Court Opinion

ID: 2971131
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:29:28.717876+00
Date Added: 2024-06-11T11:43:33.961632
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
            Pursuant to Sixth Circuit Rule 206            2    United States v. McBride                   No. 02-3931
    ELECTRONIC CITATION: 2004 FED App. 0093P (6th Cir.)
                File Name: 04a0093p.06                                       _________________
                                                                                 OPINION
UNITED STATES COURT OF APPEALS                                               _________________
              FOR THE SIXTH CIRCUIT                          RONALD LEE GILMAN, Circuit Judge. James Thomas
                _________________                         McBride was convicted of (1) presenting a false claim against
                                                          the IRS, and (2) various obstruction of justice and bankruptcy
 UNITED STATES OF AMERICA , X                             fraud charges based upon certain financial transactions he
            Plaintiff-Appellee, -                         initiated that were related to a tax evasion case against his
                                   -                      girlfriend. He insisted on proceeding without the assistance
                                   -  No. 02-3931         of counsel at his trial. The jury convicted him on all counts.
           v.                      -                      McBride seeks to overturn his conviction on the basis that his
                                    >                     waiver of counsel was ineffective and because the evidence
                                   ,                      against him was allegedly insufficient. For the reasons set
 JAMES THOMAS MCBRIDE,             -
         Defendant-Appellant. -                           forth below, we AFFIRM the district court’s determination
                                                          that McBride effectively waived his right to counsel at all
                                  N                       stages of the proceedings and that there was sufficient
      Appeal from the United States District Court        evidence to convict him on Counts 2-6, but REVERSE
     for the Southern District of Ohio at Columbus.       McBride’s conviction on Count 1 because there was
    No. 02-00060—George C. Smith, District Judge.         insufficient evidence to support the verdict on that charge.
                                                          We also VACATE McBride’s sentence and REMAND for
               Argued: February 5, 2004                   resentencing consistent with this opinion.

          Decided and Filed: March 30, 2004                                   I. BACKGROUND

   Before: NELSON, GILMAN, and ROGERS, Circuit            A. Factual background
                     Judges.
                                                             Katina Kefalos was convicted by a jury, in proceedings
                  _________________                       before District Judge Algenon L. Marbley, of evading
                                                          $12,990.67 in federal income taxes. Kefalos was McBride’s
                       COUNSEL                            girlfriend. During the course of her trial, Kefalos fired the
                                                          two attorneys—David Axelrod and Terry Sherman—who
ARGUED: Robert J. Dunn, Bay City, Michigan, for           were appointed to represent her. Prior to Kefalos’s
Appellant. Daniel Allen Brown, ASSISTANT UNITED           sentencing, McBride sent a check for the $12,990.67 to IRS
STATES ATTORNEY, Columbus, Ohio, for Appellee.            revenue agent Margaret Nypaver, who had unsuccessfully
ON BRIEF: Robert J. Dunn, Bay City, Michigan, for         attempted to collect this sum from Kefalos and who testified
Appellant. Daniel Allen Brown, ASSISTANT UNITED           against her at trial. McBride knew that his check would
STATES ATTORNEY, Columbus, Ohio, for Appellee.            “bounce” because it was drawn on an account that he had

                            1
No. 02-3931                   United States v. McBride      3    4      United States v. McBride                    No. 02-3931

closed one year earlier. He then submitted bad checks from       McBride responded that he had been a criminal defendant
the same account to the Franklin County Treasurer’s Office       before, that he had assisted other people in representing
to purportedly pay the real estate taxes for the first half of   themselves in several cases, and that he had participated in
2001 on the residences of Judge Marbley, attorneys Axelrod       both federal and state criminal proceedings. The court then
and Sherman, and agent Nypaver.                                  went over each count of the indictment in detail and stressed
                                                                 the severity of the penalties involved, including the possibility
  The Treasurer’s Office, without waiting to see if the checks   of consecutive sentences. With the following exchange, the
would clear, issued statements to McBride acknowledging          court closed this line of questioning:
that he had paid these real estate taxes. McBride then used
the statements as evidence of his creditor status when he            THE COURT: So, you know just exactly how much
subsequently filed four involuntary bankruptcy petitions in                     jeopardy that you are in, in this
the United States Bankruptcy Court for the Southern District                    proceeding? You realize that if you
of Ohio against Judge Marbley, attorneys Axelrod and                            represent yourself, you are on your own?
Sherman, and agent Nypaver. He also paid the $200 filing fee                    Do you realize that, Mr. McBride?
for each of the bankruptcy petitions with more bad checks
that were drawn on his closed account.                               MCBRIDE:       Yes, sir, I do.

B. Procedural background                                           The court proceeded to ask McBride about his familiarity
                                                                 with the trial process, the Federal Rules of Evidence, and the
  McBride was indicted on the following six felony charges:      Federal Rules of Criminal Procedure. McBride expressed
presenting a false claim against the government in violation     comfort with these procedural matters. He was then advised
of 18 U.S.C. § 287, obstructing justice in violation of 18       that should he take the stand, he would have to ask questions
U.S.C. § 1503, obstructing the due administration of the         of himself and would not be permitted to testify in narrative
internal revenue laws in violation of 26 U.S.C. § 7212(a), and   form. Finally, the court issued the following warnings to
three counts of bankruptcy fraud in violation of 18 U.S.C.       McBride:
§ 157.
                                                                     THE COURT: In looking at the charges against you, Mr.
   In two appearances before the designated magistrate judge,                   McBride, and the complexity of this case,
McBride was advised of his right to counsel, including his                      this is not an ordinary - - this isn’t some
right to appointed counsel if he could not afford to retain an                  fender bender accident?
attorney. At his arraignment, McBride elected to proceed pro
se. David Graeff was appointed as standby counsel.                   MCBRIDE:       Exactly, sir.

  During a pretrial conference, the district court extensively           ...
questioned McBride about his decision to represent himself.
McBride was first asked about his educational background             THE COURT: At least in the opinion of the Court, you
and then questioned to verify that he was not under the                         would receive a far better defense if you
influence of prescription medication, narcotics, or alcohol.                    would proceed with a lawyer, rather than
The court also inquired about McBride’s legal experience.                       being on your own. And I think it is
No. 02-3931                   United States v. McBride      5    6      United States v. McBride                  No. 02-3931

                  unwise for you to try and represent            under the United States Sentencing Guidelines in accordance
                  yourself. And while you are familiar with      with Offense Level 26, Criminal History Category IV, within
                  the law, you are not familiar to the depth     a range of 92-115 months of imprisonment. It decided that
                  that would be necessary to give yourself       McBride should instead be sentenced under Offense Level 22,
                  the best possible defense, considering the     Criminal History Category IV. The court then sentenced
                  complexity of what you are charged with.       McBride to 78 months of imprisonment on Count 2; 60
                                                                 months on Counts 1, 4, 5, and 6; and 36 months on Count 3,
  MCBRIDE:        I understand.                                  all to be served concurrently.
  THE COURT: And while you have been in a court                                        II. ANALYSIS
             proceeding or maybe more than one,
             different things come up at different               A. McBride knowingly and intelligently waived his right
             proceedings that you may never have seen               to counsel
             or heard of before. . . . And you have at
             your elbow there someone who has had                    1. Standard of review
             many years of experience in this and other
             courts and would be termed probably an                 McBride argues on appeal that he did not effectively waive
             expert on federal trial work.                       his right to counsel at trial or at sentencing. Both parties
                                                                 agree that the standard of review for such claims is de novo,
                  Let me ask you this, Mr. McBride. Is your      but neither party provides any citations to applicable Sixth
                  decision entirely voluntary on your part?      Circuit precedent directly on point. Our sister circuits
                                                                 uniformly apply a de novo standard of review to a district
  MCBRIDE:        Yes, sir.                                      court’s conclusion of law that a defendant has waived his
                                                                 right to counsel. See, e.g., United States v. Kimball, 291 F.3d
The district court then concluded that McBride had               726, 730 (11th Cir. 2002); United States v. Turner, 287 F.3d
knowingly and voluntarily waived his right to counsel, that he   980, 983 (10th Cir. 2002); Lopez v. Thompson, 202 F.3d
was competent to do so, and that he had demonstrated an          1110, 1116 (9th Cir. 2000) (en banc).
understanding of the proceedings and the charges he faced.
Graeff was nonetheless requested by the court to continue in        In this circuit, however, two trends have developed. We
his role as standby counsel.                                     have on occasion applied “plain error” review to examine the
                                                                 validity of a defendant’s waiver of counsel. See United States
   McBride represented himself throughout his trial with the     v. Modena, 302 F.3d 626, 630-31 (6th Cir. 2002) (holding
assistance of Graeff. The jury found him guilty on all counts.   that the plain error standard applies where the defendant fails
At sentencing, McBride raised no objections to the               to object to continuing his self-representation); United States
Presentence Report and used the hearing to state his view that   v. Herrera-Martinez, 985 F.2d 298, 301 (6th Cir. 1993)
the district court and the U.S. Attorney’s Office were engaged   (holding that because no specific objection was made at trial
in fraudulent “smoke and mirrors” accounting practices. The      to the defendant’s proceeding pro se, the plain error standard
district court sua sponte raised concerns about the probation    applied).
officer’s determination that McBride should be sentenced
No. 02-3931                   United States v. McBride      7    8      United States v. McBride                    No. 02-3931

   Other panels have approached the waiver-of-counsel issue      also Miller, 910 F.2d at 1324 (holding that literal adherence
by omitting discussion of the standard of review and             to the recommended battery of questions is not required).
proceeding to engage in a thorough review of the colloquy        After the questioning, the district court should make an
between the district court judge and the defendant. See, e.g.,   express finding on the record that the accused has knowingly
United States v. Colbert, No. 00-1481, 2002 WL 31873484,         and voluntarily waived his right to counsel. McDowell, 814
at *3 (6th Cir. Feb. 12, 2002) (unpublished opinion)             F.2d at 250.
(reviewing the hearing transcript to determine whether the
judge conducted the model inquiry); Noble v. Wilkinson, No.         The model inquiry encompasses thirteen questions and one
92-4121, 1993 WL 436850, at *1 (6th Cir. Oct. 27, 1993)          strongly worded admonishment. In the present case, the
(unpublished opinion) (“When reviewing on direct appeal a        district court asked McBride, verbatim, twelve of the thirteen
claim of error regarding a waiver of counsel, we examine the     questions, and delivered the requisite warning. The only
substantive, detailed inquiry required of the district court     question that was not specifically asked was the following:
pursuant to United States v. McDowell”) (citation omitted);
United States v. Miller, 910 F.2d 1321, 1324 & n.3 (6th Cir.         Now, in light of the penalty that you might suffer if you
1990) (reproducing the colloquy and holding that it                  are found guilty and in light of all the difficulties of
constituted an effective waiver).                                    representing yourself, is it still your desire to represent
                                                                     yourself and to give up your right to be represented by a
   Because the result in this case would be the same under           lawyer?
either plain error or de novo review, we have no need to
resolve the ambiguity created by the above cases. Instead, we    Id. at 252. But the court substantially complied with the
will proceed to examine the district court’s colloquy to         essence of this inquiry when it reviewed the maximum
determine whether McBride made an effective waiver of his        penalty for each count that McBride faced, asked McBride
right to counsel.                                                whether he realized the jeopardy he was in, and informed him
                                                                 that he would be on his own if he chose to represent himself.
  2. McBride’s waiver of counsel at trial                        The court also advised McBride that his case was complex
                                                                 and would be better handled by his standby counsel, who was
  Before a criminal defendant may represent himself at trial,    an expert at federal trial work.
he must knowingly and intelligently waive his right to
counsel. Faretta v. California, 422 U.S. 806, 835 (1975)           After the lengthy colloquy with McBride, the district court
(“[H]e should be made aware of the dangers and                   asked McBride whether his decision to represent himself was
disadvantages of self-representation, so that the record will    “entirely voluntary” and, based upon McBride’s affirmative
establish that he knows what he is doing and his choice is       response, made the following finding:
made with eyes open.”) (citation and quotation marks
omitted). Whenever a district court in the Sixth Circuit is          The Court finds that the defendant has knowingly and
faced with an accused who wishes to represent himself, the           voluntarily waived his right to counsel. The Court also
court must ask the defendant a series of questions drawn             finds the defendant is competent to waive his right, as he
from, or substantially similar to, the model inquiry set forth       has demonstrated an understanding of the proceedings
in the Bench Book for United States District Judges. United          and the factual allegations against him, and I will permit
States v. McDowell, 814 F.2d 245, 250 (6th Cir. 1987); see           you to represent yourself.
No. 02-3931                     United States v. McBride        9    10   United States v. McBride                     No. 02-3931

Because the district court substantially adhered to the model        United States v. Fazzini, 871 F.2d 635, 643 (7th Cir. 1989)
inquiry as prescribed by McDowell, we affirm the court’s             (“Once the defendant has knowingly and intelligently waived
conclusion that McBride knowingly and voluntarily waived             his right to counsel, only a substantial change in
his right to counsel at trial.                                       circumstances will require the district court to inquire whether
                                                                     the defendant wishes to revoke his earlier waiver.”); Arnold
  3. McBride’s waiver of counsel at sentencing                       v. United States, 414 F.2d 1056, 1059 (9th Cir. 1969)
                                                                     (holding that, after a competent waiver of the right to counsel,
   McBride next argues that the district court should have           a new waiver need not be obtained at every subsequent court
obtained a second, independent waiver of his right to counsel        appearance of the defendant); Davis v. United States, 226
at the sentencing phase. The “plain error” standard of review        F.2d 834, 840 (8th Cir. 1955) (same).
is appropriate for this contention because, at the start of the
sentencing proceeding, McBride could have objected to                   This court has held, in a somewhat analogous situation, that
continuing his self-representation. He in fact failed to do so.      where a magistrate judge has engaged in the McDowell
See United States v. Modena, 302 F.3d at 630-31. “Plain              colloquy with the defendant and found an effective waiver,
error is defined as an egregious error, one that directly leads      the district judge is under no obligation to repeat the inquiry
to a miscarriage of justice, or error that is obvious, affects       at trial in the absence of any indication from the defendant
substantial rights, and seriously impairs the fairness or            that he has had a change of heart. Modena, 302 F.3d at 631.
integrity of the judicial proceedings.” United States v.             Both Modena and Napier lead us to adopt the rule set forth
Camejo, 333 F.3d 669, 672 (6th Cir. 2003) (citation and              above by our sister circuits that a defendant’s waiver of
quotation marks omitted).                                            counsel at trial carries over to subsequent proceedings absent
                                                                     a substantial change in circumstances. Because we find the
   In an unpublished opinion, this court has held that “[t]he        rule to be a sound one, we adopt it as part of this circuit’s
elaborate waiver procedure outlined in McDowell does not             jurisprudence.
apply to waiver of counsel during sentencing. The dangers of
self-representation at trial are simply not present at                  McBride’s behavior at the sentencing hearing also sheds
sentencing.” United States v. Napier, Nos. 88-164, 88-1693,          light on the continuing validity of his waiver of counsel. See
88-1763, 88-1765, and 88-1766, 1989 WL 100865, at *5 (6th            United States v. Gangler, No. 95-2406, 1997 WL 618783, at
Cir. Sept. 1, 1989). We need not decide whether this is a            *2 (6th Cir. Oct. 6, 1997) (unpublished opinion) (holding that
correct holding in the present case. The issue here is the           “waiver can be inferred from a defendant’s actions”) (citation
narrower one of whether a defendant’s waiver of counsel at           omitted). At sentencing, the district court first asked
trial carries over to the sentencing phase. Other circuits have      McBride’s standby counsel if he believed that McBride
held that a valid waiver remains in effect at subsequent             understood the Presentence Report. After receiving an
proceedings in the absence of an explicit revocation by the          affirmative response, the court asked for any objections to the
defendant or a change of circumstances that would suggest            report, resulting in the following exchange:
that the district court should make a renewed inquiry of the
defendant. See, e.g., United States v. Unger, 915 F.2d 759,            THE COURT: Mr. McBride, do you wish to have
762 (1st Cir. 1990) (holding that the district court was free to                  [standby counsel] say anything on your
find that the defendant’s earlier waiver was still in force at the                behalf?
sentencing hearing in the absence of intervening events);
No. 02-3931                   United States v. McBride      11    12   United States v. McBride                     No. 02-3931

  MCBRIDE:        May I speak on my own behalf?                     In the present case, the district court explicitly told
                                                                  McBride that it would be unable to assist him in the conduct
  THE COURT: You may speak on your own behalf, but                of the trial:
             please answer the question I asked you. I
             just asked you, do you wish to have                    THE COURT: I cannot tell you how to try your case. I
             [standby counsel] speak?                                          can keep everyone, including the
                                                                               prosecutor under a certain amount of
  MCBRIDE:        I only wish to speak on my own behalf.                       control, but I can’t tell you what to do or
                                                                               when to do it.
  THE COURT: Okay. So, the answer is no? You may
             speak on your own behalf.                              MCBRIDE:         Right.
  McBride’s conduct at sentencing demonstrates that he did          THE COURT: And I can’t question witnesses for you or
not wish to revoke his previous waiver of counsel. He                          cross-examine them or give you a word of
refused to let his standby counsel speak on his behalf to voice                advice. The Court desires to be and is,
any objections to the Presentence Report. Because nothing                      neutral in this and in every other case.
occurred between trial and sentencing that would have
prompted the district court to make a more thorough inquiry         MCBRIDE:         I understand.
of McBride’s wish to continue to represent himself, we reject
McBride’s claim that his waiver of counsel at trial was not in      THE COURT: I will not provide you with personal
force at the sentencing hearing.                                               instruction on courtroom procedure or
                                                                               perform any legal duties that counsel
B. The district court had no duty to assist McBride in                         would normally carry out.
   the conduct of his own defense
                                                                  The court then inquired whether McBride was familiar with
   McBride also argues that the district court should have        both the Federal Rules of Evidence and the Federal Rules of
informed him that he had a right to bring a Rule 29 motion for    Criminal Procedure, to which McBride answered in the
a judgment of acquittal either at the close of the government’s   affirmative. Under these circumstances, we find McBride’s
evidence or after the close of all the evidence. Fed. R. Crim.    contention that the district court had a duty to suggest that he
Proc. 29. The Supreme Court, however, has made clear that         make a Rule 29 motion to be without merit.
“[a] defendant does not have a constitutional right to receive
personal instruction from the trial judge on courtroom            C. Sufficient evidence supports McBride’s conviction on
procedure.” McKaskle v. Wiggins, 465 U.S. 168, 183 (1984).           Counts 2-5, but not on Count 1
“Nor does the Constitution require judges to take over chores
for a pro se defendant that would normally be attended to by        McBride next argues that the evidence was insufficient to
trained counsel as a matter of course.” Id.                       sustain the jury’s guilty verdict on the five counts that he
                                                                  contests. In order to appeal a jury’s verdict on the basis of
                                                                  insufficient evidence, the defendant must have moved for
                                                                  acquittal in the district court pursuant to Rule 29. United
                                                                  States v. Charles, 138 F.3d 257, 265 (6th Cir. 1998).
No. 02-3931                    United States v. McBride      13    14   United States v. McBride                     No. 02-3931

McBride made no such motion. Because of this failure, the          845 F.2d 1374 (6th Cir. 1988). In both of these situations the
evidence against McBride is reviewed under a “manifest             defendant is using fraudulent means to secure an unjustified
miscarriage of justice” standard and “we only reverse a            monetary payment from the government. McBride, on the
conviction if the record is devoid of evidence pointing to         other hand, convincingly argues that he cannot fall within the
guilt.” United States v. Carnes, 309 F.3d 950, 956 (6th Cir.       ambit of this statutory provision because, by sending the IRS
2002) (citation and quotation marks omitted).                      a bad check for Kefalos’s outstanding tax obligation, he could
                                                                   not possibly have obtained any money, property, credit, or
  In McBride’s brief, he appears at first glance to question the   reimbursement from the government in return.
sufficiency of the evidence only for Counts 3-5. But
embedded in his discussion of his waiver of the right to             The government devotes only three sentences to McBride’s
counsel is a challenge to the sufficiency of the evidence for      contention in its brief. Its position is essentially that “the
his conviction on Counts 1 and 2 as well. McBride concedes         presentation of the claim, in this case the bad check, with the
that there was sufficient evidence to convict him on Count 6.      knowledge that it is false, . . . comprises the offense.” But no
We will therefore address below the sufficiency of the             authority was cited to support its contention, and we have
evidence for Counts 1-5 solely to determine if the record is so    found none. One of the citations that the government did
devoid of evidence pointing to guilt as to constitute a            provide on this issue actually confirms the plain-meaning
miscarriage of justice. Carnes, 309 F.3d at 956.                   understanding of § 287, which does not cover McBride’s
                                                                   conduct. See United States v. Miller, 545 F.2d 1204, 1212
  1. Count 1: false claim against the government                   n.10 (9th Cir. 1976) (observing that the filing of a false tax
                                                                   return pursuant to a scheme to obtain an unjustified tax refund
   The jury found McBride guilty of presenting a false claim       constitutes a false claim under § 287) (citation omitted).
against the government, in violation of 18 U.S.C. § 287,
because he sent a governmental agency, the IRS, a bad check           Another case relied upon by the government is United
to cover the outstanding tax liability of Kefalos. Section 287     States v. Jackson, 845 F.2d 880 (9th Cir. 1988), cited for the
provides in pertinent part as follows:                             proposition that § 287 covers situations where the defendant
                                                                   seeks a “reduction in liability from the government.” Id. at
  Whoever makes or presents to any . . . department or             882. The facts in Jackson, however, do not support the
  agency . . . any claim upon or against the United States,        government’s position in the case before us. In Jackson, the
  or any department or agency thereof, knowing such claim          defendant received and cashed nine educational benefits
  to be false, fictitious, or fraudulent, shall be imprisoned      checks from the Veterans Administration (VA) for which he
  not more than five years and shall be subject to a fine          was later found ineligible. Id. at 881. With the knowledge
  ....                                                             that he was both ineligible for the benefits and that he had
                                                                   already deposited the checks, Jackson submitted a claim form
The word “claim” is not defined in the statute. Typical § 287      to the VA stating he had never received the checks and
cases in this circuit have involved the filing of a false tax      requesting that they be reissued to him. Id.
return seeking an unjustified tax refund, see, e.g., United
States v. Nash, 175 F.3d 429 (6th Cir. 1999), or the filing of        In analyzing the meaning of a false “claim,” the Jackson
a fraudulent claim for Medicare reimbursement for services         court stated that the “focus must be on the substance of the
that were never rendered, see, e.g., United States v. Campbell,    transaction, the disbursement of government funds, and not on
No. 02-3931                   United States v. McBride     15    16    United States v. McBride                     No. 02-3931

the timing or form of the entry in the government’s              301 F.3d 1000, 1002-3 (9th Cir. 2002) (describing
accounting ledgers.” Id. at 882 (emphasis added). The court      Schweitzer’s seminars on the use of fraudulent financial
held that Jackson’s conduct fell within the ambit of § 287       instruments with which to “satisfy” outstanding tax liability
because, by denying that he had received the first set of        and seek unjustified refunds from the IRS); United States v.
checks, Jackson sought to avoid reimbursing the government.      Wells, 163 F.3d 889, 893 (4th Cir. 1998) (same). In the
Id.; see also United States v. Duncan, 816 F.2d 153, 155 (4th    absence of additional information, we will assume for the
Cir. 1987) (holding that submitting a false travel voucher to    purposes of analyzing Morgan that the false lien drafts were
obtain credit for previously advanced government funds           the equivalent of a bad check.
constitutes a false claim because the government is at risk of
suffering a monetary loss).                                        The key factor that distinguishes Morgan from McBride’s
                                                                 case is that the defendant in Morgan sought an unjustified
  Jackson is easily distinguishable from the present case.       payment from the government—a tax refund. McBride, on
The defendant in Jackson did two things that involved the        the other hand, did not attempt to elicit a payment from the
disbursement of government funds. He first sought to reduce      IRS when he sent it a bad check; he was at most, according to
his liability to the government in the sense that he attempted   his brief, trying to harass the IRS and its agent.
to avoid refunding to the government the VA payments that
he had received but to which he was not entitled. Second, he        The Morgan court considered the defendant’s false lien
made a false claim upon the government by requesting that        draft as a “claim” because “the government would suffer a
these checks be reissued to him. Nothing McBride did, on the     monetary loss if she were successful.” 3 Fed. Appx. at 635.
other hand, involved the disbursement of government funds.       Morgan’s concern with the potential loss to the government
He neither received any undue payments from the                  indicates that the real focus of the court was on the unjustified
government nor tried to induce the government to send him        refund sought by the defendant, because the government’s
duplicate payments. McBride simply sent the IRS a bad            financial position does not change when a proposed payment
check in purported payment of his girlfriend’s tax liability.    for taxes owed is returned for insufficient funds; the tax
                                                                 liability remains outstanding both before and after the bad
   The closest case that we have found to the one before us is   check or false lien draft is tendered.
United States v. Morgan, 3 Fed. Appx. 633, 2001 WL 123838
(9th Cir. Feb. 12, 2001) (unpublished opinion). In Morgan,          The unpublished Morgan opinion has little independent
the Ninth Circuit affirmed the defendant’s conviction under      reasoning, relying on Jackson for the proposition that a
§ 287 where she “sought both to pay her tax liability and to     “‘claim’ includes seeking a reduction in liability to the
obtain a refund based on lien drafts that she knew to be         government.” Id. This phrase—“seeking a reduction in
false. . . .” Id. at 635. We surmise, based on the only other    liability to the government”—is taken out of context. As we
federal case to use the term “lien draft,” United States v.      have already pointed out, the defendant in Jackson had
Rudd, No. 98-30218, 1999 WL 98618 (9th Cir. Feb. 17, 1999)       received prior VA payments from the government for which
(unpublished opinion), which also originates from the United     he was ineligible and for which he was seeking replacement
States District Court in Idaho, that these documents were        checks. There is a significant difference between filing a
fictitious comptroller warrants distributed by Leroy             form to deceive the government about funds that have been
Schweitzer, a ringleader of the Freemen of Montana who           advanced and to which one is not entitled, as occurred in
assisted others in tax evasion. See United States v. Finley,     Jackson, and simply sending a bad check to purportedly
No. 02-3931                    United States v. McBride       17    18   United States v. McBride                    No. 02-3931

“cover” a person’s tax liability. Similarly, there is a big         unjustified refunds); United States v. Hebeka, 25 F.3d 287,
difference between McBride’s conduct, which had no                  289, 292 (6th Cir. 1994) (affirming a § 287 conviction for
potential for causing any payment to emanate from the               making an unjustified request to the government for
government, and the Morgan lien drafts whose very purpose           redemption of $7.2 million worth of food stamps); Campbell,
was to obtain an unjustified tax refund. Because the                845 F.2d at 1381-83 (affirming a § 287 conviction for billing
reasoning of Morgan is unpersuasive and not even a                  the government’s Medicare program for unperformed medical
permissible citation in its own circuit, see U.S. Ct. of App.       services). Because “any ambiguity in criminal statutes [is]
9th Cir. Rule 36-3, we decline to apply it to the present case.     resolved against the government and in favor of the criminal
                                                                    defendant,” United States v. Jolivette, 257 F.3d 581, 584 (6th
  Our decision on this issue would have been greatly                Cir. 2001), we are loath to adopt a meaning of “false claim”
simplified if § 287 had defined the word “claim,” but it does       that is contrary to both the plain meaning of the term and our
not. “When the text of a statute contains an undefined term,        circuit’s precedent.
that term receives its ordinary and natural meaning.” The
Limited, Inc. v. Comm’r of Internal Revenue, 286 F.3d 324,            After scouring the federal case law, we can find no case
332 (6th Cir. 2002). The leading law dictionary defines a           holding that the sending of an insufficient-funds check to the
“claim” as a “[d]emand for money or property as of right.”          IRS constitutes a false claim under § 287. We decline, for all
BLACK’S LAW DICTIONARY 247 (6th ed. 1990). Even more                the reasons set forth above, to be the first court to do so.
on point, the False Claims Act, 31 U.S.C. §§ 3729-3733, the         Because McBride never received any advance payments from
civil counterpart to § 287, defines a “claim” as                    the government to which he was not entitled, nor could his
                                                                    action of sending the IRS a bad check have possibly elicited
  any request or demand, whether under a contract or                any payment from the government, he cannot, as a matter of
  otherwise, for money or property which is made to a               law, be found liable under § 287. We therefore reverse
  contractor, grantee, or other recipient if the United States      McBride’s conviction on Count 1.
  Government provides any portion of the money or
  property which is requested or demanded, or if the                  2. Count 2: impeding the administration of justice
  Government will reimburse such contractor, grantee, or
  other recipient for any portion of the money or property            The jury convicted McBride of corruptly endeavoring to
  which is requested or demanded.                                   influence, intimidate, or impede the administration of justice,
                                                                    in violation of 18 U.S.C. § 1503. To sustain a conviction
31 U.S.C. § 3729(c) (emphasis added).                               under this section, the government must prove that McBride
                                                                    acted with the intent to influence, in the sense of interfering
  Both definitions reaffirm the prevailing understanding in         with, judicial proceedings. United States v. Atkin, 107 F.3d
this circuit that a “false claim” for the purposes of § 287 is an   1213, 1218 (6th Cir. 1997). A defendant must “undertake
unjustified demand for money or property from the                   action from which an obstruction of justice was a reasonably
government. See United States v. Logan, 250 F.3d 350, 357-          foreseeable result,” but he need not be successful in his
59 (6th Cir. 2001) (affirming a §287 conviction for filing          endeavor. Id. (quotation marks omitted).
forms to induce the government to pay on false HUD/FHA
loan insurance claims); Nash, 175 F.3d at 436-37 (affirming           In United States v. Fleming, 215 F.3d 930, 933-38 (9th Cir.
a § 287 conviction for filing fictitious tax returns to obtain      2000), the Ninth Circuit affirmed the conviction of a
No. 02-3931                    United States v. McBride       19    20    United States v. McBride                      No. 02-3931

defendant who attempted to file a $10 million dollar lien on        410 (8th Cir. 1992) (holding that the filing of a false federal
real property owned by the judge who had dismissed the              tort claim against an IRS agent was sufficient evidence to
defendant’s civil case. Although the lien was never filed, the      allow a jury to conclude that the defendant intended to
defendant’s conduct was considered an attempt to influence          impede the administration of the internal revenue laws under
or intimidate the judge, in violation of § 1503. Similar            26 U.S.C. § 7212(a)); United States v. Reeves, 752 F.2d 995,
circumstances are presented here. McBride filed a fraudulent        1001-02 (5th Cir. 1985) (holding that the defendant’s filing of
involuntary bankruptcy petition against Judge Marbley, the          frivolous common law liens against an IRS agent constituted
district judge presiding over Kefalos’s trial, in the period        a prohibited corrupt endeavor under 26 U.S.C. § 7212(a)).
between her conviction and sentencing. He admitted at his           We see no miscarriage of justice in affirming the jury’s
trial that he filed the petition in response to what he perceived   verdict on Count 3.
as “injustices” in the Kefalos trial. A reasonable jury could
find that McBride acted with the intent to intimidate Judge           4. Counts 4 and 5: bankruptcy fraud
Marbley as the latter prepared to sentence Kefalos, even
though McBride was unlikely to be successful. We see no               The jury convicted McBride of devising or intending to
miscarriage of justice in affirming McBride’s conviction on         devise a scheme to defraud Kefalos’s two defense attorneys,
Count 2.                                                            Axelrod and Sherman, in violation of 18 U.S.C. § 157.
                                                                    Section 157 “contains three elements: 1) the existence of a
  3. Count 3: impeding the administration of the IRS                scheme to defraud or intent to later formulate a scheme to
                                                                    defraud and 2) the filing of a bankruptcy petition 3) for the
   McBride was convicted of corruptly endeavoring to                purpose of executing or attempting to execute the scheme.”
obstruct or impede the administration of the internal revenue       United States v. DeSantis, 237 F.3d 607, 613 (6th Cir. 2001).
laws, in violation of 26 U.S.C. § 7212(a). “[T]o act corruptly      Filing the petition “itself is the forbidden act. . . . Success of
means to act with the intent to secure an unlawful benefit          the scheme is not an element of the crime.” Id.
either for oneself or another.” United States v. Winchell, 129
F.3d 1093, 1098 (10th Cir. 1997) (collecting cases). The              McBride does not dispute that he filed false involuntary
defendant must also be acting in response to “some pending          bankruptcy petitions against Axelrod and Sherman. Attached
IRS action of which [he is] aware.” United States v. Kassouf,       to the petitions were official acknowledgments from the
144 F.3d 952, 957 (6th Cir. 1998).                                  Franklin County Treasurer’s Office showing that McBride
                                                                    had purportedly paid the real estate taxes on Axelrod’s and
  McBride filed a fraudulent petition to place Nypaver, the         Sherman’s residences for the first half of 2001, thus making
IRS revenue agent assigned to Kefalos’s case, into                  McBride one of their creditors. A reasonable jury could find
involuntary bankruptcy. Although Kefalos had already been           that McBride’s actions evidenced an intent to defraud them of
convicted of tax evasion when McBride filed the petition, the       their property. “The statute makes the crime complete upon
IRS still had a pending claim against Kefalos of which              the filing of the bankruptcy petition” as long as the scheme or
McBride was aware. A reasonable jury could find that                intent to formulate the scheme exists. Id. (emphasis in
McBride’s filing of a false petition against Nypaver was            original). Under the circumstances of this case, we see no
intended to intimidate Nypaver or otherwise interfere with the      miscarriage of justice in affirming McBride’s conviction on
revenue agent’s efforts to collect the unpaid taxes from            Counts 4 and 5.
Kefalos. See, e.g., United States v. Rosnow, 977 F.2d 399,
No. 02-3931                   United States v. McBride      21    22    United States v. McBride                     No. 02-3931

D. McBride’s sentence                                             attorneys Sherman and Axelrod, and agent Nypaver
                                                                  ($1,125,970). The market value of these individuals’
   Embedded in McBride’s claim that he did not waive his          residences was included because had McBride been
right to counsel at sentencing is a separate complaint about      successful in forcing his victims into involuntary bankruptcy,
the district court’s calculation of loss to the victims. But      he could have obtained a creditor’s interest in their property.
McBride made no objection to the Presentence Report’s             Even though McBride would never have succeeded in
calculation of loss at his sentencing hearing. “[A]bsent plain    obtaining possession of his victims’ residences, the district
error, this Court will not address claims of alleged              court nonetheless felt obliged to use the residences’ value
misapplication of the [sentencing] guidelines unless the          because intended loss is defined as including “harm that
defendant first raised the claim before the district court.”      would have been impossible or unlikely to occur.” The U.S.
United States v. Thomas, 24 F.3d 829, 832 (6th Cir. 1994).        Sentencing Guidelines provide that where the cumulative loss
                                                                  exceeds $1 million, the court should increase the base offense
  U.S. Sentencing Guidelines § 2B1.1, which addresses             level of 6 by 16 levels.
offenses involving fraud and deceit, establishes the sentencing
range for Counts 1, 4, 5, and 6. By operation of the rules for      Because it was highly improbable that McBride intended,
aggregating multiple counts, the offense level for the latter     or would have been able, to obtain ownership of these
counts also determines the sentencing range for Counts 2 and      residences, the district court was troubled by the inclusion of
3. U.S. Sentencing Guidelines Manual ch. 3, pt. D (2003). A       the full value of each victim’s home in the loss calculation.
decision to vacate McBride’s sentence for Counts 1, 4, 5, and     But the district court concluded that Amendment 617 to the
6 would therefore require remand and resentencing on all of       U.S. Sentencing Guidelines, which clarified that “intended
the counts.                                                       loss” included unlikely or impossible losses, effectively
                                                                  overruled the Sixth Circuit’s practice of vacating sentences
  Determination of the offense level under § 2B1.1 depends        where “the total intended loss bore no relation to ‘economic
on the amount of loss caused or intended by the defendant.        reality,’ . . . because . . . the plan had no chance of success.”
The Application Note to this section provides as follows:         United States v. Fleming, 128 F.3d 285, 288 (6th Cir. 1997)
                                                                  (collecting cases); see also United States v. Watkins, 994 F.2d
  “Intended loss” (I) means the pecuniary harm that was           1192, 1196 (6th Cir. 1993) (holding that a defendant “may not
  intended to result from the offense; and (II) includes          be sentenced on the basis of harm that he or she was
  intended pecuniary harm that would have been                    incapable of inflicting”).
  impossible or unlikely to occur (e.g., as in a government
  sting operation, or an insurance fraud in which the claim         The district court nonetheless decided that there were many
  exceeded the insured value).                                    variables that can affect a residence’s market value and, “out
                                                                  of an abundance of caution,” sua sponte reduced the
U.S. Sentencing Guidelines Manual § 2B1.1, cmt. n. 3 (2003).      probation officer’s loss figure by 15 percent. This reduced
In the Presentence Report, the probation officer estimated the    the total loss that McBride intended to inflict to $970,865.17.
total intended loss at $1,139,760.67, which represented the       McBride’s base offense level was thus increased by 14, rather
sum of the bad checks written by McBride to the IRS               than 16, levels.
($12,990.67) and to the bankruptcy court ($800), plus the
total market value of the residences of Judge Marbley,
No. 02-3931                    United States v. McBride      23    24    United States v. McBride                     No. 02-3931

  On appeal, McBride argues for the first time that the district   warranted.” The Sentencing Commission has provided no
court misapplied § 2B1.1. He contends that he did not              further guidance regarding the application of this downward
actually intend to acquire his victims’ homes, but rather only     departure. We agree, however, with the observation by one
intended to harass the individuals. McBride correctly notes        district court that “[b]ecause the loss determination essentially
that pecuniary harm does not include emotional distress. U.S.      dictates the severity of the sentence, it is this determination
Sentencing Guidelines Manual § 2B1.1., cmt. n.3. He                that will almost always be the subject of departure scrutiny.”
therefore contends that the intended loss was at most only         United States v. Roen, 279 F. Supp. 2d 986, 990 (E.D. Wisc.
$800, which is the sum of the four filing fees paid with bad       2003).
checks to the bankruptcy court.
                                                                      The Roen court described four scenarios in which a loss
  The district court properly recognized that Amendment 617        determination may significantly overstate the severity of the
resolved a circuit split regarding the meaning of “intended        offense. Id. at 990-91 Only one concerns us here. Where
loss” by clarifying that the definition reached “unlikely or       sentencing is based largely or solely on intended loss, a
impossible losses . . . because their inclusion better reflects    downward departure may be warranted under the “economic
the culpability of the offender.” U.S. Sentencing Guidelines       reality” principle. Id. at 991; see also United States v.
Manual app. C. at 181 (2003). We have previously                   Stockheimer, 157 F.3d 1082, 1089 (7th Cir. 1998) (same).
acknowledged that “the amendments abandon this circuit’s           The underlying theory behind this principle is that “where a
interpretation of intended loss . . . .” United States v.          defendant devises an ambitious scheme obviously doomed to
Anderson, 353 F.3d 490, 505 n.13 (6th Cir. 2003). On the           fail and which causes little or no actual loss, it may be unfair
other hand, there is surely some point at which a perpetrator’s    to sentence based on the intended (but highly improbable)
misperception of the facts may become so irrational that the       loss determination from the [§ 2B1.1] table.” United States
words “intended loss” can no longer reasonably apply. For          v. Forchette, 220 F. Supp. 2d 914, 924-25 (E.D. Wisc. 2002).
instance, if someone vandalized a federal building by spray
painting an incantation that all government gold shall               A court should therefore consider “whether there was any
disappear, the “intended loss” would presumably not be the         reasonable possibility that the scheme could have caused the
value of all the gold in Fort Knox, even if the vandal             loss the defendant intended.” Roen, 279 F. Supp. 2d at 991.
genuinely believed that all the gold would disappear.              This is so because the Sentencing Commission is using
                                                                   intended loss as a proxy for the defendant’s degree of
   McBride’s actions in the case before us, however, do not        culpability. U.S. Sentencing Guidelines § 2B1.1 cmt.
rise to that level of irrationality. The probation officer’s       background (stating that “loss serves as a measure of . . . the
calculation of intended loss thus appropriately included the       defendant’s relative culpability”).        The Roen court
total market value of the residences of McBride’s victims,         persuasively pointed out that
despite the fact that McBride could never have caused them
to lose their homes. But that is not the end of the matter.          [t]hose who devise ridiculous schemes (1) do not
                                                                     ordinarily have the same mental state and (2) do not
  Application Note 18(C) to § 2B1.1 provides: “There may             create the same risk of harm as those who devise cunning
be cases in which the offense level determined under this            schemes. In short, they are not as dangerous. Thus, it is
guideline substantially overstates the seriousness of the            entirely proper to mitigate their sentences by a departure.
offense. In such cases, a downward departure may be
No. 02-3931                    United States v. McBride      25    26    United States v. McBride                     No. 02-3931

Roen, 279 F. Supp. 2d at 991.                                      $80 million and the actual loss was only $200,000, a
                                                                   downward departure was warranted).
   In Roen, the defendant had a life insurance policy valued at
approximately $9,700. He induced the insurance company to            The quixotic nature of McBride’s activities had far less
issue him loans against the policy, which he “repaid” by           chance of success than the defendant’s scheme in Roen.
writing checks drawn on a closed account. Defendant’s              Conceivably, in Roen, a vendor could have provided the
scheme cost the insurance company approximately $19,000.           defendant with goods or services before realizing that the
Id. at 986. But the defendant wrote other bad checks, to the       check was drawn on a closed account, thereby triggering
tune of $1.2 million, for various high-priced items. None of       actual losses. In McBride’s case, it defies common sense to
the recipients of the checks provided defendant with any           believe that McBride would have succeeded in forcing Judge
goods or services. Id. at 987. According to the Presentence        Marbley, attorneys Axelrod and Sherman, and agent Nypaver
Report, the total loss was approximately $1.26 million—the         into involuntary bankruptcy and thereby obtained possession
sum of the actual loss to the insurance company and the            of their residences.
intended loss based on the other bad checks. Id. For losses
over $1 million, § 2B1.1 dictates a 16-level enhancement to          The disparity between the presumed actual loss of $800 (as
the base offense level of 6. Roen’s total offense level was        measured by the bad checks actually deposited by the
thus placed at 22 in the Presentence Report. Id. at 987.           bankruptcy court in payment of filing fees) and the intended
                                                                   loss of $1,139,760.67 is also far greater in McBride’s case—a
   Because Roen’s scheme was not so improbable as to defeat        ratio of 1:1425— than the disparity in Roen (1:67) and
a finding of intent, the court in Roen accepted Offense Level      Stockheimer (1:400). We conclude that the impossibility that
22 as the starting point for sentencing. Id. at 989. But the       McBride’s scheme would succeed and the gross disparity
court determined that a downward departure was necessary           between the actual loss and the intended loss demonstrate that
because there was no reasonable possibility that Roen’s            there is a significant risk that “the offense level determined
scheme could have caused over a million dollars in losses. Id.     under this guideline substantially overstates the seriousness
at 992.                                                            of the offense. . . [and] a downward departure may be
                                                                   warranted.” U.S. Sentencing Guidelines Manual § 2B1.1,
  The Roen court also discussed a second measure of the            cmt. 18(C); see also United States v. Coffman, 94 F.3d 330,
economic reality of the intended harm: “the variance between       336-337 (7th Cir. 1996) (applying the economic reality
the intended loss and the realistic possibility of such a loss.”   principle in considering a downward departure under §2B1.1).
Id. at 991 (citing Stockheimer,157 F.3d at 1091). “Of course,
the best evidence of a scheme’s probable success is its actual       Despite our conclusion on the merits of this issue, we
success.” Roen, 279 F. Supp. 2d at 991. In Roen, the court         recognize the general rule that “a court’s failure to . . . grant
held that “the discrepancy between the actual                      a downward departure is not reviewable.” United States v.
loss—$19,000—and the intended loss—over $1.2 million—              Coleman, 188 F.3d 354, 357 (6th Cir. 1999) (en banc). We
was extreme.” Id. at 992. Because of this disparity, the court     will review a failure to depart, however, “if the district court
concluded that a downward departure was warranted. Id.; see        judge incorrectly believed that he lacked any authority to
also Stockheimer, 157 F.3d at 1090-92 (holding that where it       consider defendant’s mitigating circumstances as well as the
was highly unlikely that the intended loss would have reached      discretion to deviate from the guidelines.” Id. (citation
                                                                   omitted).     In such circumstances, we will vacate the
No. 02-3931                    United States v. McBride      27    28   United States v. McBride                    No. 02-3931

defendant’s sentence and remand for reconsideration. United        prohibited under the Sentencing Guidelines. The implication
States v. Truman, 304 F.3d 586, 589 (6th Cir. 2002).               is that the court was unaware that it could apply the economic
                                                                   reality principle in considering a downward departure.
   To determine whether the district judge believed that there
was no authority to depart, we review the sentencing hearing         There is additional evidence to suggest that the district
transcript. United States v. Ebolum, 72 F.3d 35, 37 (6th Cir.      court wanted to depart but did not recognize that it could do
1995). Omission from the Presentence Report of any                 so. First, the court found another way to decrease McBride’s
discussion concerning an applicable downward departure may         offense level when it reduced the intended loss figure by 15
also suggest that the court was not aware of its ability to        percent because “too many variables exist in determining the
depart. United States v. Hall, 71 F.3d 569, 573 (6th Cir.          fair market value of the victims’ homes to use the probation
1995) (holding that the failure of the Presentence Report and      officer’s calculations.” The court thus did depart, albeit in a
the district court to consider the applicability of a particular   nontraditional manner. Second, the Presentence Report
downward-departure provision, given defendant’s                    contains no discussion of the circumstances in McBride’s
circumstances, indicated that the court was not aware of its       case that might have warranted a downward departure. The
discretion to depart).                                             probation officer in fact recommended enhancing McBride’s
                                                                   offense level for misrepresentation during a bankruptcy
   We typically invoke the above standards when a defendant        proceeding and obstruction of justice. Both of these
has made a motion for a downward departure that was                recommendations were rejected by the district court.
rejected by the district court. Here, McBride neither objected
to the Presentence Report nor made a motion for a downward           The sentencing proceedings strongly suggest that the
departure. The court’s failure to consider sua sponte a            district court was disposed to depart downward from the
downward departure must therefore rise to the level of plain       initial offense level but, because it erroneously believed that
error before we will consider granting any relief to McBride.      the economic reality principle was completely discredited, it
                                                                   did not invoke the principle in considering a downward
  An examination of the sentencing transcript indicates that       departure. We are mindful, however, that we are reviewing
the district court was predisposed to reducing McBride’s           McBride’s sentence under the plain error standard because he
offense level. The court “question[ed] the appropriateness of      failed to object to the Presentence Report and failed to make
including the value of each victim’s home in the loss              a motion for a downward departure.
calculation,” recognizing that it did not fit with longstanding
Sixth Circuit practice to “limit[] intended loss to harms the         Both the D.C. and Seventh Circuits have held that plain
defendant was actually capable of inflicting.” But the court       error may be shown where a defendant fails to make the
assented to the use of the value of the victims’ homes because     appropriate objections or motions and the record indicates
Sentencing Guidelines “Amendment [617] resolved . . . the          that the district court erroneously believed that it lacked the
application of the economic reality test, and in effect,           authority to depart on a particular ground. See United States
prohibited the use of this doctrine under the Sentencing           v. Draffin, 286 F.3d 606, 610 (D.C. Cir. 2002) (concluding
Guidelines.” (Emphasis added.) Although Amendment 617              that plain error may lie, notwithstanding defendant’s silence,
did bar the court from applying the economic reality principle     where the sentencing court makes plain that it is choosing not
when calculating “intended loss,” there is no basis for the        to depart on a particular ground because of the mistaken
district court’s conclusion that the test was categorically        belief that it lacks the authority to do so); United States v.
No. 02-3931                    United States v. McBride       29   30   United States v. McBride                     No. 02-3931

Stockheimer, 157 F.3d 1082, 1091 (7th Cir. 1998) (holding            the apparently unprecedented magnitude of the
that even where defendants fail to make a motion for a               discrepancy between the actual and intended loss, we
downward departure, plain error may be shown where “the              conclude that the error seriously affected the fairness of
district court has both a substantive basis and an inclination       [McBride’s] sentencing proceedings.
to consider a downward departure”).
                                                                   Id. at 1092. We therefore vacate McBride’s sentence and
  Stockheimer is of particular relevance because, like             remand to the district court for resentencing.
McBride, the defendants in that case were sentenced under
§ 2B1.1 and the estimated intended loss significantly                 As a final caveat, we note that even though our opinion
overstated the seriousness of the actual fraud committed. 153      “reflect[s] a strong conviction that on the basis of the record,
F.3d at 1089-90. Because the defendants failed to make a           consideration of a downward departure is appropriate, the
motion for a downward departure, the Seventh Circuit applied       actual decision is entirely in the hands of the district court.”
plain error review to this issue. Id. at 1091.                     Id. The district court has already reduced McBride’s offense
                                                                   level by somewhat arbitrarily deflating the intended loss
  Reviewing the sentencing hearing transcript, the                 figure. Our point is that this adjustment—and any other
Stockheimer court concluded that the district court                appropriate adjustment—should be made through the
erroneously decided that circuit precedent barring                 downward departure mechanism.
consideration of economic reality when calculating intended
loss also barred the principle from being taken into account in                        III. CONCLUSION
considering a downward departure. Id. at 1090. This was
held to be an error of law. The Seventh Circuit reaffirmed           For all of the reasons set forth above, we AFFIRM
that “the place for mitigation on the basis of a large             McBride’s conviction on Counts 2-6, REVERSE his
discrepancy between intended and probable loss is, under the       conviction on Count 1, VACATE his sentence, and
guidelines, in the decision whether to depart downward,            REMAND for resentencing consistent with this opinion.
rather than in the calculation of the intended loss.” Id. at
1091 (citation omitted).
   We agree with our sister circuit that this court should “not
blithely recognize plain error in a sentencing court’s decision
not to depart downward.” Id. But, as in Stockheimer, the
district court below erred in believing that it could not apply
the economic reality principle at all, when in fact it remains
a valid basis for a downward departure. We therefore adopt
the Seventh Circuit’s conclusion that the plain error standard
is met here because
  the record suggests that the district court had a legal basis
  and some predilection to depart downward, [so] the error
  affected [McBride’s] substantial rights. . . . [B]ecause of