Court Opinion

ID: 2965078
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:34:55.568612+00
Date Added: 2024-06-11T11:37:26.691374
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

        No. 96-1969

                              UNITED STATES OF AMERICA,

                                      Appellant,

                                          v.

                                  JOHN A. BRENNICK,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Nancy J. Gertner, U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                                Boudin, Circuit Judge,
                                        _____________

                       Godbold and Cyr, Senior Circuit Judges.
                                        _____________________

                                 ____________________

            Stephen  G.  Huggard, Special  Assistant  United States  Attorney,
            ____________________
        with whom  Donald K. Stern, United  States Attorney, was on  brief for
                   _______________
        the United States.
            Scott  P. Lopez,  by appointment  of the  court, with  whom  Terry
            _______________                                              _____
        Philip Segal and Burns & Levinson LLP were on brief for appellee.
        ____________     ____________________

                                 ____________________

                                   January 20, 1998
                                 ____________________

                 BOUDIN, Circuit Judge.   John Brennick was  convicted of
                         _____________

            various offenses centered  around his failure to  pay over to

            the Treasury income  and social security taxes  withheld from

            his  employees' paychecks.  The district court calculated the

            range of imprisonment  fixed by the sentencing  guidelines at

            41  to 51  months but  then departed  downward and  imposed a

            sentence  of 13  months' imprisonment.    The government  now

            appeals, arguing that the downward departure was error.

                                          I.

                 John Brennick was the president and sole proprietor of a

            number  of head  injury  treatment centers  in Massachusetts,

            Pennsylvania,  Delaware and Maryland.   He also  operated one

            head trauma  center in New  Jersey as a  limited partnership,

            Brennick  being the  general  partner.   Some of  the centers

            provided sophisticated  medical treatment;  others appear  to

            have been supported living centers for head injured patients.

            Taken as a  whole, the companies were a  large and successful

            business venture.

                 Employers  like Brennick are required to withhold income

            taxes and social security taxes  from employee paychecks on a

            periodic basis and to pay those amounts over to the Treasury.

            The  Internal Revenue Service specifies the periods for which

            such withholding is required.  Employers are required  by law

            to deposit the  withheld taxes into the Treasury within three

            days after  the end  of each such  period.   Regular returns,

                                         -2-
                                         -2-

            specifying  the  amounts  withheld and  paid  over,  are also

            required on a quarterly basis.

                 From 1986 to  1992, Brennick followed a  regular pattern

            of withholding the taxes from his employees' pay but delaying

            payment of  the monies into  the Treasury  for a  substantial

            period beyond  the time  due.  Normally  his payments  to the

            government were  between  two and  six months  after the  due

            dates.     Brennick   routinely   filed  returns   accurately

            describing  the amounts withheld, and when he ultimately made

            the  delayed  payments to  the  Treasury,  he  also paid  the

            interest and penalties prescribed by law for late payments.

                 During this period,  Brennick frequently withdrew  money

            from his businesses by means that avoided bank reports to the

            IRS  that are  required  when a  person  withdraws more  than

            $10,000  from an  individual bank  on a  single  banking day.

            Brennick told various of his employees and  family members to

            cash checks drawn on Brennick's various business accounts and

            to turn  the money over to  him.  The  individual checks were

            for less than $10,000 each;  but the total withdrawn from his

            company accounts was often well over $10,000 a day.

                 There  is  no  claim  that  Brennick  was  forbidden  to

            withdraw  the monies from  the companies' accounts;  in fact,

            for most  of them  he was the  sole proprietor,  and for  the

            remaining one he  was the general partner.   The charge later

            brought  against him was that the withdrawals were structured

                                         -3-
                                         -3-

            to  avoid the filing  of currency transaction  reports and to

            deflect the  attention of  the tax authorities.   It  is said

            that Brennick took much or all the money he withdrew and lost

            it in gambling:  he claims to have lost more than  $1 million

            a year.

                 During the  second half  of 1992, Brennick's  businesses

            began to suffer  financial problems.  Changes  were occurring

            in  the health  care industry  adversely affecting  providers

            like Brennick.  Insurance reimbursements came more slowly and

            for  lower  amounts,  while the  costs  of  providing service

            increased.  In December 1992, one of  the banks that had been

            lending money to Brennick failed and Brennick could not  find

            another lender to replace it.

                 At  the  same   time,  the  IRS  began   to  investigate

            Brennick's  pattern of  chronically  late  payments.    In  a

            meeting with  an  IRS agent  on  October 30,  1992,  Brennick

            agreed to  a payment  plan, including  a  commitment to  keep

            current on future payments.  He  promised that his businesses

            would seek to expedite payments to  the IRS and would cut his

            own pay and  the pay of other executives in order to pay back

            taxes.  Instead,  Brennick removed another $80,000  cash from

            the businesses in November 1992  and almost twice that amount

            in December.

                 In  addition, Brennick now began to file false quarterly

            withholding tax returns for many  of the companies.   Returns

                                         -4-
                                         -4-

            filed in  the third  and fourth quarter  of 1992  incorrectly

            stated   that  Brennick  had  paid  over  to  the  government

            virtually all of the withheld taxes; in truth, the  companies

            in question had paid  none of the taxes over to the  IRS.  In

            two cases Brennick signed the false returns himself; in other

            cases they  were signed  by employees,  but Brennick was  the

            person responsible for the withholding of the taxes.

                 In February  1993, Brennick filed for  reorganization of

            his businesses under chapter  11 of the Bankruptcy  Code, and

            later  the case was transformed into a chapter 7 liquidation.

            At the initial  filing, Brennick owed the  Treasury over $1.4

            million in withheld taxes that  should have been, but had not

            been,  paid over to  the government.   During reorganization,

            Brennick  took additional  funds out  of  the businesses  for

            himself while  failing to pay  over the full amount  of taxes

            withheld during the same period.

                 In  1995,   a  grand  jury  indicted  Brennick.    In  a

            superseding indictment,  Brennick was charged  with 22 counts

            of  willful failure to  account for, and  pay over quarterly,

            specified withholding taxes, 26 U.S.C.   7202; nine counts of

            structuring currency  transactions, 31  U.S.C.     5313, 5322

            and 5324; and one count  of corruptly endeavoring to obstruct

            and impede  the  IRS, 26  U.S.C.    7212(a).    There was  an

            additional single  charge of  bankruptcy fraud,  18 U.S.C.   

            152, but the jury later deadlocked on that issue.

                                         -5-
                                         -5-

                 In  December  1995,   Brennick  went  on  trial.     The

            government,  in addition to  offering evidence of  the events

            already  described,  called  several   of  Brennick's  former

            employees who testified that Brennick had known the deadlines

            for  paying  over  the withheld  taxes  but  had deliberately

            chosen to ignore them even though his employees had sought to

            get him  to  pay over  the  taxes on  a  timely basis.    The

            bankruptcy  fraud count aside, the jury convicted Brennick on

            all remaining counts.

                 The   district  court  held   a  two-day  proceeding  to

            determine Brennick's sentence and after sentencing, issued  a

            memorandum and order explaining the court's analysis.  United
                                                                   ______

            States v.   Brennick, 949 F. Supp. 32  (D. Mass 1996).  After
            ______     _________

            briefly  setting out  the  background  facts, the  memorandum

            calculated the normal  guideline range, referring (as  we do)

            to the 1992  version of the guidelines.  Then,  at length, it

            set out  the framework for departures and the court's reasons

            for departing in this case.

                 Brennick  was  convicted  of violating  three  different

            statutes--failure to  pay over  withheld taxes,  structuring,

            and  obstructing  the  IRS--but   the  conduct  was  arguably

            related.  In any event, the district court chose to treat the

            offenses  as closely  related  counts  to  be  grouped  under

                                         -6-
                                         -6-

            U.S.S.G.    3D1.2,  and its  choice is  not disputed  on this

            appeal.1  Where counts are  so grouped, the court selects the

            offense level for the violation  among the group that had the

            highest offense level.  U.S.S.G.   3D1.3(b).

                 The  district court ruled that the highest offense level

            was  generated by  the  offense  of  corruptly  impeding  tax

            officials  under 26 U.S.C.    7212(a).   Although no specific

            guideline exists for this offense (unless force is used), see
                                                                      ___

            U.S.S.G.,  appendix  A,  the court  is  directed  to use  the

            guideline  for the  offense most  analogous  to the  criminal

            conduct of  which the  defendant was  convicted.   U.S.S.G.  

            1B1.2.   Here, the district court concluded  that the closest

            analogy for  the obstructive conduct  was the offense  of tax

            evasion,  a  violation of  26  U.S.C.     7201, for  which  a

            specific  tax  evasion  guideline is  set  forth,  U.S.S.G.  

            2T1.1.

                 Although Brennick was not charged with tax evasion, this

            choice of  analogy is not  challenged by either side,  and we

            accept it  as reasonable  for purposes of  this appeal.   The

            government's obstruction  charge embraced  all of  Brennick's

            behavior  (deliberate underpayments,  structuring, and  other

            acts of  falsity or  concealment) and  that conduct  includes

                                
            ____________________

                 1The government says for the record that the structuring
            counts  should  have  been grouped  separately  from  the tax
            counts,  which would have  resulted in a  one-level increase.
            U.S.S.G.    3D1.4.   But this  caveat was  not raised  in the
            district court and is not pursued here.

                                         -7-
                                         -7-

            withholding  revenues  from   the  government  combined  with

            elements of conscious wrongdoing and personal gain.

                 The base offense level for the tax evasion guideline  is

            driven by  the tax loss  inflicted on the government,  and in

            this case  the undisputed  level of  the government's  loss--

            "more  than  $1,500,000"--corresponds  to  offense level  18.

            U.S.S.G.    2T1.1(a), 2T4.1(M).  The district court added two

            levels  on the ground  that Brennick had  used "sophisticated

            means" to impede  discovery of  the offense,  see U.S.S.G.   
                                                          ___

            2T1.1(b)(2), and two  more levels for obstruction  of justice

            because of  untruthful testimony  by Brennick  at trial,  see
                                                                      ___

            U.S.S.G.   3C1.1.  

                 Given  a  total offense  level  of  22 (and  a  criminal

            history  category I), the guideline range  for Brennick was a

            term  of imprisonment of 41  to 51 months.   From this range,

            the district court departed downward  to level 13, for  which

            the  prescribed range  for a  defendant  in criminal  history

            category  I is  12 to  18  months' imprisonment.   The  court

            imposed a sentence of 13 months, as well as a fine  of $6,000

            and the  statutory special  assessment, noting that  Brennick

            remained personally liable  to the government for  tax losses

            he had caused, 26 U.S.C.   6672.

                 The court's reasons for the departure were set  forth in

            some  detail but  reflect two  central themes:    first, that

            Brennick's intent  was not as  wicked as that of  the typical

                                         -8-
                                         -8-

            tax evader because, despite some conscious wrongdoing, he did

            not intend permanently to deprive the government of the funds

            he failed to pay over; and second, the ultimate losses to the

            government were due  not merely to Brennick's  conduct but to

            contributing   causes  as  well,  including  failure  of  his

            business's main bank  and adverse developments in  the health

            care market.  

                 The  government  has  now   appealed  to  challenge  the

            sentence.   It  argues  that  the departure  was  based on  a

            misconstruction of the  guidelines and that even if  a ground

            for departure exists in theory (which the government denies),

            the  district  court's  decision  to  depart  and  degree  of

            departure were  unreasonable on the  present facts.   We take

            the issues in that order.  

                                         II.

                 Departures from the  guideline range  are allowed  where

            "the   court  finds  that  there  exists  an  aggravating  or

            mitigating  circumstance  of  a kind,  or  to  a degree,  not

            adequately  taken   into  consideration  by   the  Sentencing

            Commission in formulating the  guidelines that should  result

            in a  sentence different from  that described."  18  U.S.C.  

            3553(b).  Sometimes, the guidelines identify a "circumstance"

            that  is  a  permissible or  forbidden  basis  for departure,

            sometimes further indicating that departure is  encouraged or

            discouraged.

                                         -9-
                                         -9-

                 Absent such explicit guidance, the Commission itself has

            told courts that they should  treat each guideline as carving

            out  a "heartland"  representing  "a  set  of  typical  cases

            embodying  the   conduct  that  each   guideline  describes."

            U.S.S.G. ch.  1, pt. A  intro. comment  4(b).  "When  a court

            finds  an atypical case, one  to which a particular guideline

            linguistically  applies   but  where   conduct  significantly

            differs  from the  norm,  the court  may  consider whether  a

            departure  is  warranted."   Id.   If  the  characteristic is
                                         ___

            "atypical"  and aggravates or  mitigates the typical conduct,

            it may provide a basis for departure.

                 Where a district  court does depart, an  aggrieved party

            may appeal from both the decision to depart and the extent of

            the  departure.  18  U.S.C.   3742.   The  standard of review

            varies with the nature of the issue involved, deference being

            limited or absent on abstract issues of law but more generous

            as to questions of  law application and factfinding.   United
                                                                   ______

            States v. Black, 78 F.3d  1, 8 (1st Cir.), cert.  denied, 117
            ______    _____                            _____________

            S. Ct. 254  (1996).  The present case presents  issues of all

            three kinds.

                 We start  with the  district court's  determination that

            Brennick,  although he  had deliberately  failed  to pay  the

            government  the withheld wages  and social security  taxes at

            the time they were due, genuinely intended to pay them in due

            course.   In the  district court's view,  Brennick's main aim

                                         -10-
                                         -10-

            was to  use the  IRS as  a bank.   It is  not clear  that the

            government  directly challenges this finding, but in any case

            we think  the finding is not clearly  erroneous, the standard

            ordinarily  applied   to  determinations  of   fact  made  at

            sentencing.  United States v.  Pineda, 981 F.2d 569, 572 (1st
                         _____________     ______

            Cir. 1992).

                 Brennick's   pattern   before   financial   difficulties

            engulfed him was  to retain the use of the  funds in question

            for periods of  four to six months  and then to pay  over the

            funds, adding penalties  and interests.  The  likelihood that

            he would be able to make this repayment obviously declined as

            troubles loomed in  late 1992, but  he continued to  scramble

            for  resources to  continue payment.   Whether  an intent  to

            repay can be  ascribed to all of  the delays in payment  is a

            more difficult issue.  See part III below.
                                   ___

                 In the district judge's sentencing memorandum and order,

            she relied heavily upon this  intention to repay to carve the

            present case out  of the "heartland"  of typical tax  evasion

            cases.   The  government says  this  rationale was  a belated

            attempt   to  bolster  a  departure  earlier  premised  on  a

            different ground, namely, that there were multiple causes for

            the  loss  to  the  government.    Our  own  reading  of  the

            sentencing  transcript  suggests  that  the  benign  view  of

            Brennick's  intent  was  always an  element  in  the district

            court's reasoning.

                                         -11-
                                         -11-

                 The nature of the scienter element in a tax evasion case

            is complicated to summarize given that different requirements

            may apply  on different issues.  Still,  the taxpayer usually

            is  attempting to deprive the government permanently of taxes

            owed   to  it.    Typically,  the  instruction  requires  the

            government  to prove that the defendant "willfully evaded, or

            attempted  to evade,  income  taxes  with  the  intention  of

            defrauding the government of  taxes owed."  Leonard B.  Sand,
            __________

            et al., Modern  Federal Jury Instructions: Criminal    59.01,
                    __________________________________ ________

            Instruction  59-8 (1992) (emphasis added).  See, e.g., United
                                                        ___  ____  ______

            States v. Aitken, 755 F.2d 188 (1st Cir. 1985).
            ______    ______

                 Admittedly, it would do a  defendant no good to say that

            he deliberately understated his income but sincerely intended

            to pay the money back to the government  in five years' time.

            But  neither is it easy to imagine a fraud conviction where a

            defendant files an accurate return, intends shortly to pay in

            full, but  remits the funds  with interest shortly  after the
                                                                _____

            April  15 deadline.    Indeed,  the  guideline  covering  the

            failure to  pay over  payroll taxes notes  in the  commentary

            that   "[t]he  offense  is  a  felony  that  is  infrequently

            prosecuted."  U.S.S.G.   2T1.6, commentary.

                 In  all events,  we are  inclined  on the  basis of  the

            information we have and our common sense to think that such a

            temporary  delay in payment--where  the defendant expected to

            pay--is not a "typical" or  "heartland" case of tax  evasion.

                                         -12-
                                         -12-

            Thus,  even  if  the  evasion  statute  and  guideline  might

            "linguistically" be extended to embrace  such temporary delay

            cases, the intent  to delay payment  only briefly could  take

            the  case out of the  heartland.  And,  as already noted, the

            district court made such a finding in this  case, sustainable

            at  least as  to much  of  the losses  driving the  guideline

            sentence.

                 The  district court had  another theme in  its departure

            analysis.  It said that the $1.5 million loss suffered by the

            government overstated the  seriousness of Brennick's offense,

            partly because the  losses were due to  multiple causes, some

            of which  were not  Brennick's  fault or  within his  control

            (failure   of  his   bank,  the   changes   in  health   care

            reimbursement).   The government says that these concepts are

            part of  the fraud  guidelines and applying  them to  the tax

            crime guidelines is an error of law.

                 The  fraud  guidelines,  like  the  tax guidelines,  set

            offense  levels  primarily based  upon loss.   But  the fraud

            guidelines alone  refer in  comment to the  possibility of  a

            departure  where computed  losses  under-  or  overstate  the

            seriousness of  the offense;  likewise, the  fraud guidelines

            alone at one  time referred to multiple causes  as a possible

            example of an overstatement and while that language  has been

            deleted, they  retain that  concept in  one of the  examples.

            Compare U.S.S.G.    2F1.1,  application note  11 (1990)  with
            _______                                                  ____

                                         -13-
                                         -13-

            application note 10 (1991).   See generally  United States v.
                                          _____________  _____________

            Rostoff, 53 F.3d 398, 406 (1st Cir. 1995).
            _______

                 We agree with the government that provisions in one  set

            of  guidelines  cannot  normally  be  transferred  to another

            separate set of guidelines.  See United States  v. Smallwood,
                                         ___ _____________     _________

            920 F.2d 1231, 1238 (5th Cir. 1991); United States v. Anders,
                                                 _____________    ______

            899 F.2d 570, 580 (6th  Cir. 1990).  The guidelines  for each

            offense or set of offenses  tend to function as an integrated

            unit,  containing  their  own  tradeoffs and  specifications.

            Thus, without laying  down an iron rule, we  view skeptically

            any importation  of language from  another offense guideline,

            absent an explicit cross-reference.

                 Yet this  does not  take the government  very far.   The

            notion in the fraud guideline  that the loss table may under-

            or overstate the  seriousness of the  offense is little  more

            than another  way  of saying  that departures  from the  loss

            table may be  warranted for good cause.  Even if we treat the
                                    ______________

            fraud guideline's  language as generously  inviting a  search

            for  such causes,  the  fact  remains  that  the  all-purpose

            departure provision  remains available for tax cases whenever

            the  case falls  outside  the  heartland.   See  18 U.S.C.   
                                                        ___

            3553(b); U.S.S.G.   5K2.0.

                 The fraud guidelines' multiple-cause language  is a more

            complicated  matter.    The government  says  that  the fraud

            guidelines may need  such flexibility because of  the diverse

                                         -14-
                                         -14-

            situations to which  they must apply.  By  contrast, it says,

            "loss" for tax  purposes is based on  calculations, set forth

            in the guidelines,  that (in words of the  brief) "focus upon

            the amount due and  owing at the time of the offense."   If a

            tax evader  repays what was  stolen, says the  government, he

            merely   deserves  a  few   levels  off  for   acceptance  of

            responsibility.

                 Tax  loss seems  to be  a somewhat more  protean concept

            than the government implies,2 but we  think that the argument

            is  beside  the  point.    We are  here  concerned  not  with

            computing the loss--the parties have agreed that it should be

            treated as "more than 1.5 million"--but rather with whether a

            departure  is proper.   And  we are  dealing not  with  a tax

            evader  who stole  the  government's money  and  later had  a

            change of heart  but with someone who (accepting the district

            court's finding) never intended to steal the money at all (or

            at least most of it).

                 Further, regardless  of the fraud  guideline, the  facts

            mentioned by the district court in its causation analysis are

            obviously  relevant  even  if  the   analysis  is  not.    To

            distinguish  Brennick from  the ordinary  tax  evader, it  is

            essential to show  that he did  intend to  pay over what  was

                                
            ____________________

                 2Tax  loss  is  defined  somewhat  differently  for  the
            different   tax  offenses,   compare  U.S.S.G.      2T1.1(a),
                                         _______
            2T1.2(a), 2T1.3(a), and 2T1.6(a), and  the tax table at 2T4.1
            has changed over time.

                                         -15-
                                         -15-

            owed and was merely deferring payment.  This premise would be

            hard to  sustain unless some  other cause had  contributed to

            his later failure to pay over the funds.

                 This said, we think that  it merely invites confusion to

            treat  "multiple causation"  as an  independent  basis for  a

            departure.  And we think that to do so  would be inconsistent

            with  the normal presumption that provisions in one guideline

            are  not  to be  read  into  the  guideline for  a  different

            offense--absent  an  explicit cross  reference or  some other

            reason to believe that the  Commission so intended.  We doubt

            that  this emendation would alter the district court's desire

            to depart, but as a remand is required for other reasons,  it

            is free to decide the point for itself.

                                         -16-
                                         -16-

                                         III.

                 While a departure  could be justified in  theory in this

            case, we do not think  that either the decision to depart  or

            the  amount of the  departure has been  adequately explained.

            Our reasons  are not the  usual ones--that  the departure  is

            based on  an impermissible ground  or that there has  been no

            effort to explain the degree  of departure.  Rather, we think

            that factors  weighing against  any departure,  and certainly

            one of this degree, received inadequate attention.

                 In this case the guideline  range for Brennick was 41 to

            51 months; and the 13-month  sentence imposed was less than a

            third of the minimum and just over a quarter of the  maximum.

            A 13-month sentence would  be the midpoint in the range for a

            first time offender who evaded  or sought to evade $40,000 or

            more  in taxes  but had  no other  adjustment.   Brennick, of

            course, caused the government a tax loss of over $1,500,000.

                 It would  be easy enough  to understand the  sentence if

            Brennick  had merely  withheld  a large  payment,  reasonably

            expecting  to pay  the  money  shortly but  using  it in  the

            meantime  for  business  purposes  which  then   unexpectedly

            collapsed.   Absent  loss  to  the  government,  there  would

            probably  not even  be  a  prosecution in  such  a case;  and

            certainly the intent would be less culpable than  in ordinary

            tax evasion.  But Brennick's actions and intentions were more

            serious than this abstraction allows.

                                         -17-
                                         -17-

                 First,  Brennick   may  in  some  sense   have  intended

            repayment,  but  the  reasonableness,  and perhaps  even  the

            possibility, of  such a belief must have  lessened over time.

            To  the eve  of bankruptcy  and  apparently beyond,  Brennick

            appears  to have  deferred payment  to  the government  while

            withdrawing  very substantial sums for  his own use.  Without

            more findings, it would be  hard to give Brennick the benefit

            of a  bona fide intention to  repay the entire loss,  even if
                                                    ______

            much of it may be encompassed.  

                 Second,   even  apart  from   an  intention   to  repay,

            Brennick's good faith is marred by dishonesty in at least two

            respects, (even apart from his falsehoods at trial which were

            the subject of a  separate adjustment).  On  a number of  the

            later returns, Brennick falsely stated or had others misstate

            that  the amounts due to the government had been paid when he

            knew that  they had  not.  And  his elaborate  structuring of

            withdrawals was effectively an effort to mislead and conceal,

            as   perhaps  also   was  his   use   of  multiple   employer

            identification numbers.

                 Third, Brennick committed the  crime of structuring  and

            the government points out that the structure counts alone, if

            no  other offense  had  been  committed,  could  easily  have

            produced an  adjusted offense level  of 17,3 and  a guideline

                                
            ____________________

                 3That level might  have been anywhere between 15 and 21.
            Under the 1992 guidelines, the structuring counts generated a
            base offense level  of 13. U.S.S.G.   2S1.3(a)(1),  and would

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            sentence of 24 to 30 months.  The minimum is almost twice the
                                              _______

            amount  of Brennick's actual  sentence after departure.   The

            government  has  not  argued  that  this  makes  a  departure

            impermissible as a  matter of law, but it  certainly bears on

            the reasonableness and degree of departure.

                 We  appreciate that where a ground for departure exists,

            the district  court's discretion  is at  its zenith  deciding

            both whether and  how far to depart.  United  States v. Diaz-
                                                  ______________    _____

            Villafane, 874 F.2d 43, 49-50 (1st cir. 1989).  But  the quid
            _________                                                ____

            pro quo for departures is reviewability, including review for
            _______

            abuse  of discretion,  18 U.S.C.    3742(b)(3);  and even  if

            review is hedged by deference,  Koon v. United States, 116 S.
                                            ____    _____________

            Ct. 2035, 2046 (1996), it has to mean something.

                 In this  case,  we fail  to see  how a  departure to  13

            months can be justified as reasonable on this record in light
                                                  ______________

            of  the three considerations  set forth  above, all  of which

            appear to  us relevant.   We have put to  one side Brennick's

            gambling, the significance of which is a matter of reasonable

            dispute,  and the  government's claim  that  he deprived  his

            employees of health care, which was neither a charged offense

            nor clearly relevant conduct.    

                                
            ____________________

            have been adjusted upward two  levels for the amount of money
            involved.  U.S.S.G.    2S1.3(b)(2).     Brennick's  two-level
            adjustment for obstruction  of justice would  presumably also
            have applied, generating  a level of 17.   A further increase
            of four levels  would have resulted  if the court  determined
            that  "the defendant  knew or  believed that  the funds  were
            criminally derived property."  U.S.S.G.   2S1.3(b)(1).

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                 Possibly, even  after these  factors are  considered and

            weighed in  full, there  is still  warrant for  a substantial

            departure,  but we  think that  some  further explanation  is

            essential.   Indeed, while the  district court takes  note of

            Brennick's  false  filings,  the  government  says  that  the

            discussion  understates  them;4  and   the  district  court's

            decision  does  not  squarely   address  our  concerns  about

            Brennick's good  faith on the  later losses or the  import of

            the structuring guideline.

                 The sentence  was  not imposed  casually:  the  district

            court conducted  a lengthy  sentencing and  wrote at  length,

            addressing itself primarily to  the government's objections--

            which  we think  are overstated.   The  area is  complicated;

            there   is   little   helpful   precedent;   and   Brennick's

            circumstances are  unusual.   If it takes  one more  round to

            fine-tune the sentence, this is a price worth paying.

                 On  remand, the  district  court  is  free  to  consider

            whether   its  inclination  to  depart  is  affected  by  our

            conclusion  that the  fraud guideline  should  be put  to one

            side.   Assuming  not,  we expect  that  in resentencing  the

            district court will  address the considerations that  we have

            outlined.   While  expressing  doubt that  a  sentence of  13

                                
            ____________________

                 4The district  court  mentioned  two  returns  filed  by
            Brennick  falsely claiming that the amount indicated was paid
            in full.    The  government notes  that  although  two  false
            returns  were  actually  signed  by  Brennick, an  additional
            fourteen false returns were signed by his employees.

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                                         -20-

            months  is justified, we impose no mechanical downward limit.

            What  procedure  to follow  on  remand  is entirely  for  the

            district court to decide.

                 The sentence imposed by the district court is vacated in
                                                               _______

            its entirety and  the case is remanded to  the district court
                                          ________

            for further proceedings consistent with this opinion.

                 It is so ordered.
                 _________________

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