Court Opinion

ID: 2963549
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:11:47.513485+00
Date Added: 2024-06-11T09:18:25.077526
License: Public Domain

USCA1 Opinion

	

                            UNITES STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                                     
                                 ____________________

        No. 95-1051

                              UNITED STATES OF AMERICA,

                                      Appellant,

                                          v.

                               GEORGE S. BENNETT, JR.,

                                 Defendant, Appellee.

                                                     
                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Edward F. Harrington, U.S. District Judge]
                                               ___________________

                                                     
                                 ____________________

                                Selya, Cyr and Boudin,

                                   Circuit Judges.
                                   ______________

                                                     
                                 ____________________

             William P.  Stimson, Assistant United States  Attorney, with whom
             ___________________
        Donald K. Stern, United States Attorney, was on brief for appellant.
        _______________
             Morris  M. Goldings, with whom  John F. Aylmer,  Jr. and Mahoney,
             ___________________             ____________________     ________
        Hawkes & Goldings were on brief for appellee.
        _________________

                                                     
                                 ____________________

                                    July 31, 1995
                                                     
                                 ____________________

                    CYR, Circuit  Judge.   Following our remand  for resen-
                    CYR, Circuit  Judge.
                         ______________

          tencing in United States  v. Bennett, 37 F.3d 687 (1st Cir. 1994)
                     _____________     _______

          ("Bennett I"), which vacated a downward adjustment for acceptance
            _________

          of responsibility, the district  court determined that the defen-

          dant's restitutionary effort    an  element in its initial  down-

          ward  adjustment  ruling      nonetheless  warranted  a  downward
                __________

          departure   from  its  recalculated  guideline  sentencing  range
          _________

          ("GSR").   The government again  appealed, and we  now remand for

          resentencing within the recalculated GSR. 

                                          I
                                          I

                                      BACKGROUND
                                      BACKGROUND
                                      __________

                    We relate only the  facts essential to an understanding

          of the instant appeal.  For further detail, the reader is invited

          to see Bennett I, 37 F.3d at 689-92.  
                 _________

          A.   Factual Background and Initial Sentencing
          A.   Factual Background and Initial Sentencing
               _________________________________________

                    Appellee Bennett abused positions of  trust with Daniel

          Webster  Mortgage Company, Inc.  ("Daniel Webster"), by obtaining

          more  than ten  fraudulent  real  estate  loans based  on  Daniel

          Webster's  lines of  credit  with Plymouth  Federal Savings  Bank

          ("Plymouth  Federal") and  New Bedford  Institution  for Savings,

          which Bennett  applied toward the development  of real properties

          held  in trust  for the  benefit of  himself and  his wife.   The

          fraudulent borrowing scheme  involved aliases,  false loan  docu-

          ments and concealment.   Following its  discovery by the  Federal

          Deposit Insurance  Corporation during the spring  of 1990, Daniel

                                          2

          Webster  and Plymouth Federal sued Bennett.  On February 1, 1991,

          the  parties  entered  into  a  settlement  agreement,  requiring

          Bennett  to turn over cash and  other property, including certain

          improved properties which remained in his possession.  

                    In  late  1991, Bennett  was  indicted  on nine  felony

          counts for  fraudulently  obtaining  $900,000  from  a  financial

          institution,  see  18 U.S.C.     20  (1988) (defining  "financial
                        ___

          institution"),  between August  1988 and  October  1989.   See 18
                                                                     ___

          U.S.C.   1344.  Following his trial and conviction on  all charg-

          es, the district  court calculated the  total loss occasioned  by

          Bennett  at  $900,000, see  U.S.S.G.     2F1.1(b), rejecting  the
                                 ___

          government's contention  that the  total loss should  include, as

          relevant conduct, amounts  fraudulently borrowed but  not charged

          in  the indictment.   The  district court  then deducted  (1) the

          $589,000  Bennett had repaid on the indictment loans prior to the

          discovery of his  crimes, and (2) the value to  Daniel Webster   

          "at least  $660,000"     of the civil  suit settlement  agreement

          entered into after Bennett's crimes had been discovered.

                    Having determined  that no loss had  been occasioned by

          Bennett's fraud, the district court  ruled that Bennett merited a

          two-level downward  adjustment, see U.S.S.G.    3E1.1, for accep-
                              __________  ___

          tance  of responsibility  by  agreeing to  settle the  indictment

          loans in full.  The resulting Total Offense Level ("TOL") of  8,1
                              
          ____________________

               1The  TOL  calculations  at  the first  sentencing  were  as
          follows:

                      2F1.1 (base offense level)                 6
                      2F1.1(b)(1) (zero loss)                    0

                                          3

          together with a Criminal History Category of I, produced a GSR of

          from 2 to  8 months'  imprisonment, 24 to  36 months'  supervised

          release,  and a  $5,000  to $50,000  fine.   The  district  court

          sentenced Bennett to  24 months' probation  and six months'  home

          detention, special assessments totaling $450, and no fine. 

          B.   Bennett I
          B.   Bennett I
               _________

                    On  appeal in Bennett I we held that the district court
                                  _________

          had  erred in  excluding from  the total  loss  calculation under

          U.S.S.G.   2F1.1(b)(1), as relevant conduct, the losses resulting

          from fraudulent borrowings not charged in the indictment, Bennett
                                                                    _______

          I,  37 F.3d  at  694, and  in  crediting Bennett  with "at  least
          _

          $660,000"  for the civil  suit settlement entered  into after his
                                                                  _____

          crimes had  been discovered.   Id.  at 695  ("'[T]he loss  is the
                                         ___

          amount of the loan not repaid at the time the  offense is discov-

          ered, reduced by the amount the lending institution has recovered

          (or can expect to recover) from any  assets pledged to secure the

          loan.'")  (citing U.S.S.G.   2F1.1,  n. 7(b)).2  Finally, Bennett
                                                                    _______
                              
          ____________________

                      2F1.1(b)(2) (more than minimal planning)   2
                      3B1.3 (abuse of position of trust)         2
                      3E1.1 (acceptance of responsibility)      (2)
                                                            _______
                                        TOL                      8

               2Bennett I established the following formula for calculating
                _________
          "actual loss" under U.S.S.G.   2F1.1 on remand:

               1(a) the   total  dollar  amount  of  the  fraudulent  loans
                    involved in the  nine counts of conviction  ($900,000);
                    and
                    ___

                (b) the total dollar amount of all loans coming  within the
                    "relevant  conduct"  guideline calculation  ($526,000);
                    less
                    ____

                                          4

          I held  that the two-level downward adjustment  for acceptance of
          _                                   __________

          responsibility was clear error,  since Bennett had neither demon-

          strated  genuine  contrition nor  made  voluntary  restitution by
                                                  _________

          settling  the civil suit, nor  pled guilty to  the charges in the

          indictment, but instead denied  the essential factual elements of

          the  charges throughout  trial and  at sentencing  by maintaining

          that he had never intended to defraud the banks.  See id. at 696-
                                                            ___ ___

          98.  We  therefore vacated  the first sentence  and remanded  for

          resentencing.  Id. at 700.
                         ___

          C.   Resentencing
          C.   Resentencing
               ____________

                    On  remand the  district court  recalculated the  total

          loss  at $837,000, after  including the losses  occasioned by the

          fraudulent borrowings for which Bennett was not indicted, result-

          ing in a TOL of 18.3  Following Bennett's request  for a downward

          departure, see 18 U.S.C.   3553(b), the district court identified
          _________  ___
                              
          ____________________

               2(a) the  total dollar  amount of  all  loans repaid  by the
                                                             ______
                    defendant  prior to  May 3,  1990 ($589,000),  the date
                    Bennett's unlawful activities were discovered; and
                                                                   ___

                (b) the  total recoveries  realized  and reasonably  to  be
                    expected  from all  collateral  pledged  to secure  the
                    fraudulent loans involved  in all counts  of conviction
                    and  encompassed within  the relevant  conduct calcula-
                    tion.

          See Bennett I, 37 F.3d at 695.
          ___ _________

               3The recalculated TOL is comprised as follows: 

                      2F1.1(a) (base offense level)                   6
                      2F1.1(b)(1) (total loss of $837,000)            8
                      2F1.1(b)(2) (more than minimal planning)        2
                      3B1.3 (abuse of position of trust)              2
                                                                 ______
                                             TOL                     18

                                          5

          two  factors  ostensibly warranting  a  departure  from the  GSR.

          First,  Bennett had  already  served a  portion  of the  original

          sentence, including  the entire six months'  home detention term.

          Second,  the civil suit  settlement constituted "an extraordinary

          act that seldom occurs in the criminal courts. . . ."  According-

          ly,  the district  court granted  a six-month  downward departure

          from  the  recalculated 27-month  GSR minimum,  based on  the six

          months'  home  detention term  already  served,  combined with  a

          further 15-month  downward departure for the  "extraordinary act"

          of  entering into  the civil suit  settlement agreement  to repay

          $694,000.4   The  district court  then imposed  the minimum  six-

          month prison term now under challenge on appeal. 

                                          II
                                          II

                                      DISCUSSION
                                      DISCUSSION
                                      __________

                    The United  States contends that  Bennett I  foreclosed
                                                      _________

          both a  downward adjustment and  a downward departure  for accep-

          tance of responsibility  based on the  civil settlement and  Ben-

          nett's  belated  expression of  contrition  at  sentencing.   See
                                                                        ___

          Bennett I, 37 F.3d at 696-98; see also  U.S.S.G.   3E1.1 (permit-
          _________                     ___ ____
                              
          ____________________

               4As the  government has not appealed  the six-month downward
          departure,  we do  not  address it.   But  cf.  United States  v.
                                                ___  ___  _____________
          Zackular,  945  F.2d 423,  425  (1st Cir.  1991)  (rejecting home
          ________
          confinement as "official  detention" for purposes of  18 U.S.C.  
          3585 (Credit for Prior Custody):   "While a defendant's  movement
          may be  severely curtailed  by  . .  . home  confinement,  . .  .
          confinement to the comfort of one's own home is not the function-
          al equivalent of incarceration in either a practical or a psycho-
          logical sense."); see also Reno v. Koray, 115  S. Ct. 2021 (1995)
                            ___ ____ ____    _____
          (construing phrase "official detention," see 18 U.S.C.   3585(b),
                                                   ___
          in  light of Bail Reform  Act of 1984,  related sentencing provi-
          sions and Bureau of Prisons guidelines).

                                          6

          ting  two-level downward  adjustment for  clear demonstration  of
                                    __________

          acceptance of responsibility).  

          A.   Downward Departure
          A.   Downward Departure
               __________________

                    A sentencing court may depart from the GSR "only in the
                                           ______

          extraordinary case  -- the case that falls  outside the heartland

          for the offense of conviction . . . ."  United States v. Jackson,
                                                  _____________    _______

          30  F.3d 199,  201 (1st  Cir. 1994);  see also  United  States v.
                                                ___ ____  ______________

          Rivera,  994 F.2d  942, 947-49  (1st Cir.  1993).   The departure
          ______

          decision is subject to bifurcated review.  United States v. Fahm,
                                                     _____________    ____

          13 F.3d 447, 450  (1st Cir. 1994).  First,  all "quintessentially

          legal" rulings  underlying the decision to  depart (viz., whether

          the guideline  language encourages, permits or  forbids departure

          for the kinds of reasons relied upon by the sentencing court) are
                  _____ __ _______

          reviewed de novo.  Id. at 450 (quoting Rivera, 994  F.2d at 951).
                   __ ____   ___                 ______

          Second,  the "heartland"  determination  itself is  reviewed with

          "full awareness of, and respect for, the trier's  superior 'feel'

          for the case."   Rivera, 994 F.2d at  952 (citation omitted); see
                           ______                                       ___

          also Fahm, 13 F.3d at 450.
          ____ ____

               1.   Extraordinary Act
               1.   Extraordinary Act
                    _________________

                    Following Bennett I, the  district court found that the
                              _________

          $660,000  settlement agreement constituted  "an extraordinary act

          that seldom  occurs in  the criminal  courts," for  which Bennett

          "should be  rewarded .  .  . ."    The district  court  carefully

          avoided  explicit  reliance  on  "acceptance  of responsibility,"

          apparently in deference to  Bennett I, 37 F.3d at  698 (stressing
                                      _________

          that  restitution  must  be "'genuinely  voluntary,  rather  than

                                          7

          motivated  primarily  by a  collateral  consideration  such as  a

          desire to settle  the civil lawsuit'") (quoting  United States v.
                                                           _____________

          Miller, 991 F.2d 552, 553 (9th Cir. 1993));  cf. United States v.
          ______                                       __  _____________

          Hendrickson, 22 F.3d 170, 176 (7th Cir.) (rejecting civil forfei-
          ___________

          ture, in light of its involuntary nature, as basis for finding of

          "extraordinary acceptance of  responsibility"), cert. denied, 115
                                                          _____ ______

          S. Ct. 209 (1994).  Bennett I also held, however,  that the civil
                              _________

          suit  settlement was not  "genuinely voluntary," 37  F.3d at 698,

          and  that "'restitution is relevant to the extent it shows accep-
                                              __ ___ ______ __ _____ ______

          tance of responsibility.'"  Id. (quoting Miller, 991 F.2d at 553)
          _____ __ ______________     ___          ______

          (emphasis added).   Consequently, whether  or not the  civil suit

          settlement constituted an "extraordinary  act," there has been no

          showing that it  formed a  material basis for  either a  downward

          adjustment or  a downward  departure, let alone  for establishing

          restitutionary conduct outside the  "heartland."  See Rivera, 994
                                                            ___ ______

          F.2d at 947.  

                    As the  only ground for the  challenged downward depar-

          ture  had been foreclosed by  Bennett I, which  plainly held that
                                        _________

          the civil  suit settlement  was not genuinely  "voluntary" within

          the meaning of U.S.S.G.    3E1.1, see Bennett I, 37 F.3d  at 698,
                                            ___ _________

          and  could not  form  the basis  for  a downward  adjustment  for
                                                            __________

          acceptance  of responsibility,  it  could  afford no  permissible

          basis  for the 15-month downward departure.  See Miller, 991 F.2d
                                           _________   ___ ______

          at 553 (sentencing court may depart downward on basis of restitu-

          tionary conduct only if it evinces an acceptance of responsibili-

                                          8

          ty  substantially  greater  than  that required  for  a  downward

          adjustment under U.S.S.G.   3E1.1). 
          __________

               2.   Overstated Loss and "Multiple Loss Causation"
               2.   Overstated Loss and "Multiple Loss Causation"
                    ____________________________________________

                    On  appeal, Bennett  broaches  for the  first time  the

          alternative arguments that the 15-month downward departure should

          be upheld  either because  the $837,000 total  loss recalculation

          significantly  overstates  the  seriousness of  his  conduct, see
                                                                        ___

          U.S.S.G.    2F1.1, n. 7(b) (1994),  or on the ground  of multiple

          loss causation.   See, e.g.,  United States v.  Rostoff, 53  F.3d
                            ___  ____   _____________     _______

          398, 405 (1st Cir. 1995) (acknowledging that a downward departure

          may be  warranted in the "few instances" where ". . . a misrepre-

          sentation  . .  . is  not the  sole cause  of the  loss. .  . .")

          (citing U.S.S.G.   2F1.1, n.11 (1987)); see also United States v.
                                                  ___ ____ _____________

          Gregorio, 956 F.2d 341, 345 (1st Cir. 1992).
          ________

                    Although  Bennett  contends  that  the  total  loss  is

          overstated  as  a  consequence of  an  economic  downturn in  the

          regional economy, insofar as the record on appeal permits assess-

          ment it undermines Bennett's claim.  The valuation of the proper-

          ty Bennett agreed to surrender under  the terms of the civil suit

          settlement  was disputed  at  the initial  sentencing; viz.,  the

          government contending for $431,024.16, Bennett $684,000.  At that

          time, Bennett maintained  that a slumping economy had reduced the

          value  of the settlement  after the banks  took title to  the im-
                                    _____

          proved properties  and other  assets tendered  by  Bennett.   The

          district court accordingly rejected the lower valuation propound-

          ed  by the government, and  found the settlement  worth "at least

                                          9

          $660,000."  Subsequently, at resentencing, it placed the value of

          Bennett's "extraordinary act" at $694,000.  

                    Thus, not only did  Bennett not proffer record evidence

          of a  sudden, unforeseen  downturn in  the regional economy  that

          significantly lowered  the value of the  properties financed with

          his  illegal  borrowings, but  throughout  both prior  sentencing

          proceedings he  maintained that  market factors had  not affected

          these properties.  We therefore hold both that the "multiple loss

          causation" claim  has not  been preserved,  see United  States v.
                                                      ___ ______________

          Dietz, 950 F.2d  50, 55  (1st Cir. 1991)  ("[I]n connection  with
          _____

          sentencing  as in other contexts  . . .  arguments not seasonably

          addressed to the trial court may not be raised for the first time

          in  an appellate venue."), and  that it is  unsupported    indeed

          contradicted    by the record.  

                                         III
                                         III

                                      CONCLUSION
                                      CONCLUSION
                                      __________

                    As all available avenues  for a downward departure have

          been  foreclosed, we vacate  the second  sentence imposed  by the

          district court  and remand for resentencing  within the guideline

          sentencing range  prescribed by the total  offense level recalcu-

          lated by the district court at the first resentencing.

                    SO ORDERED.
                    SO ORDERED.
                    __ _______

           

                                          10