not bar  a misapplication  charge in
                           ____      ___

            every  case where  the  straw happened  to  be a  financially

            responsible borrower.    We  so noted  in  United  States  v.
                                                       ______________

                                         -12-
                                         -12-

            Brennan, 994 F.2d 918 (1st Cir. 1993).  There we  said that a
            _______

            misapplication  charge could be made out where a bank officer

            made loans to  named debtors knowing that  the proceeds would

            go to  a third party and where  the surrounding circumstances
                                 ___

            involved  dishonesty  (e.g.,  false  entries  in  the  bank's
                                   ____

            records).  Id. at 923-24.
                       ___

                 Wester's requested instruction 37 was thus not warranted

            by  Gens because it  would have  converted a  circumstance in
                ____

            Gens--financial  responsibility  of  the   borrower--into  an
            ____

            automatic  defense  requiring acquittal  regardless  of other

            evidence of dishonesty.  Misapplication and intent to defraud

            turn  largely on  the facts;  the facts  here were  enough to

            convict; and the requested  instruction was overbroad and was

            properly denied.

                 2.   Wester's  other  complaint  about the  jury  charge

            concerns the district court's instruction based  on Pinkerton
                                                                _________

            v. United States, 328 U.S. 640 (1946), that a conspirator may
               _____________

            be    accountable for  actions  of  co-conspirators taken  in

            furtherance of the  conspiracy.   Wester was  charged with  a

            conspiracy that  had as  its objects misapplication  and bank

            bribery.   Wester claims that the  district court's Pinkerton
                                                                _________

            instruction was mistaken in two respects. 

                 First,  Wester  argues  that  the  Pinkerton instruction
                                                    _________

            allowed  the jury  to  find him  vicariously  liable for  the

            substantive crimes  of a co-conspirator even  if those crimes

                                         -13-
                                         -13-

            were  not the object of  the conspiracy or  in furtherance of

            it.  For example, he says that the jury could have found that

            Wester was  guilty of the  substantive crime of  bank bribery

            because  one of  his co-conspirators committed  that offense;

            yet the  jury could have  found that the  conspiracy's object

            was limited to misapplication. 

                 One wonders  if Wester carefully read  the transcript of

            the jury charge before making this argument.  After correctly

            describing the other elements  of the Pinkerton doctrine, the
                                                  _________

            district  court  stated that  the  jury must  find  "that the

            substantive  crime (attributed to  the defendant vicariously)

            was committed  pursuant to the common  plan and understanding

            you  found to  exist among the  conspirators," and  that "the

            defendant could have reasonably foreseen that the substantive

            crime  might be committed by his  co-conspirator."  In short,

            the instruction itself answers Wester's hypothetical.   

                 Second, Wester argues that  it was inappropriate to give

            a  Pinkerton  instruction at  all,  because  "where there  is
               _________

            evidence  of various substantive offenses . . . it raises the

            risk  that the jury will  resort to the  inverse of Pinkerton
                                                                _________

            and  infer the existence of the conspiracy from the series of

            substantive  criminal  offenses."    He says  this  risk  was

            especially high here because the government  concentrated its

            efforts on  proving only the  substantive charges.   We agree

            neither with the premise nor the conclusion.

                                         -14-
                                         -14-

                 In  a  case like  this one,  some interplay  between the

            jury's  assessment of guilt on the substantive counts and the

            conspiracy charge  is both natural and  appropriate.  Indeed,

            the fact  that substantive  crimes  were carried  out by  the

            defendants, following discussions between them, may well make

            the  fact of agreement more  likely.  Rossetti  v. Curran, 80
                                                  ________     ______

            F.3d 1,  5 (1st  Cir. 1996).   This  is so  whether or not  a

            Pinkerton charge is  given; the  charge is at  most an  added
            _________

            complication for the jury but one well within its ken.

                 Here,   the   government  offered   ample   evidence  of

            discussions between  the four  partners that provided  a firm

            basis  for  the  conspiracy  charge.   There  were  pages  of

            testimony concerning the meetings among Wester, Fredo, George

            and  Morgan, that led to  the various loans  and the payments

            back to Wester.  This testimony provided grounds for the jury

            to find  that Wester participated in  the charged conspiracy.

            And, because Wester argued  that he was unaware of  many acts

            undertaken by his co-conspirators  (i.e, the false entries on
                                                ___

            loan  documents   by  Fredo),  a  Pinkerton  instruction  was
                                              _________

            especially apt.

                 3.   Wester's  challenges  to  his  sentence  have  more

            merit.  One  argument is that  the district court  improperly

            calculated  the  victim loss  figures  for  one of  the  bank

            bribery counts.  The other concerns an adjustment for role in

            the offense.  We address the claims in that order, describing

                                         -15-
                                         -15-

            at the outset the calculation of the sentence.  Citations are

            to  the 1987 edition of  the guidelines which  was applied in

            this case. 

                 At  sentencing,  the  misapplication  and  bank  bribery

            counts were grouped as  closely related counts under U.S.S.G.

               3D1.2(d); and the bribery guideline  was used to determine

            the base offense level because its level is the higher of the

            two.    Id.    3D1.3(b).   The  base offense  level  for bank
                    ___

            bribery is eight, id.    2B4.1, to be increased based on  the
                              ___

            greater of the  value of  the bribe or  the improper  benefit

            conferred  in return, according to the table at section 2F1.1

            (fraud).  In this case, the figure employed was  the value of

            the bribe.

                 At the sentencing hearing, the district court found that

            Wester  received,  or intended  to receive,  bribes totalling

            $12,650,000.   From the  presentence report, it  appears that

            this total reflected Wester's release from personal liability

            on the $12.4 million NEFR loan (in exchange for arranging the

            $2.3  million loan to Morgan and George), and the $250,000 in

            buyout payments  he received  from Morgan and  George.   This

            $12,650,000 figure  subjected Wester to the  maximum 11-level

            increase. U.S.S.G.   2F1.1.

                 The  resulting  offense level  of  19  (8 plus  11)  was

            further  adjusted  upward  by  4  levels  to  23,  reflecting

            Wester's role  as an  organizer or  leader (a separate  issue

                                         -16-
                                         -16-

            addressed below).  There  was no reduction for  acceptance of

            responsibility.    The  resulting  range, for  a  first  time

            offender, is  46 to  57 months'  imprisonment.   The district

            court sentenced Wester,  at the  bottom of the  range, to  46

            months.

                 On  appeal, Wester  first  maintains  that the  district

            court should not  have included the  $12.4 million figure  as

            any part  of the value of  the bribes.  He  contends that the

            release from  his personal guaranty on the $12.4 million loan

            should  not  count because  NEFR  did not  consider  the $2.3

            million loan a quid pro quo for the release, an argument that

            he supports by pointing out that NEFR never formally executed

            the release.  He also asserts that First Service would likely

            have  made  the  $2.3  million  loan  to  Morgan  and  George

            regardless whether  NEFR offered to release  Wester and Fredo

            from personal liability.

                 18 U.S.C.   215 makes it criminal  corruptly to solicit,

            accept or agree to  accept anything of value intending  to be

            influenced or rewarded in connection with a bank transaction.

            The jury was entitled to find that Wester did foster the $2.3

            million  loan to NEFR on  the understanding that  he would be

            relieved of his  personal guaranty.   Whether the bank  would

            have  made  the  loan  anyway, and  whether  Wester  actually

            received the  promised benefit, are  of no  moment under  the

                                         -17-
                                         -17-

            statute; and the guidelines apply to a promised payment quite

            as much as to payment actually received.3

                 Wester  is on  more solid  ground when  he argues  that,

            assuming that  the promised release of  his personal guaranty

            could be counted for  sentencing purposes, the district court

            incorrectly valued  the release at the  $12.4 million figure,

            which  represented the full  amount of the  loan.  It  is far

            from clear that this issue was properly preserved, a point to

            which we will  return; but  the issue was  discussed in  oral

            argument in this court,  and the government has  furnished us

            with the  Eighth Circuit's helpful decision  in United States
                                                            _____________

            v. Fitzhugh, 78 F.3d 1326, 1331 (8th Cir. 1996).
               ________

                 In Fitzhugh,  the court  was concerned with  valuing the
                    ________

            improper benefit conferred on the borrower by a loan obtained

            by bank bribery.  The trial  court had taken this value to be

            simply the face amount of the loan; but as the Eighth Circuit

            explained, citing  authority and examples, "[t]he  value of a

            transaction is  often quite different than the face amount of

            that transaction."   78 F.3d  at 1331.   Indeed, the  current

            guideline  commentary  makes  clear that  (depending  on  the

            facts) the value of a loan might be no more than the value of

            a lower interest rate procured through the bribe.  Id.
                                                               ___

                                
            ____________________

                 3The statute  by its own terms  applies to solicitations
            and  agreements to accept as well as to bribes actually paid.
            As to the guidelines, see, e.g., United States v. Gillis, 951
                                  ___  ____  _____________    ______
            F.2d  580, 585 (4th Cir. 1991), cert. denied, 112 S. Ct. 3030
                                            ____________
            (1992); U.S.S.G.   2C1.1 (lack of completion irrelevant).

                                         -18-
                                         -18-

                 Obviously, if  Wester had been bribed  with a one-dollar

            lottery ticket for a million dollar prize, no one would claim

            that  the  ticket should  be  valued  at the  full  potential

            winnings.  So,  too, if  he had been  given a  million-dollar

            term  life  insurance policy.    Here,  the actual  value  of

            Wester's promised release from  his personal guaranty for the

            $12.4 million loan  depends on such factors as the likelihood

            of default and the worth of the collateral securing the loan.

            It is unlikely that  the economic value of the  release comes

            close to $12.4 million.

                 At sentencing,  neither the  parties  nor the  probation

            officer made any attempt to develop the information necessary

            to  estimate reasonably the value of the release.  It appears

            that in  the district court  Wester's primary concern  was to

            exclude any consideration of the release (on grounds  we have
                    ___

            already rejected); and neither  the probation officer nor the

            government seems to have  noticed the underlying problem with

            using face  value when  the presentence report  was prepared.

            Thus, the district court was not fairly alerted to the issue.

                 Nevertheless, we think that the miscalculation should be

            noticed as plain error.  United States v. Olano, 507 U.S. 725
                                     _____________    _____

            (1993).  Prejudice exists since it is almost certain that the

            misevaluation affected the guideline range, quite possibly to

            a  significant extent;  for  example, eliminating  the  $12.4

            million figure entirely  would lower  the range to  30 to  37

                                         -19-
                                         -19-

            months.  And while an appeals court is not required to notice

            every such  unpreserved error in sentencing,  Olano, 507 U.S.
                                                          _____

            at 736, we think  that this is a proper case for us to notice

            a  significant mistake.   United States  v. Whiting,  28 F.3d
                                      _____________     _______

            1296, 1312 (1st  Cir.), cert. denied, 115 S. Ct. 378 (1994). 
                                    _____ ______

                 Wester's other main claim as to his sentence is that the

            district court erred in adjusting  his offense level up  four

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

            This provision  provides for a four-level  enhancement if the

            court finds that "the defendant was an organizer or leader of

            a criminal activity which  included five or more participants

            or  was  otherwise  extensive."   On  appeal,  Wester's  only

            developed  challenge is  to the  latter requirement  that the

            activity include  five or more participants  or be "otherwise

            extensive."

                 At the sentencing hearing, the district judge found that

            Wester was an organizer or leader, based on his capacity as a

            top official at First  Service and because the  scheme likely

            could not have taken place without Wester's leadership.  From

            this the court concluded  that the enhancement was warranted,

            without making  any additional  record finding as  to whether

            the  enterprise involved  five  or more  participants or  was

            "otherwise extensive."   

                                         -20-
                                         -20-

                 The court  did adopt the presentence  report by checking

            the appropriate box,  but the  report is itself  a source  of

            uncertainty.  The initial report appears to rely on the "five

            or  more participants"  prong,  stating that  Wester was  the

            organizer  of  criminal  activity  involving  himself, Fredo,

            George,  Morgan, and  then naming  several other  individuals

            such as  Morgan's accountant,  George's lawyer,  officials at

            NEFR,  and employees of First Service.  There was no reliance

            on other variables such  as duration, number of episodes,  or

            amount.  

                 Before  sentencing, Wester  objected to this  finding on

            the grounds that the necessary five participants must each be

            criminally  responsible,  not  merely  involved,  see  United
            __________                                        ___  ______

            States v. Graciani, 61 F.3d 70,  75 (1st Cir. 1995), and that
            ______    ________

            none of the persons named in the report beyond the  four main

            actors were criminally responsible for the  relevant actions.

            In response, the probation officer prepared an amended report

            that  took  the   position  that  Wester's   activities  were

            "otherwise extensive"  because of  the number of  individuals

            directly involved  and the  necessary use of  other unknowing

            employees of First Service in order to effect the scheme.  

                 But  the  amended report  did  not  clearly abandon  the

            earlier  position   that  there   were  also  five   or  more

            participants, and the district judge did not make clear which

            of the report's two alternative grounds he was adopting.  The

                                         -21-
                                         -21-

            problem  is not  that  independent detailed  findings by  the

            district court  are required;  rather, it is  that we  cannot

            effectively  review the  decision  to impose  the  four-level

            increase  without  knowing  the  ground on  which  it  rests.

            United States v.  Anh Van, 1996 WL  324615 at *3-4  (1st Cir.
            _____________     _______

            June 18, 1996).

                 None  of  this  would  matter if  the  undisputed  facts

            required   a   finding  that   there  were   five  criminally
            ________

            responsible  participants or that  the activity was otherwise

            extensive.   But that is not  the case here.   On appeal, the

            government concedes  that  the five  participant  requirement

            cannot  be met, and, in our  view, the district court was not

            compelled   to  find   that  the   activity  was   "otherwise

            extensive," a  label that incorporates a  number of variables

            primarily within the  ken of  the district court.   Anh  Van,
                                                                ________

            1996 WL 324615 at *4.

                 On  remand,  the  district  court  should  address   the

            "otherwise  extensive" issue  in the course  of resentencing.

            The court  is free  to make  new findings  in support of  its

            earlier   determination  or  to   reconsider  the  adjustment

            entirely,  as it sees fit.  Since resentencing will likely be

            required based  on the re-valuation of the  bribes, we affirm
                                                                   ______

            the convictions  but vacate the existing  sentence and remand
                                 ______                            ______

            for resentencing.

                 It is so ordered.
                 _________________

                                         -22-
                                         -22-