Court Opinion

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Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

5-12-1994

United States of America v. Hallman
Precedential or Non-Precedential:

Docket 93-1414

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                                                                   1

                                                 UNITED STATES COURT
                           OF APPEALS
                     FOR THE THIRD CIRCUIT

                          No. 93-1801

                    UNITED STATES OF AMERICA,
                                       Appellee,

                               v.

                        REGINALD HALLMAN,
                                       Appellant.

                         Appeal from the
                  United States District Court
            for the Eastern District of Pennsylvania
                  (D.C. Crim. No. 93-00104-01)

           Submitted Under Third Circuit LAR 34.1(a)
                          May 3, 1994

                    (Filed: May 13, l994     )

  Before: SLOVITER, Chief Judge, HUTCHINSON AND SEITZ, Circuit
                            Judges.

Jerry S. Goldman, Esquire
Jerry S. Goldman & Associates, P.C.
1520 Locust Street, 10th Floor
Philadelphia, Pennsylvania 19102
    Attorney for Appellant

Michael R. Stiles, United States Attorney
Walter S. Batty, Jr., Assistant
   United States Attorney, Chief of Appeals
Virgil B. Walker, Assistant
   United States Attorney
                                                                                  2

Office of the United States Attorney
615 Chestnut Street
Philadelphia, Pennsylvania 19106
       Attorneys for Appellee
                            __________
                       OPINION OF THE COURT

SEITZ, Circuit Judge.

                                       I.

         Reginald Hallman ("Appellant") appeals a sentence imposed

on him by the district court.               The district court had subject

matter jurisdiction pursuant to 18 U.S.C. § 3231.                This court has

jurisdiction under 18 U.S.C. § 3742(a).
                                     II.

         On September 9, 1992, appellant used a stolen check to pay

for a room at the Korman Suites in Philadelphia, Pennsylvania.

At   the    request   of   federal    investigators,          local   authorities

arrested the appellant and located stolen mail after he consented

to a search of his vehicle.

         Appellant pled guilty to a state forgery charge and was

sentenced to three years probation and restitution of $6,400.

Appellant     remained     incarcerated,           however,   because     he     was

identified as a fugitive from justice in Atlanta, Georgia and

having charges pending against him in Delaware County (PA) Court.

         On February 11, 1993, appellant was taken into federal

custody pursuant to a four-count federal indictment.                  It appeared

that,    using   various   aliases,        appellant    deposited     stolen    and

forged     checks   into   an   account      and    then   withdrew     the    funds

therefrom (Count 1).       One of the checks deposited in this account

was a check made out to the Internal Revenue Service (Count 2).
                                                                                   3

Appellant    forged    one   of   the     stolen    checks      he   possessed   to

purchase an automobile in the State of Alabama for approximately

$14,000 (Count 3).      Lastly, the appellant was found to have been

in possession of approximately sixty-one stolen pieces of mail

(Count 4).

         Appellant entered a plea of guilty on all four counts.

After receipt of the Pre-Sentence Report and a hearing thereon,

the defendant was duly sentenced.              He now appeals.
                                     III.

         The standard and scope of review of the district court's

interpretation and application of the Sentencing Guidelines is

plenary.     United States v. Murillo, 933 F.2d 195, 196 (3d Cir.
1991).     However, where the district court's application is based

on factual analysis, we will reverse the district court only if

its conclusion is clearly erroneous.              United States v. Ortiz, 878
F.2d 125, 127 (3d Cir. 1989).
                                        IV.

A.       Calculation of Loss

         A search of the appellant's car after his arrest on the

Korman Suites' forgery charge resulted in the recovery of sixty-

one pieces of stolen mail, mostly checks, that underlie Count 4.1

Appellant objects to the calculation of "loss" in this count,

which added $25,152.36 to the loss amount and one (1) point to

his offense level.      Under USSG § 2F1.1, adjustments are made to

the   base   offense   level   if   the       monetary   loss    exceeds certain

1
The sixty-one pieces of mail included:        fifty                   checks,    six
bundles of blank checks, and five credit cards.
                                                                  4

levels. Under § 2F1.1(a), the base offense level is six.        The

Probation Officer calculated the losses to be $73,419.36.      This

was arrived at by adding the losses suffered by the bank in Count

1 ($34,282), the amount of the check in Count 3 ($13,985), plus

the face value of the stolen mail in Count 4 ($25,152.36).   Under

USSG § 2F1.1(b)(1)(G) six points were added to the base level

because the "loss" exceeded $70,000.

      The district court determined that the "loss" in regard to

these stolen checks should be determined under USSG § 2B1.1.2

The district court referred to Application Note 2 to USSG § 2B1.1

as applicable. The note defines "loss" as
     the value of the property taken, damaged, or destroyed.
     Ordinarily, when property is taken or destroyed the
     loss is the fair market value of the particular
     property at issue. . . . Examples: (1) In the case of
     a theft of a check or money order, the loss is the loss

2
To avoid confusion in considering the arguments advanced by
appellant concerning the calculation of the offense score, some
clarification as to which Guidelines sections are being utilized
is necessary. In our four-count indictment, there are both fraud
and theft-oriented charges. Under USSG § 3D1.2(d), conduct that
results in offense levels being determined under Chapter 2 (e.g.,
theft and fraud) are to be "grouped" together.      Once grouped
together, USSG § 3D1.3(a) requires that the highest offense level
of the group is to be used. Application Note 3 to § 3D1.3 states
that "[i]f the counts in the Group are covered by different
guidelines (e.g., theft and fraud), use the guideline that
produces the highest offense level."        In this case, both
guidelines, §§ 2B1.1 and 2F1.1, result in the same score--12
points--and either could have been used to calculate the score.
The use of these guidelines to determine the score, however, does
not dispose of the need to refer to the appropriate guideline for
the calculation of loss.       For example, although Hallman's
indictment groups fraud and theft charges, we must refer to
§2B1.1 to calculate the loss in regard to the theft charges
(e.g., Count 4). See 18 U.S.C. § 1708 (referring to § 2B1.1 of
Guidelines). This amount is then applied to the guideline used
to calculate the offense level.
                                                                                  5

       that would have occurred if the check or money order
       had been cashed.

The face value of the stolen checks was $25,152.36.

        A recent opinion of this court supports the calculation of

loss based on the face value of the checks.                 In United States v.
Cianscewski, 894 F.2d 74 (3d Cir. 1990), a couple was convicted

of possessing stolen mails and selling stolen treasury checks.

The amount of loss in regard to the checks was challenged on

appeal. The defendants argued that the amount of loss should have

been the sum of the amounts that were received for the checks

upon resale. The court disagreed and held that "[w]hen a check is

stolen, the cost to the party who ultimately bears the loss is

obviously     the   face   value    of   the   check.   .    .   .     Under   such

circumstances . . . a court does not err by valuing losses at

replacement cost to the victim--in this case the face value of

the stolen checks."        Id. at 80.
        Appellant argues that some of the checks had no economic

value because they were not valid either as a result of the

passage of time or because payment on the checks logically would

have   been    stopped.      This    argument    erroneously         applies   USSG

§ 2B1.1. Application Note 2 specifically states that "loss" is

"the loss that would have occurred if the check or money order

had been cashed."      (Emphasis added).         Appellant's crime of theft

of the checks was completed, although his criminal conduct was

only partially completed.

        Appellant argues that the Government failed to show an

intent by him to use the checks and thus, the amount should be
                                                                                        6

lowered by applying USSG § 2X1.1 relating to "attempts."                            In an

effort to require the government to show intent, the appellant

cites United States v. Kopp, 951 F.2d 521 (3d Cir. 1992).                             The

appellant's reading of this case is in error.                       The court in Kopp

was distinguishing theft and fraud.                  The court determined that

when calculating loss in a fraud context, the calculation of loss

should be based on "actual or intended harm."                       Id. at 529.       The

court, however, said that when calculating the loss in the theft

context, applying USSG § 2B1.1, one need only apply the "simple

`amount taken' rule" because "all thefts involve an intent to

deprive the victim of the value of the property taken."                              Id..

The charge in Count 4 warrants application of § 2B1.1, and we

must therefore examine "loss" in the theft context.                        The district

court's calculation of the amount of loss involved in Counts 1, 3

and 4 is not clearly erroneous.
B.     Related Offenses

       Appellant next challenges the calculation of his criminal

history     score.        The    district       court    adopted       the    Probation

Officer's    career       history     calculation       of    thirteen     points    that

placed the appellant in a category VI classification.                         Appellant

appeals   the   calculation         on   the    ground       that   the    Pre-Sentence

Report contained two calculation errors when it counted related

offenses separately.
1.     Consolidation for Sentencing

       First, appellant argues that two prior sentences, listed

at   paragraphs      51    and   52      of    the   Pre-Sentence         Report,    were

"related" within the meaning of USSG § 4A1.2(a)(2) because they
                                                                           7

were consolidated for sentencing.        Under Application Note 3 to §

4A1.2,
     [p]rior sentences are not considered related if they
     were for offenses that were separated by an intervening
     arrest. . . .        Otherwise, prior sentences are
     considered related if they resulted from offenses that
     (1) occurred on the same occasion, (2) were part of a
     single common scheme or plan, or (3) were consolidated
     for trial or sentencing. . . .

The district court determined that there was not a consolidation

for sentencing purposes and adopted the Pre-Sentence Report's

calculation.

         After examining two case action summaries from the State

of Alabama, we conclude that there may have been consolidation

for sentencing, but that this conclusion does not affect our

result    as   we   find    other   grounds   to   sustain   the   separate

calculation    of   the    offenses   based   on   our   interpretation   of

Application Note 3.        The first sentence of that Application Note

states that "[p]rior sentences are not considered related if they

were for offenses that were separated by an intervening arrest

(i.e., the defendant is arrested for the first offense prior to

committing the second offense)."         The appellant was arrested for

the offenses listed at paragraphs 51 and 52 of the Pre-Sentence

Report on different dates. We read the "otherwise" in the Note to

mean that if there is not an intervening arrest, then there may

be other ways in which to find consolidation.                 We need not

consider those alternatives, however, as the district court's
                                                                                  8

counting of each separate offense was proper under our reading of

Application Note 3.3
2.      Common Scheme or Plan

        Appellant's second "relatedness" contention is that his

conviction for the forgery of the check to the Korman Suites was

improperly counted because it was "related" to the conduct in

Count   4.     The    forgery    conduct    consisted     of    the   appellant's

forging of a check, numbered 295 with the name "James La Roux"

emblazoned on the face.          The check was one of a sequential series

of   checks    with   Mr.   La   Roux's    name    on   them.     The    appellant

contends that the prior sentence he received for the forgery is

related   to   the    present offense      of     possession    of    stolen   mail

because it is part of a common scheme or plan.                          Under USSG

§ 4A1.2(a)(2), "[p]rior sentences imposed in unrelated cases are

to be counted separately." According to Application Note 3 to

§ 4A1.2, prior sentences are related if they "(2) were part of a

single common scheme or plan . . . ."

3
Our reading of Application Note 3 finds support in a recent
decision in United States v. Gallegos-Gonzalez, 3 F.3d 325 (9th
Cir. 1993):
     [T]he first question is always whether the underlying
     offenses were punctuated by an intervening arrest; by
     the logic and ordering of Note 3, that inquiry is
     preliminary to any consideration of consolidated
     sentencing. The use of the word "otherwise" indicates
     that sentence consolidation is relevant only in the
     absence of intervening arrests. Properly read, Note 3
     instructs that whenever offenses are separated by
     intervening arrests, the sentences for those offenses
     are unrelated regardless of whether sentencing was
     consolidated.
Id. at 327
                                                                                               9

         On    its    face,     the      argument      made       by    appellant      is    an

erroneous application of the Guidelines because as a general

rule, USSG § 4A1.2(a)(2) applies to the relatedness between prior

sentences, not prior sentences to the present offense.                                  E.g.,
United States v. Beddow, 957 F.2d 1330, 1337 (6th Cir. 1992);

United States v. Walling, 936 F.2d 469, 471 (10th Cir. 1991).

Therefore, because we have only one prior sentence here, there

can be no relatedness analysis under § 4A1.2(a)(2).

         The    appellant,           however,        suggests          that    under        USSG

§ 4A1.2(a)(1), the prior sentence and present offense are related

because of the requirement that the prior sentence be imposed

"for   conduct       not    part    of   the   instant       offense."         Appellant's

argument is that the conduct that led to his state sentence for

forgery is part of the same scheme and conduct that led to his

federal indictment on the count of possession of stolen mail.

         Although neither party has cited a case that would be of

assistance, there are several decisions from other circuits that

throw some light on the issue.                   The Sixth Circuit stated that

"the appropriate inquiry is whether the `prior sentence' and the

present    offense         involve    conduct        that    is    severable     into        two

distinct      offenses."           Beddow, 957 F.2d    at       1338.    The     Sixth

Circuit's test was developed in response to the Tenth Circuit's

decision in United States v. Banashefski, 928 F.2d 349 (10th Cir.

1991).     In Banashefski, the defendant, a felon, placed a shotgun

in the trunk of a stolen car and then drove the car away.                              He was

charged by the state with possession of a stolen car, and was

charged by the federal government for possession of a firearm by
                                                                                              10

a felon.        The district court determined that there were two

distinct possessory acts that were severable.                           The facts in our

case constitute a closer call.                    Recognizing that possession of

stolen mail is a distinct offense, we also note that possession

of   stolen     mail        in     the   form    of    blank       checks    suggests      that

additional conduct may be required for the actor to obtain ill-

gotten gains.          We do not adopt the Sixth Circuit's "severability

test"       based     on    our     facts.      Although      Banashefski          could   have

possessed the firearm or the car without the other and been

charged with an offense for each, appellant here could not have

forged a check until he had stolen the checks.

            Although       most     conduct     may    be    separable       into    distinct

offenses, we believe the focus of the inquiry is on the conduct

and whether that conduct is related--is it part of a common

scheme or plan?             We agree with the Seventh Circuit's view that

"[t]he Sentencing Commission . . . intended a broad reading of

`related cases.'"             United States v. Connor, 950 F.2d 1267, 1271
(7th    Cir.        1991)    (finding      that       sentences      given     for     federal

conviction      and        state    conviction        were    related       when    they   were

brought pursuant to one arrest, despite separate trials).

            In determining whether there was a common scheme or plan,

intent of the defendant is a crucial part of the analysis.                                    In

the Tenth Circuit's decision in United States v. Coleman, 947
F.2d 1424 (10th Cir. 1991), cert. denied, 112 S. Ct. 1590 (1992),

a defendant was being prosecuted on drug charges.                            The court held

that    a    sentence       for     retaliation       by     the    defendant       against   a

witness during a prior trial was not part of the scheme or plan
                                                                            11

for which the defendant was presently being prosecuted because

the   retaliation   took   place   after    the   completion   of   the   drug

offenses   and   therefore,   could   not    be   considered   "`intimately

related'" to the drug charges as the defendant had suggested.

Id. at 1429-30.
        The Seventh Circuit's decision in United States v. Ali,

951 F.2d 827 (7th Cir. 1992), decided a case factually similar to

the present one in which intent played a key role.                  In Ali, a

burglar argued that two prior convictions were related because

they were part of a common scheme.          The two convictions were for

the robbery of a supermarket and the forgery of a money order

that was stolen during that robbery.          To quote at length, for it

is quite relevant to our particular facts, the court in refusing

to find a common scheme or plan and relatedness, stated that:
     No one robs without intending to obtain value from what
     is taken, and if that is a financial instrument on
     which a signature must be forged if it is to be cashed
     or otherwise used to the robber's profit the forgery
     could easily be thought a part of a single scheme or
     plan. But "scheme" and "plan" are words of intention,
     implying that the forgery and the robbery have been
     jointly planned, or at least that it have been evident
     that the commission of one would entail the commission
     of the other as well.      If the decision to commit
     forgery arose only after the robber discovered what he
     had taken, the forgery would be no more a part of the
     scheme or plan to rob than would be retaliation against
     a witness of whose existence the retaliator was unaware
     when he planned the crime to which the witness has
     testified; and Coleman even narrowly read would
     therefore govern.    A crime merely suggested by or
     arising out of the commission of a previous crime is
     not . . . related to the earlier crime in the special
     sense of being part of a common scheme or plan.

Id. at 828 (emphasis added).
                                                                                         12

         We hold that the appellant's possession of this stolen

mail was part of a common scheme and plan and that the prior

sentence for the forgery was for conduct that is related to the

offense in Count 4.      Our conclusion rests on the fact that all of

the    stolen   mail   recovered    in    the    search      of    the     appellant's

vehicle was in the form of checks or credit cards and that the

check forged to Korman Suites was from a sequence of blank checks

found within the stolen mail.              Therefore, it is reasonable to

infer    that    the   mail   was     stolen     to    find       checks       or     other

instruments that could be converted to use through forgery.

         Because we hold that the forgery conviction and Count 4

are parts of a common scheme or plan, the appellant's criminal

history score warrants a reduction by one point.                               This will

result in a criminal history score of twelve and a Category V

criminal history classification.4
C.       Restitution

         The    appellant's   final      contention     is    that       the    district

court abused its discretion in requiring that restitution be made

in the amount of $34,282 to the bank involved in Count 1 because

it failed to make specific factual findings as to his ability to

pay.

         Restitution    is    authorized        by    the    Victim      and        Witness

Protection Act (VWPA), 18 U.S.C. § 3663(a), and is incorporated

into the Sentencing Guidelines at § 5E1.1.                  Our review is plenary

over whether an award is permitted, but we review the specific

4
Thus, a sentencing range of 27-33 months will result as opposed
to 30-37 months.
                                                                                    13

award for abuse of discretion.           United States v. Seligsohn, 981
F.2d 1418, 1421 (3d Cir. 1992).

         In   exercising   its     supervisory    powers,      this    court       has

required the district courts to make "findings as to the factual

issues that are relevant to the application of the restitution

provisions of the VWPA."           United States v. Palma, 760 F.2d 475,

480 (3d Cir. 1985). The district court is required to
     consider the amount of the loss sustained by any victim
     as a result of the offense, the financial resources of
     the defendant, the financial needs and earning ability
     of the defendant and the defendant's dependents, and
     such other factors as the court deems appropriate.

Id. (quoting 18 U.S.C. § 3580(a)) (emphasis added).                  The district

court    determined   that    the     appellant      could    pay     the    amount

proscribed within the period of his supervised release.                            Our

review is limited to "whether the record supports the finding."

United States v. Sleight, 808 F.2d 1012, 1021 (3d Cir. 1987).

         The district court did not impose a fine on appellant

citing   his   "inability     to    pay."     Indigency       at     the    time   of

sentencing is, however, not a bar to ordering the appellant to
pay restitution. United States v. Logar, 975 F.2d 958, 962 (3d

Cir. 1992) (citing ten other circuits in accord with this rule).

The order of restitution, on the other hand, may not be based on

some future fortuitous event that may befall the appellant, but

must be based on realistic expectations.                   Id. at 962-64; cf.

United States v. Mitchell, 893 F.2d 935, 936 n.1 (8th Cir. 1990)

(rejecting     government's        argument   that     a     "high     amount       of
                                                                                   14

restitution is proper on the chance that the defendant may win

the lottery").

         The district court based its order of restitution on the

Pre-Sentence Report.         The Report includes an analysis of the

financial    impact    on   the    victim,     the     bank,    and   details     the

appellant's   physical      and    mental     health,   education,      vocational

skills, and financial ability to pay.                Specific findings by the

district court determined that the appellant obtained a high

school   diploma;     claimed     to   have    obtained       thirty-six     college

credits at the University of Alabama; was given an honorable

discharge from the military for medical reasons; was once a part-

owner of a hair salon in Philadelphia that generated a monthly

gross income of $1,500; earned $300 a night from 1990 until 1992

as a private disc jockey; and had worked for his stepfather's

business assisting in the design and installation of security

systems.    The district court also adopted the findings of the

report that found the appellant had purchased a 1991 Ford Mustang

for $20,750 cash in 1991 and sold the same car in 1992 for

$13,000.    Finally, the report noted that he could make $.15-.25

per hour and possibly up to $1.25 per hour while incarcerated

that could be applied to the amount of restitution ordered.                       The

district    court   stated    at    sentencing       that     "the    defendant    by

education and natural ability that God and his parents gave him

has the capacity to earn lawful income."

         To sustain the district court's order of restitution, the

appellant   must    "realistically      [be     able    to]    pay    [the   amount]

within the five year period."            Sleight, 808 F.2d at 1021.               The
                                                                    15

record supports a reasonable expectation that the appellant will

be able to make restitution.     Putting aside the large amount of

money that he received for the sale of his car (or the amount he

paid for it in cash), the appellant's educational level and past

work   experience     indicate   an    ability   to   obtain   gainful

employment.5

       In light of the specific findings made by the Probation

Officer that were adopted by the district court, and the time

afforded the appellant in which to pay the amount, we cannot say

that the district court's restitution order constituted an abuse

of its discretion.
                                  V.

       We approve the district court's calculation of the amount

of loss involved, the separate calculation of the offenses listed

in paragraphs 51 and 52 of the Pre-Sentence Report, and the order

of restitution.     We will vacate the district court's calculation

of the appellant's criminal history score as a result of our

holding that the forgery charge and Count 4 were part of a common

scheme or plan and should not have been counted separately. The

5
We note that 18 U.S.C. § 3663(g) authorizes the court to "revoke
probation or a term of supervised release . . . or hold a
defendant in contempt pursuant to section 3583(e) if the
defendant fails to comply with such order."         Although the
ordering of restitution may not be an exact science, we also note
that § 3663(g) also permits the court, in determining whether to
revoke probation or supervised or to hold in contempt, may
"consider the defendant's employment status, earning ability,
financial resources, the willfulness of the defendant's failure
to pay, and any other special circumstances that may have a
bearing on the defendant's ability to pay." We read this section
as granting the court discretion to modify the restitution order
in the future depending on the defendant's circumstances.
                                                              16

sentence of the district court will be vacated and the matter

will be remanded to the district court for sentencing consistent

with this opinion.