Court Opinion

ID: 2966950
Source: CourtListenerOpinion
Date Created: 2015-09-22 01:35:46.533112+00
Date Added: 2024-06-11T15:00:55.264362
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v.                                                                      No. 97-4363

WILLIAM ARAMONY,
Defendant-Appellant.

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v.                                                                      No. 97-4540

THOMAS J. MERLO,
Defendant-Appellant.

Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Chief District Judge.
(CR-94-373)

Argued: December 2, 1998

Decided: January 28, 1999

Before HAMILTON, LUTTIG, and KING, Circuit Judges.

_________________________________________________________________

Affirmed in part, vacated in part, and remanded by published opinion.
Judge Hamilton wrote the opinion, in which Judge King joined. Judge
Luttig wrote a separate opinion concurring in part and dissenting in
part.

_________________________________________________________________
COUNSEL

ARGUED: John DeWitt Cline, FREEDMAN, BOYD, DANIELS,
HOLLANDER, GUTTMANN & GOLDBERG, Albuquerque, New
Mexico, for Appellant Aramony; Richard Dennis Heideman, THE
HEIDEMAN LAW GROUP, P.C., Washington, D.C., for Appellant
Merlo. Gordon Dean Kromberg, Assistant United States Attorney,
Alexandria, Virginia, for Appellee. ON BRIEF: William B. Moffitt,
ASBILL, JUNKIN & MOFFITT, Washington, D.C., for Appellant
Aramony. Helen F. Fahey, United States Attorney, Randy I. Bellows,
Assistant United States Attorney, Alexandria, Virginia, for Appellee.

_________________________________________________________________

OPINION

HAMILTON, Circuit Judge:

Codefendants William Aramony and Thomas Merlo (collectively
the Defendants) appeal their respective sentences imposed following
our remand for resentencing in United States v. Aramony, 88 F.3d
1369 (4th Cir. 1996), cert. denied, 117 S. Ct. 1842 (1997) (Aramony
I). We affirm the Defendants' sentences in all respects except for the
district court's imposition of a $300,000 fine on Aramony and a
$30,000 fine on Merlo. Accordingly, we vacate the fine components
of the district court's respective judgments and remand for reconsid-
eration of its decisions imposing fines on the Defendants in accor-
dance with our instructions as set forth herein.

I

In Aramony I, we affirmed the Defendants' convictions on various
counts of fraud, see 18 U.S.C. §§ 371, 1341, 1343; various counts of
engaging in the interstate transportation of fraudulently acquired
property, see 18 U.S.C. § 2314; various counts of filing false income
tax returns, see 26 U.S.C. § 7206(1); and various counts of aiding the
filing of false income tax returns, see 26 U.S.C. § 7206(2). See
Aramony I, 88 F.3d at 1373. However, we vacated the Defendants'
convictions on various counts of money laundering, see 18 U.S.C.
§ 1957, because the district court did not require the jury to make a

                    2
finding on an essential element of money laundering, and under the
circumstances of the case, we were precluded from applying
harmless-error analysis. See Aramony I, 88 F.3d at 1373, 1385-87.

Our vacatur of the Defendants' money laundering convictions
required us to vacate the Defendants' respective sentences and
remand for resentencing, because the Defendants' total offense levels
under the United States Sentencing Guidelines (the Sentencing Guide-
lines or USSG) had been based upon their money laundering convic-
tions. We also vacated the district court's $552,188.97 forfeiture
orders against Aramony and Merlo, which were premised on their
money laundering convictions. See id. at 1392.

A. Background.

The facts underlying the Defendants' convictions are set forth in
detail in Aramony I. See id. at 1372-76. Accordingly, we need only
briefly summarize them here.

Aramony was the chief executive officer of the United Way of
America (UWA) from 1970 until his termination in March 1992.
UWA is "a nonprofit organization that acts as a service organization
for local United Way organizations located throughout the United
States." Id. at 1373. UWA was incorporated in New York and is head-
quartered in Alexandria, Virginia. Merlo served as UWA's chief
financial officer from January 1990 until his termination in March
1992.

In their leadership positions, both men improperly used UWA
money for personal gain. For example, Aramony charged personal
chauffeuring expenses to UWA and purchased a condominium in
Florida for his personal use with UWA funds, and Merlo used his
position at UWA to personally obtain $120,000 in proceeds of an
annuity belonging to UWA. Merlo also used his position at UWA to
aid Aramony in his various frauds on UWA, many of which served
to further Aramony's relationships with various women.

                   3
B. The Defendants' Initial Sentencings.

The district court initially sentenced the Defendants on June 22,
1995. Pursuant to the grouping rules of the Sentencing Guidelines, see
USSG § 3D1.1-5 (1991),1 the Defendants' money laundering convic-
tions provided their respective base offense levels for purposes of cal-
culating their sentencing ranges. The district court sentenced
Aramony to eighty-four months' imprisonment and Merlo to fifty-five
months' imprisonment, with each to serve three years of supervised
release. Additionally, pursuant to 18 U.S.C. § 982, the district court
ordered the Defendants to forfeit $552,188.97 on account of their
money laundering convictions. In light of this forfeiture order, the dis-
trict court did not impose any fines upon the Defendants.

Of relevance in the present appeal is the fact that the Presentence
Report (PSR) prepared for the Defendants' initial sentencings, recom-
mended a two-level increase in the Defendants' offense level with
respect to the fraud counts pursuant to USSG § 2F1.1(b)(2) (1991).
USSG § 2F1.1(b)(2) (1991) provides for a two-level increase in a
defendant's base offense level with respect to any fraud counts "[i]f
the offense involved (A) more than minimal planning, or (B) a
scheme to defraud more than one victim . . . ." Id. (emphasis added).

The Defendants objected to this recommended increase. At sen-
tencing, the district court sustained the Defendants' objections with
respect to USSG § 2F1.1(b)(2)(A) (1991), separately commenting
with regard to each defendant that his fraud crimes did not involve
more than minimal planning. However, the district court never
expressly addressed the applicability of a two-level increase pursuant
to USSG § 2F1.1(b)(2)(B) (1991) for a scheme to defraud involving
more than one victim.

C. The Defendants' Resentencings.

Following remand, the probation officer prepared revised PSRs for
the Defendants. The revised PSRs are identical to the initial PSRs
_________________________________________________________________
1 For ex post facto reasons, the district court used the 1991 version of
the Sentencing Guidelines in calculating the Defendants' sentences both
at their initial sentencings and at their resentencings.

                    4
with the exception of certain redactions and other changes made to
reflect the reversal of the Defendants' convictions on the money laun-
dering counts. With the money laundering convictions vacated, the
grouping rules of the Sentencing Guidelines, see USSG § 3D1.1-5
(1991), required the Defendants' respective base offense levels to be
premised upon their fraud convictions.

1. Aramony.

The district court resentenced Aramony on April 25, 1997. In
resentencing Aramony, the district court determined that Aramony's
total offense level under USSG § 2F1.1 (1991), which is the section
of the Sentencing Guidelines dealing with offenses involving fraud or
deceit, was twenty-seven, consisting of a base offense level of six, an
eleven-level increase based upon the amount of loss involved as quan-
tified in a dollar amount,2 a two-level increase pursuant to USSG
§ 2F1.1(b)(2)(B) (1991) for a scheme to defraud involving more than
one victim, a two-level increase pursuant to USSG§ 2F1.1(b)(3)(A)
(1991) for a misrepresentation that Aramony was acting on behalf of
a charitable organization, a four-level increase pursuant to USSG
§ 3B1.1(a) (1991) for Aramony's role in the offense, and a two-level
increase pursuant to USSG § 3B1.3 (1991) for Aramony's abuse of
a position of trust. The district court determined Aramony's Criminal
_________________________________________________________________
2 Pursuant to USSG § 1B1.3 (1991), in calculating the amount of loss
involved, the district court counted losses stemming from conduct for
which Aramony was indicted, but successfully moved for judgment of
acquittal at the close of the government's case-in-chief. Specifically, the
district court counted losses stemming from Aramony's conduct, as
detailed in Aramony's revised PSR, in fraudulently obtaining money
from an organization related to UWA named Partnership Umbrella, Inc.
(PUI). PUI's primary purpose was to act as a support organization for
charities by endeavoring "to aid and assist not-for-profit organizations to
secure the economic and related benefits of volume purchasing through
development and management of national purchasing programs on behalf
of such organizations." Aramony I, 88 F.3d at 1373 n.2 (internal quota-
tion marks omitted). According to Aramony's revised PSR, his modus
operandi in defrauding PUI was similar to his modus operandi in
defrauding UWA. For example, Aramony caused PUI funds to be used
to pay for personal travel expenses incurred by him and one of his girl-
friends.

                    5
History Category to be I. Aramony's total offense level of twenty-
seven when combined with his Criminal History Category of I
resulted in a sentencing range of seventy to eight-seven months'
imprisonment.3 Within this range, the district court sentenced Ara-
mony to eighty-four months' imprisonment.

The district court then imposed a $300,000 fine on Aramony. In
this regard, the district court made a conclusory finding that Aramony
had the financial means to pay a $300,000 fine. Furthermore, the dis-
trict court commented that it did not impose a fine on Aramony at his
initial sentencing "because of the amount of forfeiture that was
involved." (J.A. 382). The district court then commented that absent
the forfeiture, it found the imposition of a $300,000 fine appropriate.
Of relevance in this appeal, Aramony objected to the inclusion of any
loss sustained by PUI in the calculation of his offense level, to the
two-level increase in his offense level under USSG§ 2F1.1 (1991)
pursuant to USSG § 2F1.1(b)(2)(B) (1991) for a scheme to defraud
involving more than one victim, and to the two-level increase in his
offense level under USSG § 2F1.1 (1991) pursuant to USSG
§ 2F1.1(b)(3)(A) (1991) for a misrepresentation that Aramony was
acting on behalf of a charitable organization. Aramony also objected
to the district court's refusal to grant his motion for a downward
departure based upon his allegedly extraordinary good works.

Finally, Aramony objected to the imposition of a fine on the
ground that he lacked the ability to pay any amount of fine given his
then current financial condition, his term of imprisonment, and his
likely inability to earn any significant amount of money upon expira-
tion of his term of imprisonment in light of his advanced age and sta-
tus as a convicted felon. Aramony also pointed out that the
information contained in his revised PSR concerning his financial
condition had not been updated from his initial PSR.

In response to Aramony's objection to the imposition of a
$300,000 fine, the district court acknowledged that its finding that
_________________________________________________________________
3 In calculating Aramony's sentence under the Sentencing Guidelines,
the district court refused to grant a motion by Aramony for a downward
departure in his sentence based upon his alleged extraordinary good
works.

                    6
Aramony had the ability to pay a $300,000 fine was based upon the
information in the original PSR. The district court then invited Ara-
mony to update his financial information by motion, stating that it
would "be glad to examine" such information. (J.A. 384).

On May 1, 1997, Aramony filed a notice of appeal. On May 9,
1997, Aramony filed a motion pursuant to Federal Rule of Criminal
Procedure 35 to correct the fine component of his sentence. Aramony
attached an updated financial statement to his motion reflecting that
his debts exceeded his assets by more than $850,000, and his monthly
cash flow is negative. On June 2, 1997, the district court denied the
motion on the ground that Aramony's notice of appeal had divested
it of jurisdiction.

2. Merlo.

The district court resentenced Merlo on May 23, 1997. At his
resentencing, the district court determined that Merlo's total offense
level with respect to the fraud counts was twenty-three, consisting of
a base offense level of six, an eleven-level increase based upon the
amount of monetary loss involved,4 a two-level increase pursuant to
USSG § 2F1.1(b)(2)(B) (1991) for a scheme to defraud involving
more than one victim, a two-level increase pursuant to USSG
§ 2F1.1(b)(3)(A) (1991) for a misrepresentation that Merlo was acting
on behalf of a charitable organization, and a two-level increase pursu-
ant to USSG § 3B1.3 (1991) for Merlo's abuse of a position of trust.
The district court determined Merlo's Criminal History Category to
be I. Merlo's total offense level of twenty-three when combined with
his Criminal History Category of I resulted in a sentencing range of
forty-six to fifty-seven months' imprisonment. Within this range, the
district court sentenced Merlo to fifty-five months' imprisonment.
_________________________________________________________________
4 As with Aramony, the district court counted losses stemming from
conduct for which Merlo was indicted, but successfully moved for judg-
ment of acquittal at the close of the government's case-in-chief. Specifi-
cally, the district court counted losses stemming from Merlo's conduct,
as detailed in Merlo's revised PSR, in fraudulently obtaining money
from PUI. For example, the revised PSR detailed how Merlo aided Ara-
mony in diverting thousands of dollars in PUI funds to pay for personal
travel expenses incurred by Aramony and one of his girlfriends.

                    7
The district court then imposed a $30,000 fine on Merlo.5 In this
regard, the district court made a conclusory finding that Merlo had the
financial means to pay a $30,000 fine. As with Aramony, the district
court commented that it did not impose a fine initially because of the
amount of forfeiture that was involved.

Of relevance in this appeal, Merlo objected to the inclusion of any
loss sustained by PUI in the calculation of his offense level, to the
two-level increase pursuant to USSG § 2F1.1(b)(2)(B) (1991) for a
scheme to defraud involving more than one victim, and to the imposi-
tion of the $30,000 fine. Merlo noted a timely appeal of his sentence
also.

II

The Defendants first complain that the district court erred in
including, under the theory of relevant conduct, see USSG § 1B1.3
(1991),6 the amount of PUI losses as attributed to them in their
respective revised PSRs in calculating their respective offense levels
under USSG § 2F1.1 (1991). According to the Defendants, the district
court erred because: (1) they successfully moved for judgments of
acquittal on the PUI counts; and (2) they were effectively precluded
from rebutting, for purposes of sentencing, the government's evidence
at trial that they defrauded PUI in various ways.

In response, the government initially argues that the law of the case
doctrine precludes the Defendants from making their first argument,
because the same argument was made in their joint brief in their first
appeal and rejected by this court in Aramony I , see id. at 1392. Alter-
natively, the government relies upon the Supreme Court's recent deci-
_________________________________________________________________
5 Prior to the district court's imposition of this fine, Merlo informed the
district court that the $125,988 certificate of deposit listed as his asset in
his revised PSR had been released to UWA in partial satisfaction of a
civil judgment against him, which we affirmed in Merlo v. United Way
of America, 43 F.3d 96 (4th Cir. 1994).
6 Generally stated and of relevance in this appeal, USSG § 1B1.3
(1991) directs sentencing courts to consider all related conduct and
resulting harm in determining a defendant's specific offense level char-
acteristics, whether or not such conduct resulted in a conviction.

                    8
sion in United States v. Watts, 117 S. Ct. 633 (1997), in support of its
position that the sentencing theory of relevant conduct, as set forth in
USSG § 1B1.3 (1991), permits a district court, for purposes of deter-
mining a defendant's offense level, to factor in conduct by a defen-
dant upon which he or she was indicted but successfully moved for
judgment of acquittal, so long as the conduct has been proved by a
preponderance of the evidence. As for the Defendants' second argu-
ment, the government disputes that the Defendants were denied the
opportunity to present evidence rebutting its evidence of fraud on PUI
perpetrated by the Defendants.

We first address the government's law of the case argument. "As
most commonly defined, the doctrine [of the law of the case] posits
that when a court decides upon a rule of law, that decision should
continue to govern the same issues in subsequent stages in the same
case." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800,
815-16 (1988) (internal quotation marks omitted) (alteration in origi-
nal). Furthermore, when a rule of law has been decided adversely to
one or more codefendants, the law of the case doctrine precludes all
other codefendants from relitigating the legal issue. See United States
v. Schaff, 948 F.2d 501, 506 (9th Cir. 1991) (relying on law of the
case doctrine to preclude defendant from challenging jury instruction
on appeal, which had been previously upheld in an appeal by a code-
fendant); see also United States v. Bushert, 997 F.2d 1343, 1355-56
(11th Cir. 1993) (relying on Schaff in holding that law of the case
doctrine precluded defendant from challenging district court's denial
of suppression motion where codefendants had unsuccessfully made
the same challenge in prior appeal). Under the law of the case doc-
trine, as a practical matter, once the "decision of an appellate court
establishes `the law of the case,' it `must be followed in all subse-
quent proceedings in the same case in the trial court or on a later
appeal . . . unless: (1) a subsequent trial produces substantially differ-
ent evidence, (2) controlling authority has since made a contrary deci-
sion of law applicable to the issue, or (3) the prior decision was
clearly erroneous and would work manifest injustice.'" Segman v.
Warner-Lambert Co., 845 F.2d 66, 69 (4th Cir. 1988) (quoting EEOC
v. International Longshoremen's Assoc., 623 F.2d 1054, 1058 (5th
Cir. 1980)).

At their initial sentencings, the district court held the Defendants
accountable for the same exact losses in determining their respective

                     9
offense levels under USSG § 2F1.1 (1991) as it did at their resentenc-
ings. In the joint brief of the Defendants in their first appeal, Merlo
challenged this action by the district court as it pertained to him on
the same initial basis as the Defendants now challenge the identical
action by the district court at the Defendants' resentencings--no
losses suffered by PUI as attributed to them in their respective revised
PSRs can be counted because they successfully moved for judgments
of acquittal on the PUI counts at the close of the government's case-
in-chief. Although we did not separately address Merlo's argument in
Aramony I, we explicitly acknowledged in section V of our opinion
that we had reviewed all of the other contentions raised by the Defen-
dants and found no reversible error. See id. at 1392.

Under law of the case principles, our rejection of Merlo's argument
became the law of the case for purposes of both Merlo and Aramony.
Critically, the argument at issue is a legal one, which was raised by
Merlo, a codefendant of Aramony, in the Defendants' first appeal,
and was rejected by this court in our decision in that appeal. There-
fore, unless (1) a subsequent trial or proceeding in the district court
produced substantially different evidence, (2) controlling authority
has since made a contrary decision of law applicable to the issue, or
(3) the prior decision was clearly erroneous and would work manifest
injustice, we are precluded from addressing the argument a second
time. See Segman, 845 F.2d at 69.

None of these exceptional circumstances is present, and therefore,
we do not address the argument. Specifically, no subsequent trial or
proceeding in the district court took place producing substantially dif-
ferent evidence with respect to the Defendants and PUI, and no con-
trolling authority has since made a contrary decision of law applicable
to the issues raised by the Defendants' challenge. Furthermore, our
prior decision was not clearly erroneous and would not work manifest
injustice if allowed to stand.

Accordingly, we turn now to consider the Defendants' second
argument in support of their allegation of error with respect to the
inclusion of PUI losses in calculating their respective offense levels--
that the losses should not have been counted because their judgments
of acquittal at the close of the government's case-in-chief effectively
precluded them from being able to offer evidence to rebut the findings

                    10
in their respective revised PSRs detailing various frauds on PUI by
them, such findings being based upon evidence presented at trial dur-
ing the government's case-in-chief. This argument is without merit,
because the Defendants had ample other opportunities to submit any
rebuttal evidence they desired. First, the Defendants had the opportu-
nity to object to any and all factual findings in their respective revised
PSRs and to submit with their objections any rebuttal evidence, for
example affidavits, they desired the district court to consider. Second,
the record discloses that neither Aramony nor Merlo proffered any
rebuttal evidence by this method or attempted to proffer any such evi-
dence at their respective sentencing hearings. Under these circum-
stances, the Defendants cannot be heard to complain about the district
court's reliance upon the findings in their respective revised PSRs
regarding their conduct in defrauding PUI, which findings the district
court determined were reliable. See United States v. Terry, 916 F.2d
157, 162 (4th Cir. 1990) (holding that burden is on defendant to show
inaccuracy or unreliability of factual information in PSR; thus, when
a defendant merely objects to the accuracy or reliability of certain fac-
tual information in the PSR without affirmatively showing the factual
information at issue in the PSR is inaccurate, the district court is
"`free to adopt the findings'" of the PSR"`without more specific
inquiry or explanation'" (quoting United States v. Mueller, 902 F.2d
336, 346 (4th Cir. 1990)).

In sum, we affirm the district court's inclusion of the losses suf-
fered by PUI attributable to the Defendants as set forth in the revised
PSRs as relevant conduct under USSG § 1B1.3 (1991) for purposes
of determining the Defendants' respective offense levels under USSG
§ 2F1.1 (1991).

III

The Defendants next challenge the district court's two-level
increase in their respective offense levels under USSG § 2F1.1 (1991)
pursuant to USSG § 2F1.1(b)(2)(B) (1991) for a scheme to defraud
involving more than one victim.7 According to the Defendants, under
_________________________________________________________________
7 Aramony did not originally make this argument in his separate brief
in this second appeal, but Merlo did. Aramony subsequently moved for
leave to adopt Merlo's argument pursuant to Federal Rule of Appellate
Procedure 28(i). We grant such leave, and therefore, address the argu-
ment as one made by the Defendants jointly.

                     11
the "mandate rule," the district court was precluded from increasing
their respective offense levels pursuant to USSG§ 2F1.1(b)(2)(B)
(1991). Alternatively, the Defendants challenge the applicability of
USSG § 2F1.1(b)(2)(B) (1991) on the merits. We address the Defen-
dants' alternative arguments in turn. In our circuit, the mandate rule
forecloses litigation on remand of issues decided by the district court
but foregone on appeal or otherwise waived. See United States v. Bell,
5 F.3d 64, 66 (4th Cir. 1993). The mandate rule is merely a specific
application of the law of the case doctrine and is applicable in the
context of resentencing.8 See id. at 66-67. The force of the mandate
rule, however, can be avoided in the following extraordinary circum-
stances: "(1) a showing that controlling legal authority has changed
dramatically; (2) that significant new evidence, not earlier obtainable
in the exercise of due diligence, has come to light; or (3) that a blatant
error in the prior decision will, if uncorrected, result in a serious injus-
tice." Id. at 67 (internal quotation marks and alterations in original
omitted).

Our review of the record discloses that the district court's two-level
increases on remand in the Defendants' respective offense levels
under USSG § 2F1.1 (1991) pursuant to USSG§ 2F1.1(b)(2)(B)
(1991) did not violate the mandate rule. Critically, while the district
court expressly addressed the applicability of two-level increases in
the Defendants' respective offense levels under USSG§ 2F1.1 (1991)
pursuant to USSG § 2F1.1(b)(2)(A) (1991) (for more than minimal
planning) at their initial sentencings, it did not expressly address the
applicability of alternative two-level increases pursuant to USSG
§ 2F1.1(b)(2)(B) (1991). Moreover, we reject the Defendants' argu-
ment that at the Defendants' initial sentencings the district court
somehow impliedly addressed and rejected increases pursuant to
USSG § 2F1.1(b)(2)(B) (1991), because the record discloses no such
scenario. Indeed, the district court's failure at the Defendants' initial
sentencings to address the applicability of USSG§ 2F1.1(b)(2)(B)
(1991) is understandable in light of the fact that the Defendants'
money laundering convictions drove their respective offense levels at
their initial sentencings.
_________________________________________________________________
8 The mandate rule also forecloses litigation on remand of issues
expressly or impliedly decided by an appellate court. See Bell, 5 F.3d at
66.

                     12
We now turn to consider on the merits the propriety of the district
court's two-level increase in the Defendants' respective offense levels
under USSG § 2F1.1 (1991) pursuant to USSG§ 2F1.1(b)(2)(B)
(1991). USSG § 2F1.1(b)(2)(B) (1991) provides that a defendant's
offense level under USSG § 2F1.1 (1991) should be increased by two
levels "[i]f the offense involved . . . a scheme to defraud more than
one victim . . . ." According to Application Note 3 of USSG § 2F1.1
(1991):

          "Scheme to defraud more than one victim," as used in sub-
          section (b)(2)(B), refers to a design or plan to obtain some-
          thing of value from more than one person. In this context,
          "victim" refers to the person or entity from which the funds
          are to come directly. Thus, a wire fraud in which a single
          telephone call was made to three distinct individuals to get
          each of them to invest in a pyramid scheme would involve
          a scheme to defraud more than one victim, but passing a
          fraudulently endorsed check would not, even though the
          maker, payee and/or payor all might be considered victims
          for other purposes, such as restitution.

USSG § 2F1.1, comment. (n.3) (1991). We review the district court's
findings with respect to its application of USSG§ 2F1.1(b)(2)(B)
(1991) in determining the Defendants' sentences for clear error, giv-
ing "due regard to the opportunity of the district court to judge the
credibility of the witnesses." 18 U.S.C. § 3742(e).

Here, the record fully supports the district court's findings with
respect to each defendant that he intended to obtain something of
value from more than one person or entity, i.e. , UWA and the United
States Government, through his participation in a fraudulent scheme.
See United States v. Reyes, 908 F.2d 281, 288-89 (8th Cir. 1990)
(holding that the United States Government or an agency thereof can
be a victim under USSG § 2F1.1(b)(2)(B)). For example, with respect
to Aramony, the record contains evidence that by submitting bogus
expense receipts to UWA for reimbursement, Aramony intended to
obtain money from UWA to which he was not entitled and intended
to avoid paying federal income taxes on that money. With respect to
Merlo, the record contains evidence that by allowing one of Ara-
mony's assistants to use his (Merlo's) UWA corporate credit card to

                    13
charge an airline ticket to London so that, as desired by Aramony, one
of Aramony's girlfriends could join him in London on a business trip,
Merlo intended to defraud the United Way of money for the benefit
of Aramony and intended to aid Aramony in avoiding payment of
federal income taxes on that money.

For the reasons stated, we affirm the district court's two-level
increases in the Defendants' respective offense levels under USSG
§ 2F1.1 (1991) pursuant to USSG § 2F1.1(b)(2)(B) (1991).

IV

Next, Aramony contends that the district court erred by increasing
his offense level under USSG § 2F1.1 (1991) by two levels pursuant
to USSG § 2F1.1(b)(3)(A) (1991). We disagree.

USSG § 2F1.1(b)(3)(A) (1991) provides for a two-level increase in
a defendant's offense level under USSG § 2F1.1 (1991) "[i]f the
offense involved . . . a misrepresentation that the defendant was acting
on behalf of a charitable, educational, religious, or political organiza-
tion, or a government agency . . . ." USSG § 2F1.1(b)(3)(A) (1991).
Application Note 4 to USSG § 2F1.1 (1991) provides the following
examples of conduct that could trigger application of USSG
§ 2F1.1(b)(3)(A) (1991):

          a group of defendants who solicit contributions to a non-
          existent famine relief organization by mail, a defendant who
          diverts donations for a religiously affiliated school by tele-
          phone solicitations to church members in which the defen-
          dant falsely claims to be a fund-raiser for the school, or a
          defendant who poses as a federal collection agent in order
          to collect a delinquent student loan.

See USSG § 2F1.1, comment. (n.4) (1991). In addition, the Back-
ground to USSG § 2F1.1 (1991) states that,"[u]se of false pretenses
involving charitable causes and government agencies enhances the
sentences of defendants who take advantage of victims' trust in gov-
ernment or law enforcement agencies or their generosity and charita-
ble motives." USSG § 2F1.1, comment. (backg'd) (1991).

                    14
Aramony contends that by reading these quoted passages together,
it is clear that a two-level increase pursuant to USSG
§ 2F1.1(b)(3)(A) (1991) is only appropriate if a defendant misrepre-
sents his own ability to act on behalf of a particular organization in
order to take advantage of a victim's trust in government or charitable
motives. Therefore, Aramony argues, the district court's two-level
increase in his offense level pursuant to USSG § 2F1.1(b)(3)(A)
(1991) was inappropriate, because he did not misrepresent his author-
ity to act on behalf of the United Way nor did he exploit the generos-
ity and charitable motives of any party.

We reject Aramony's challenge to the district court's two-level
increase in his offense level under USSG § 2F1.1 (1991) pursuant to
USSG § 2F1.1(b)(3)(A) (1991), because our decision in United States
v. Marcum, 16 F.3d 599 (4th Cir. 1994), makes clear that we have
upheld a two-level increase pursuant to USSG § 2F1.1(b)(3)(A)9
under analogous factual circumstances. The defendant in Marcum
was a corporal in the Logan County, West Virginia Sheriff's Depart-
ment and president of a charitable organization known as the Logan
County Deputy Sheriff's Association, which administered public
bingo games. See id. at 601. As part of his offense conduct, Marcum
skimmed ten percent of the proceeds of the public bingo games for
the personal enrichment of himself and other officers of the Sheriff's
Department who worked the games. See id. In affirming the district
court's two-level increase in Marcum's offense level under USSG
§ 2F1.1 pursuant to USSG § 2F1.1(b)(3)(A), we relied upon the fact
that Marcum had misrepresented to the public that he was conducting
the bingo games wholly on behalf of the Sheriff's Association when,
in fact, he was acting in part for himself and his fellow officers. See
id. at 603. Our decision in Marcum makes clear that a two level
increase in a defendant's offense level under USSG§ 2F1.1 (1991)
pursuant to USSG § 2F1.1(b)(3)(A) (1991) is appropriate even if the
defendant did not misrepresent his authority to act on behalf of a par-
ticular organization, but rather only misrepresented that he was con-
ducting an activity wholly on behalf of such organization.
_________________________________________________________________
9 Marcum does not disclose which version of the Sentencing Guidelines
Manual was at issue. However, such information is irrelevant, because
at the time we issued our decision in Marcum, the language of USSG
§ 2F1.1(b)(3)(A) (1991) had never been amended.

                    15
Here, Aramony did not misrepresent his authority to act on behalf
of UWA, but he did misrepresent that he was acting wholly on behalf
of UWA in soliciting donations. Thus, the district court's two-level
increase in Aramony's offense level under USSG § 2F1.1 (1991) pur-
suant to USSG § 2F1.1(b)(3)(A) (1991) was not erroneous. We,
accordingly, affirm the district court in this respect.

V

Aramony next contends the district court erred in denying his
motion for a discretionary downward departure based on his allegedly
previously engaging in extraordinary good works. In support of his
motion, Aramony submitted numerous letters from different persons
listing examples of benevolent acts on his part.

A district court's discretionary refusal to depart downward in a
defendant's sentence is not reviewable on appeal. See United States
v. Hall, 977 F.2d 861, 863 (4th Cir. 1992). However, if the district
court's refusal to depart downward rested upon its erroneous percep-
tion that it lacked the legal authority to do so, we will review the dis-
trict court's decision de novo. See id. In determining whether a district
court erroneously perceived that it lacked the legal authority to depart,
we must construe the relevant statements of the district court in the
light most favorable to the defendant. See id.

Of relevance here, USSG § 5H1.11 (1991) provides that charitable
or public service "and similar prior good works are not ordinarily rel-
evant in determining whether a sentence should be outside the appli-
cable guideline range." Id. In short, the fact that a defendant had
previously engaged in good works is a discouraged factor on which
to base a downward departure. See United States v. Rybicki, 96 F.3d
754, 758 (4th Cir. 1996) (listing conduct discussed in USSG § 5H1.11
as discouraged basis for departure). A district court may exercise its
discretion to depart downward on the basis of a discouraged factor
"where `the factor is present to an exceptional degree or in some other
way [that] makes the case different from the ordinary case where the
factor is present.'" Id. (quoting Koon v. United States, 518 U.S. 81,
96 (1996)).

The only statement made by the district court on the subject is that
it was not presented with any information upon which it could justify

                    16
a downward departure. Even evaluating this statement in the light
most favorable to Aramony, we do not conclude the district court
erroneously believed that it lacked the legal authority to depart down-
ward when a defendant makes an adequate showing that he had
engaged in good works to an exceptional degree or that he had
engaged in good works in such a way that made his case different
from the ordinary case where a defendant had engaged in good works.
Accordingly, we cannot review the district court's denial of Ara-
mony's motion for a downward departure.

VI

Lastly, the Defendants challenge their respective fines on the basis
that they lack the ability to pay them.

The Sentencing Guidelines categorically state that a court "shall
impose a fine in all cases except where the defendant establishes that
he is unable to pay and is not likely to become able to pay any fine."
USSG § 5E1.2(a) (1991). The defendant bears the burden of demon-
strating his present and prospective inability to pay. See United States
v. Hairston, 46 F.3d 361, 376 (4th Cir. 1995). In determining the
imposition and amount of a fine under 18 U.S.C.§ 3572(a), the dis-
trict court must consider, among other things, the income, financial
resources, and earning capacity of the defendant, as well as "the bur-
den that the fine will impose upon the defendant" and his dependents.
See 18 U.S.C. § 3572(a). "A district court may satisfy these require-
ments if it adopts a defendant's [PSR] that contains adequate factual
findings to allow effective appellate review of the fine . . . ." United
States v. Castner, 50 F.3d 1267, 1277 (4th Cir. 1995). Otherwise, the
district court must set forth specifically its findings of fact on the fac-
tors set forth in 18 U.S.C. § 3572(a). See United States v. Walker, 39
F.3d 489, 492 (4th Cir. 1994). The specific findings"are necessary to
assure effective appellate review of . . . fines imposed." Castner, 50
F.3d at 1277 (internal quotation marks omitted). We review a district
court's factual findings with respect to the imposition of a fine under
the clearly erroneous standard of review. See 18 U.S.C. § 3742(e).

Here, the respective revised PSR for each defendant did not even
arguably contain current information regarding his financial condition
or adequate findings with respect to the statutory factors listed in 18

                     17
U.S.C. § 3572(a). Furthermore, the district court did not make any
findings with respect to the statutory factors listed in 18 U.S.C.
§ 3572(a). Under these circumstances, effective appellate review is
precluded. Accordingly, we vacate the fine components of the respec-
tive judgments and remand to the district court with instructions that
it: (1) order the revised PSR updated to reflect the financial condition
of the Defendants; (2) reevaluate whether to impose fines on the
Defendants in light of the updated information; and (3) if it decides
to reimpose any fines, make the required statutory findings pursuant
to 18 U.S.C. § 3572(a) in order that effective appellate review is
possible.10

VII

In conclusion, we affirm the Defendants' sentences in all respects
except for the district court's imposition of fines. We, accordingly,
vacate the fine components of the respective judgments and remand
for further proceedings consistent with this opinion.

AFFIRMED IN PART, VACATED
IN PART, AND REMANDED

LUTTIG, Circuit Judge, concurring in part and dissenting in part:

I concur in the majority opinion as to Parts I to V. I write sepa-
rately because I believe that it is unnecessary to remand the case to
the district court to consider, for the third time, appellants' financial
condition. Based on the record before us on appeal, I would conclude
that appellant Aramony easily has sufficient assets to pay his assessed
fine of $300,000, particularly in light of the fact (not even mentioned
by the majority) that a district court recently awarded him some $2.37
million in pension benefits. See Aramony v. United Way of Am., 1998
WL 813475 (S.D.N.Y. Nov. 20, 1998). Although, as Aramony cor-
_________________________________________________________________
10 Aramony also contends the district court erred by denying his motion
pursuant to Federal Rule of Criminal Procedure 35, the purpose of which
was to put information regarding his then current financial condition
before the district court. Because we are vacating the fine component of
the judgment entered by the district court with respect to Aramony, we
do not address this allegation of error.

                    18
rectly notes, a sentencing court cannot garnish pension benefits to sat-
isfy a fine, see Guidry v. Sheet Metal Workers Nat'l Pension Fund,
493 U.S. 365, 371-77 (1990), a court can take such benefits into
account in assessing a defendant's overall income stream, and there-
fore his prospective ability to pay, cf. United States v. Gresham, 964
F.2d 1426, 1430 (4th Cir. 1992) (holding that value of a defendant's
home could be taken into account in determining defendant's ability
to pay fine, even if government could not presently enforce judgment
lien against home). I would also conclude that appellant Merlo,
despite his current zero to slightly negative net worth, is likely to
become able to pay his assessed fine of $30,000, especially in view
of the fact that his base salary, before bonuses, in the year prior to his
conviction was $165,000. See Sealed Supplemental Appendix at 84.

In reaching these conclusions, I recognize that, upon resentencing,
the probation officer did not revise those portions of her presentenc-
ing reports in which she considered the financial condition of the
appellants, and that the district court made no additional factual find-
ings in this regard. However, as the majority notes in its factual recita-
tion but fails to appreciate in its substantive discussion, see ante at 3,
we remanded this case to the district court only for the purpose of
recalculating appellants' base offense levels on account of our rever-
sal of their convictions for money laundering. See United States v.
Aramony, 88 F.3d 1369, 1392 (4th Cir. 1996). And, moreover, at least
Aramony's ability to pay, based upon public court records filed by
the parties as to which we may take judicial notice and unmentioned
by the majority, is demonstrably far greater today than it was at the
time of the original sentencing. Rather than assign the district court
(whose time, it bears remembering, is precious) the niggling task of
resubstantiating the fine of one man whose net worth is several times
the amount of fine imposed and the fine of another man whose profes-
sional background manifestly renders him able to pay the relatively
insignificant fine assessed against him, I would simply conclude that
the district court's finding regarding appellants' ability to pay is
amply supported by the record before us. Accordingly, insofar as the
majority opinion remands this case yet again to the district court, I
respectfully dissent.

                     19