Court Opinion

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Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

3-28-2006

USA v. Tupone
Precedential or Non-Precedential: Precedential

Docket No. 04-2832

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                                     PRECEDENTIAL

     UNITED STATES COURT OF APPEALS
          FOR THE THIRD CIRCUIT

                 Case No: 04-2832

         UNITED STATES OF AMERICA

                           v.

                ALBERT TUPONE,

                         Appellant

   On Appeal from the United States District Court
      for the Eastern District of Pennsylvania
           District Court No. 03-CR-00169
    District Judge: The Honorable Jan E. DuBois

             Argued December 12, 2005

Before: SLOVITER, SMITH, and STAPLETON, Circuit
                    Judges

              (Filed: March 28, 2006)
              Counsel:      Ellen C. Brotman (Argued)
                            Carroll & Brotman
                            601 Walnut Street
                            Suite 1150 West
                            Philadelphia, PA 19106

                            Norris E. Gelman
                            Suite 940
                            6th & Chestnut Streets
                            Public Ledger Building
                            Philadelphia, PA 19106
                            Counsel for Appellant

                            Sarah L. Grieb (Argued)
                            Suite 1250
                            Office of United States Attorney
                            615 Chestnut Street
                            Philadelphia, PA 19106
                            Counsel for Appellee

                 OPINION OF THE COURT

SMITH, Circuit Judge

        Albert Tupone appeals his felony conviction for making
false representations in connection with the receipt of federal

                              2
workers’ compensation benefits, a violation of 18 U.S.C. §
1920. Although Tupone and the Government agree that this
case should be remanded for resentencing under the Supreme
Court’s decision in United States v. Booker, 543 U.S. 220
(2005), a conclusion with which we agree, we must decide two
remaining issues. The first is whether the District Court erred
in instructing the jury on the threshold dollar amount for a
felony conviction under § 1920, and in holding that the jury’s
verdict constituted felony, rather than misdemeanor convictions.
The second is whether the District Court erred in finding that the
total amount of benefits Tupone received as a result of false
applications for workers’ compensation benefits constituted the
“loss amount” under § 2B1.1 of the United States Sentencing
Guidelines (the “Guidelines”). Because we conclude that the
District Court’s interpretation of § 1920 was sound, we will
affirm Tupone’s conviction. Because we also conclude,
however, that the “loss amount” fixed by the Court was
incorrect under the Guidelines, we will vacate the sentence, and
we will remand the case for resentencing in light of Booker and
based on a properly calculated loss amount.

                                I.

       On June 20, 1974, Albert Tupone was an employee of the
United States Postal Service. On that day, Tupone suffered
disabling injuries to his back and eardrum when his mail truck
was involved in an accident. As a result of his injuries, Tupone
was found to be totally disabled and began to receive disability

                                3
payments from the United States Office of Workers’
Compensation Program (“OWCP”).

       Each year that Tupone received disability payments, the
Department of Labor monitored his status by, inter alia, sending
him a questionnaire to complete – Form 1032. In particular,
Tupone was required to answer truthfully the following
questions: (1) “Did you work for any employer during the period
covered by the form?”; and (2) “Were you self-employed or
involved in any business enterprise during the period covered by
the form?” During the years 1998 through 2000, Tupone
received Form 1032, and each year he answered the above
employment questions “No.” As a result of his answers, Tupone
received tax-free benefits in the amount of $17,894 for 1998,
$16,592 in 1999, $19,946 in 2000, for a total of $54,432.

       In late 1997, however, Tupone began to buy, repair, and
resell used cars. Over the three years in question, Tupone
bought and sold approximately twenty-five cars for some
disputed amount of profit.1 Tupone neither reported the income

    1
      The Government asserts that Tupone’s profits totaled
$8982.68; Tupone says they were only $3300.81. For the
sentencing hearing, Tupone produced an extensive exhibit,
“Exhibit A,” based in large part on Tupone’s testimony at trial,
detailing the profits made from each car sale. Both profit
figures are based on that exhibit. Tupone’s figure is lower
because the Government’s calculation, tracking that of an

                               4
to the Department of Labor nor advised the Department of his
self-employment activity when filling out the 1032 forms for
1998 through 2000. The Department of Labor discovered the
omissions, and a criminal investigation ensued.

       On March 13, 2003, a grand jury returned an indictment
against Tupone charging him with three counts of violating 18
U.S.C. § 1920.2 The indictment alleged that Tupone had

OWCP employee called to testify at sentencing, “did not use any
items that showed a net loss.” In any event, the parties
stipulated, for sentencing purposes, on the amount that Tupone’s
benefits would have been reduced had he reported his car sale
income. See infra, this section.
  2
      Section 1920 states:

         Whoever knowingly and willfully falsifies,
         conceals, or covers up a material fact, or makes a
         false, fictitious, or fraudulent statement or
         representation, or makes or uses a false statement
         or report knowing the same to contain any false,
         fictitious, or fraudulent statement or entry in
         connection with the application for or receipt of
         compensation or other benefit or payment under
         subchapter I or III of chapter 81 of title 5, shall be
         guilty of perjury, and on conviction thereof shall
         be punished by a fine under this title, or by
         imprisonment for not more than 5 years, or both;
         but if the amount of the benefits falsely obtained

                                   5
violated the statute by certifying “on three 1032 forms that he
had . . . no self-employment and no earned income from any
employment for the previous fifteen month period.” Count One
was based on the form filed on July 1, 1998, which covered the
“previous 12 months”; Count Two was based on the form filed
on May 4, 1999, which covered the “previous 11 months”; and
Count Three was based on the form filed on May 30, 2000,
which covered the “previous 13 months.” Paragraph 6 of the
indictment indicated that Form 1032 “was used to determine
whether the claimant qualified for continued benefits and to
determine whether an adjustment for continued benefits was
warranted.” Paragraph 15 of the indictment alleged that Tupone
“knowingly and willfully . . . concealed . . . material facts, and
made false . . . representations, in connection with the receipt of
compensation and other benefits and payments exceeding
$1000, under Subchapters I and III of Chapter 81 of Title 5 of
the United States Code, the federal workers’ compensation law.”

        At trial, the OWCP employee assigned to Tupone’s case
testified as to the total amount of benefits Tupone had received
during the period covered by the indictment. A second OWCP
employee, Agent Gallagher, testified that had Tupone been

       does not exceed $1,000, such person shall be
       punished by a fine under this title, or by
       imprisonment for not more than 1 year, or both.

18 U.S.C. § 1920.

                                6
truthful on his 1032 forms, the Department of Labor would have
reduced his benefits according to profits made, required
additional medical examinations, and initiated the process
designed to determine if Tupone was still disabled and whether
his benefits should be further reduced or terminated.

       At the close of evidence, the Court instructed the jury on
the elements of the offense:

              Counts 1, 2, and 3 of the indictment charge
       defendant with violating Federal law requiring
       recipients of Federal disability benefits to report
       any employment or self-employment and any
       income earned through that employment.

               18 United States Code Section 1920
       provides in part that whoever knowingly and
       willfully falsifies, conceals or covers up a
       material fact or makes a false, fictitious or
       fraudulent statement or representation or makes or
       uses a false statement or report, knowing the same
       to contain any false, fictitious or fraudulent
       statement or entry in connection with the
       application for or receipt of compensation or other
       benefit or payment in excess of $1,000, under
       Subchapter 1 or 3 of Chapter 81 of Title 5, shall
       be guilty of an offense against the United States.
       That’s the statute.

              The defendant can be found guilty of the

                               7
       offense of making false statements in order to
       receive Federal disability benefits only if all of the
       following facts are proved beyond a reasonable
       doubt. These are what we refer to as the essential
       elements of the crime charged.

              First, that defendant knowingly and
       willfully made a false statement or report to the
       Department of Labor, Office of Workers’
       Compensation Program as charged in Counts 1, 2
       and 3 of the indictment.

              Second, that the false statement or report
       was made in connection with an application for or
       receipt of Federal workers [sic] compensation
       benefits in excess of $1,000.

              And, third, that the false statement or
       report related to a material fact.

The jury found Tupone guilty of each count of making false
statements.

       At the sentencing hearing, Tupone argued that § 1920
defined both a felony and a misdemeanor, and that the felony
required proof that Tupone had received more than $1,000 in
“falsely obtained benefits,” an element of the crime which the
jury had not been instructed to find. The Court rejected the
argument that “falsely obtained” meant something different than
receiving a benefit “in connection with” a false statement. The

                                 8
District Court entered felony convictions based on the jury
verdict.

        On the issue of the “loss” calculation under the
Guidelines, Agent Gallagher of the OWCP testified regarding
his calculation of the immediate reduction in Tupone’s benefits
that would have resulted had he reported his earnings on his
1032 forms: $1,955.25 in 1998; $3,718 in 1999; and $1,647.25
in 2000, for a total reduction of $7,320.50. Gallagher also
indicated, as he had at trial, that reported income or employment
by Tupone would have triggered a re-evaluation process
regarding Tupone’s status that could have led to a further
reduction or even elimination of his benefits and may have
resulted in Tupone’s return to some form of work.

       Based in large part on Agent Gallagher’s testimony, the
District Court found that the “loss” for Guidelines purposes
associated with Tupone’s offenses was not merely the $7,320.50
in foregone earnings-based benefit reductions, but the entire
amount of benefits that Tupone had received during the
indictment period – $54,432. Using that finding, the Court
determined that Tupone’s total offense level was 12 (rather than
6), and, applying the pre-Booker mandatory Guidelines regime,
sentenced Tupone to five months incarceration and three years
supervised release, including five months of home detention.
Tupone appealed.

                               9
                               II.

       The District Court exercised subject matter jurisdiction
over this criminal case under 18 U.S.C. § 3231. We exercise
appellate jurisdiction over the District Court’s final order
pursuant to 28 U.S.C. § 1291.

        Because Tupone’s challenge to the jury instructions turns
on a matter of statutory interpretation, our review is plenary as
to that issue. United States v. Cooper, 396 F.3d 308, 310 (3d
Cir. 2005). We review the District Court’s application of the
Guidelines to facts for abuse of discretion. Buford v. United
States, 532 U.S. 59, 63-66 (2001). Factual findings will be
reversed only if clearly erroneous. United States v. Moorer, 383
F.3d 164, 167 (3d Cir. 2004); United States v. Napier, 273 F.3d
276, 278 (3d Cir. 2001).

                               III.

        Whether the District Court adequately instructed the jury
turns on a specific question of statutory interpretation. The
parties agree that “[w]here the language of the statute is clear .
. . the text of the statute is the end of the matter.” Steele v.
Blackman, 236 F.3d 130, 133 (3d Cir. 2001). The key issue in
this case is the meaning of the phrase “benefits falsely
obtained.” Both parties look to the “plain text” of the statute,
and both believe that the text cuts their way. We conclude that
the Government’s reading of the statute best comports with the

                               10
text and structure of § 1920.

       Tupone argues before us, as he did at sentencing, that the
phrase “falsely obtained” requires that an additional element be
proved in order for a § 1920 violation to constitute a felony. He
asserts that the use of “falsely obtained” means that, for a jury
verdict to constitute a felony conviction under § 1920, a jury
must find a $1000 difference between what a given defendant
was entitled to receive had he been truthful and what he actually
received owing to his false statement. Because the indictment
and jury instructions did not include the phrase “falsely
obtained,” Tupone argues that he was charged with, and the jury
convicted him of, a misdemeanor.3

       The District Court rejected that argument and stated:

             [A]nother way to read the statute is that it
       makes it a crime to falsely apply for or receive
       compensation or other benefits. And if the

  3
   Thus, Tupone asserts, his sentence was improper under the
Supreme Court’s decision in Apprendi v. New Jersey, 530 U.S.
466 (2000), which requires that any fact that would raise a
defendant’s sentence beyond the prescribed statutory maximum
must be charged in the indictment and proved beyond a
reasonable doubt to a jury. Id. at 490. Tupone argues that the
additional element required to increase his sentence from the
misdemeanor range to the felony range was not found by the
jury.

                                11
       benefits falsely obtained, which is all of the
       benefits does not exceed $1,000, we have a
       misdemeanor and not a felony.

                      ....

               I think the statute criminalizes making of
       [sic] a false statement in connection with the
       application for or receipt of compensation, and it
       makes it a misdemeanor only if the amount of
       benefits at issue – I think they could have said “at
       issue,” but they said “falsely obtained,” in the
       statute, does not exceed $1,000. That’s a
       misdemeanor.

        According to Tupone, the District Court’s reading of §
1920 renders the phrase “falsely obtained” meaningless. In
other words, he submits that the District Court ignored the
“distinction Congress drew between the misdemeanor offense
of filing a false application . . . which is complete at the time of
filing and requires no loss, and the felony which only occurs
when and if the applicant is paid $1,001 more than he is entitled
to receive.”

        The Government argues that the structure and design of
§ 1920 show that the statute “clearly sets forth the prohibited
conduct up front, and makes the violation of the statute a
felony.” In other words, “benefits falsely obtained” refers back
to the criminal conduct proscribed by the statute, i.e., obtaining

                                12
any benefits as a result of false statements. Under this reading,
“benefits falsely obtained” is not rendered meaningless; it is
synonymous with and refers to benefits received “in connection
with” a false statement.

        Although our cases offer no precedent dealing directly
with the meaning of § 1920, two other circuits have weighed in
on the proper reading of the statute. The Tenth Circuit, in
United States v. Henry, 164 F.3d 1304, 1310 (10th Cir. 1999),
concluded that the “plain terms” of § 1920 pertain, at least for
loss calculation purposes, to the benefits obtained in connection
with a false application, “not the amount of benefits obtained
minus the amount that would have been obtained if no false
statement had been made.” Id. In United States v. Hurn, 368
F.3d 1359, 1362 (11th Cir. 2004), the Eleventh Circuit Court of
Appeals indicated that § 1920 requires a jury to find “a causal
link” between a defendant’s false statement and his receipt of
$1,000 in benefits.4 Id. The Court in Hurn also stated, however,
that “[a] reasonable juror would be likely to conclude that a
benefit is obtained ‘falsely’ if it is obtained as a result of a
fraudulent or misleading statement or omission.” Id. In other
words, the Eleventh Circuit concluded that “benefits falsely

  4
   We note that the Hurn case is not precisely analogous to the
instant appeal inasmuch as the jury instruction in Hurn did
include the phrase “falsely obtained.” Nonetheless, the Court’s
comments regarding the proper interpretation of § 1920 are
instructive.

                               13
obtained” is synonymous with benefits received as a result of a
false application. No court has addressed § 1920 and interpreted
the statute in the manner urged by Tupone.

        In matters of statutory interpretation, the “plain meaning”
of statutory language is often illuminated by considering not
only “the particular statutory language” at issue, but also the
structure of the section in which the key language is found, “the
design of the statute as a whole and its object . . . .” United
States v. Schneider, 14 F.3d 876, 879 (3d Cir. 1994). The
Supreme Court has stated consistently that the text of a statute
must be considered in the larger context or structure of the
statute in which it is found. See, e.g., City of Rancho Palos
Verdes v. Abrams, 125 S. Ct. 1453, 1462 (2005) (“context, not
just literal text, will often lead a court to Congress’ intent in
respect to a particular statute”); Alexander v. Sandoval, 532 U.S.
275, 288 (2001) (“interpretive inquiry begins with the text and
structure of the statute”).

        Many of our own cases reflect this methodology as well.
See, e.g., Zheng v. Gonzalez, 422 F.3d 98, 116 (3d Cir. 2005)
(expressly looking to the text and structure of a statute to discern
Congressional intent); Booth v. Churner, 206 F.3d 289, 295 (3d
Cir. 2000) (“We do not quarrel with petitioner’s claim that the
most natural reading of [the relevant phrase], when viewed in
isolation, would [suggest one result]. However, statutory
language must always be read in its proper context. . . . [W]hen
the relevant section is read in its entirety, it suggests [the

                                14
opposite result]”) (internal citations omitted). It would therefore
be a mistake to “squint[] myopically” at the phrase “falsely
obtained” and interpret it in isolation, rather than in the context
of the “text and structure” of § 1920 as a whole. M.A. ex rel.
E.S. v. State-Operated Sch. Dist. of the City of Newark, 344 F.3d
335, 348 (3d Cir. 2003).

        We conclude that, when read in its entirety, § 1920's
phrase “benefits falsely obtained” refers back to – and is
synonymous with – any benefits received “in connection with”
the making of a false representation. The overall “design” and
“object” of § 1920 is to criminalize the making of false
statements in the application for and receipt of government
benefits. Schneider, 14 F.3d at 879. The language of the
primary clause – the import of the section as a whole – is
concerned with communicating that any knowing or willful false
statement made in connection with the application of or receipt
of benefits will be considered a felony. The misdemeanor
exception for benefits less than $1000 rated no separate section,
no subsection, nor even a separate paragraph. Nowhere does §
1920 offer a separate definition for “benefits falsely obtained.”
The statute is devoid of any language that would require the
calculation (i.e., amount of benefits received minus amount
rightly owed in the absence of the false statement) that Tupone
argues is required by its “plain text” for felony conviction. All
of the above militates in favor of the District Court’s reading of
the statute.

                                15
        In contrast, Tupone’s reading turns the import of § 1920
on its head even as he claims to be taking its overall structure
into consideration. Tupone argues that deference is required to
the “distinction Congress drew between the misdemeanor
offense of filing a false application . . . which is complete at the
time of filing and requires no loss, and the felony which only
occurs when and if the applicant is paid $1,001 more than he is
entitled to receive.” Such a reading suggests that the main thrust
of the entire statute is to create a misdemeanor, with the latter
clause carving out a narrow category of felony liability. An
examination of the Federal Criminal Code reveals such a
structure to be highly atypical among criminal statutes –
especially those dealing with fraud, theft, or false statements –
that provide for both felony and misdemeanor offenses. In fact,
numerous sections of the criminal code mirror the precise
linguistic pattern found in § 1920. See, e.g., 18 U.S.C. §§ 655,
656, 1003, 1025. The above code sections and those like them
all include the same structural elements: a lengthy primary
clause describing certain illegal conduct and providing for
felony punishment thereof; a semicolon; and, finally, a second
clause – beginning with the word “but” – which refers back to
the illegal conduct described in the main clause and provides for
misdemeanor punishment in cases where the dollar value
associated with the aforementioned illegal conduct does not
exceed $1000. See, e.g., id. In other words, the above statutes
are felony criminal statutes that include a narrow misdemeanor
exception in the event that the illegal conduct results in de
minimus gain.

                                16
        We reject the argument that, unlike all other identically
structured provisions in the Federal Criminal Code, § 1920
alone primarily establishes a misdemeanor and creates a narrow
“felony exception” that turns on an undefined, two-word phrase,
and that requires a calculation nowhere mentioned or implied in
the text. The much more natural and obvious reading of § 1920
is that the main “effect” of the text is to create the felony of
making false statements related to government benefits, and to
carve out a narrow misdemeanor exception for those defendants
whose false statements relate to applications for or receipt of de
minimus benefits and dollar amounts.5

      Applying this interpretation of the statute, we conclude
that both the indictment and jury instructions set out the
necessary elements for felony liability under § 1920. Paragraph
15 of the indictment alleged that Tupone “knowingly and

     5
      Accordingly, we note that Tupone’s “rule of lenity”
argument is unavailing. Under Supreme Court and Third Circuit
precedent, the rule of lenity “applies only where a statute is
found to be ambiguous upon review of the text, structure,
legislative history and policies of the statute, not at the
beginning of the process of construction, as an overriding
consideration of being lenient to wrongdoers.” E.g., United
States v. Johnson, 155 F.3d 682, 685 (3d Cir. 1998) (internal
quotations and citations omitted). As discussed above, any
ambiguity that may exist as to the text of the latter clause of §
1920 is resolved upon review of the structure of the section as
a whole.

                               17
willfully . . . concealed . . . material facts, and made false . . .
representations, in connection with the receipt of compensation
and other benefits and payments exceeding $1000 . . . .” The
jury instruction stated, inter alia, that the jury must find that
Tupone “knowingly and willfully made a false statement or
report to the Department of Labor . . . in connection with an
application for or receipt of Federal workers [sic] compensation
benefits in excess of $1,000.” Although neither the indictment
nor the instruction contained the phrase “falsely obtained,” both
tracked other language from § 1920 that expresses all the
elements necessary for a felony violation of the statute.

       The phrase “benefits falsely obtained” does not create an
additional element to felony liability under § 1920. The District
Court therefore properly treated the jury verdict against Tupone
as three felony convictions. The conviction will be affirmed.6

                                IV.

       We must next decide whether the District Court erred in
finding that the loss resulting from Tupone’s false statements
equaled the entire amount of benefits Tupone received from
1998 to 2000 ($54,432), rather than fixing the loss at the amount

  6
    Because we conclude that the District Court committed no
error as to the jury instructions, we need not reach the issue –
briefed by the parties – whether the standard for evaluating such
an error would be “plain error” or “harmless error.”

                                18
that Tupone’s benefits would have been reduced immediately
had Tupone filed truthful 1032 forms ($7,320.50). We conclude
that the Court erred in its application of the Guidelines to this
case.

                               A.

        Tupone argues that the correct measure of “loss” under
the Guidelines as applied to § 1920 is “the difference between
what Tupone actually received, and what he would have
received, if his forms had been accurate.” The Government
implicitly argues that the loss under § 1920 is necessarily equal
to the entire amount of benefits received as a result of Tupone’s
false statements. We are persuaded that, in general, the
Guidelines support a “difference” method of loss calculation.

       The Commentary to U.S.S.G. § 2B1.1 states that, as a
general rule, “loss” under § 2B1.1 is the greater of “actual” or
“intended” loss. U.S.S.G. § 2B1.1 app. note 3(A). That same
Commentary, however, indicates clearly that cases involving
government benefits call for the use of a more particularized
standard in evaluating loss:

       (F) Special Rules. – Notwithstanding subdivision
       (A), [which states the above general rule,] the
       following special rules shall be used to assist in
       determining loss in the cases indicated

                               19
              ....

              (ii) Government Benefits. – In a case
              involving government benefits (e.g.,
              grants, loans, entitlement program
              payments), loss shall be considered to be
              not less than the value of the benefits
              obtained by unintended recipients or
              diverted to unintended uses, as the case
              may be. For example, if the defendant was
              the intended recipient of food stamps
              having a value of $100 but fraudulently
              received food stamps having a value of
              $150, loss is $50.

U.S.S.G. § 2B1.1 app. note 3(F)(ii). This subdivision explains
that “loss” in government benefits cases is, at a minimum, equal
to the amount of benefits obtained that were not “intended” by
the government to be obtained by a given recipient. In those
cases in which a defendant was intended by the government to
receive some amount of benefits, the loss is the delta between
the amount of benefits “intended” by the government to be
received by that defendant and any greater amount of benefits
actually received.7

  7
   We note that both the parties and the District Court seem to
have proceeded under the assumption that U.S.S.G. § 2B1.1 app.
note 3(A) provided the relevant definition of “loss” under the
Guidelines in this case. As we have indicated, U.S.S.G. § 2B1.1

                              20
       Our cases indirectly support the idea of a “difference”
method of calculating loss under the Guidelines in government
benefits cases. No precedent binding on this Court has dealt
directly with the standard for “loss” under § 1920. 8 That said,
there are decisions of our Court which, though they involve
specific offenses and Guidelines provisions distinguishable from
the case at bar, support the general concept of a “difference”
standard of loss. See United States v. Kopp, 951 F.2d 521 (3d
Cir. 1991) (loss amount in case involving false statements on
loan applications is the amount of money the victim lost as of
sentencing – i.e., the amount of the loan not repaid – not the full
amount of the original loan); United States v. Evans, 155 F.3d
245 (3d Cir. 1998) (in case involving fraudulent submission of
insurance claims, loss amount does not include legitimate
insurance claims submitted on behalf of legitimate victims).

app. note 3(F) supersedes subdivision (A) of Note 3 in
government benefits cases and provides the relevant definition
of “loss” in such cases.
   8
    The only two courts of appeal to have addressed the issue
squarely came to differing conclusions. As mentioned above, in
Henry, the Tenth Circuit stated explicitly that “the plain terms
of § 1920 pertain to ‘the amount of the benefits obtained,’ not
the amount of benefits obtained minus the amount that would
have been obtained if no false statement had been made.”
Henry, 164 F.3d at 1310. The Fourth Circuit, however, in
United States v. Dawkins, 202 F.3d 711, 715 (4th Cir. 2004),
held that the “difference” standard was correct.

                                21
        Furthermore, as an analytical matter, we note the
necessary distinction between the task of evaluating the text of
§ 1920 proper and that of measuring the “loss” amount under the
Guidelines resulting from a violation of that text. The former
task involves assessing the breadth and level of culpability – and
liability – prescribed by the language of § 1920. As discussed
above, Congress, in passing § 1920, ascribed felony liability to
the making of false statements in connection with the
application for or receipt of benefits in excess of $1000. For the
qualitative purpose of measuring criminal liability, then, all the
benefits which a defendant applies for or receives must
necessarily be “counted.”

        Loss calculations under the Guidelines, however,
generally involve a different analytical goal. Rather than
measuring the more qualitative categories of criminal culpability
and liability as such, the court attempts to reach an appropriate
sentence by quantifying the amount of “harm” wrought against
the victim – here the government – by a particular criminal act.
Applying that principle to § 1920 and other government benefits
cases, the Guidelines Commentary defines the aforementioned
“harm” as the value of benefits obtained by an individual in the
absence of a government intention that he obtain them.
Accordingly, we hold that the proper “loss” calculation under
the Guidelines for a violation of 18 U.S.C. § 1920 is the
difference between the amount of benefits actually obtained by
a given defendant and the amount the government intended him
to receive during the relevant period.

                               22
                               B.

       Applying the above standard, we conclude that the
District Court erred in finding that the “difference” in this case
was the entire amount of benefits Tupone received from 1998
through 2000.

        In this case, the key guidance on government “loss” is
found in OWCP Agent Gallagher’s testimony at the sentencing
hearing. Based on our review of that testimony, the rest of the
sentencing record, and the District Court’s remarks regarding
the evidence, we conclude that the only “loss” that can be
definitively shown on this record is the amount by which
Tupone’s benefits would have been immediately reduced had he
reported his car sale profits.

       Gallagher’s testimony contained two essential
components for loss calculation purposes. The first component
involved the immediately ascertainable and retroactive loss that
OWCP suffered because Tupone failed to report his income.
Gallagher testified that Tupone’s activities during the relevant
years did not constitute “sufficient information to establish a
pattern,” and that OWCP          “would therefore base any
adjustments for these periods of times [sic] strictly on the
figures that [Tupone] earned.” Gallagher also stated that any
overall change in Tupone’s disability status resulting from his
reported income would affect his prospective benefits and would
not be applied retroactively.

                               23
        The second key component of Gallagher’s testimony
relates to further possible loss based on a re-evaluation of
Tupone’s eligibility for benefits. Gallagher indicated that had
Tupone reported his income on his 1032 form in 1998, the
OWCP would have considered that income to be prima facie
evidence of “partial disability” rather than total disability and
would have initiated a re-evaluation of Tupone that could have
led to further reductions in his benefits. Gallagher testified –
when questioned by the Court – that his “earnings only”
assessment of benefits reduction was a retroactive estimate
based on the information provided by the defense as to Tupone’s
car sale profits. Gallagher said he was hindered in his estimate
because, in a trial context, it was given “so late after the fact,”

       [W]hereas, in actual practice, as soon as we’re
       notified of these type [sic] of earnings, we’re
       going to start the ball rolling with the medical
       examination . . . we’re going to determine . . .
       disability . . . we’re going to go back to the
       employing agency and request a job offer to get
       [the beneficiary] back to their original employer.

Tupone’s attorney responded by asking whether, on the mere
basis of “Tupone’s sale of six cars in 1999 . . . [OWCP] would
start to do a work- [up?]”; Gallagher responded, “Oh yes”;
Attorney: “– an earning capacity [?]”; Gallagher: “Yes,
absolutely.”

       Additionally, Agent Gallagher testified that despite the

                                24
required regular medical reports given by all beneficiaries, a
report of earnings or employment by a beneficiary would call
into question whatever medical information OWCP had on file.
Accordingly, the agency would likely seek an additional and
“[m]ore definitive” medical report in light of the new
information.

        Other evidence illustrates the two-tiered import of Agent
Gallagher’s testimony. For example, Exhibit B to Tupone’s
Sentencing Memorandum was a letter sent by Agent Gallagher
to the defense after the defense provided Gallagher with
profit/loss figures from Tupone’s car sales. In that letter,
Gallagher states that his best estimate of actual retroactive
benefits reductions based on Tupone’s profits would have been
$7,320.50. Gallagher adds, however, that he “would also point
out that had this office been aware of Mr. Tupone’s activities,
re-evaluation of his medical condition would have been
indicated, with potential further reduction or termination of his
compensation entitlement.”

       Taken together, these two aspects of Agent Gallagher’s
testimony support two distinct propositions. The first is that
Tupone’s omission of his earnings caused the OWCP to pay
Tupone at least $7,320.50 more than OWCP would have
“intended” to pay him during the relevant period had he reported
his income. U.S.S.G. § 2B1.1 app. note 3(F)(ii). The second is
that Tupone’s omissions precluded the OWCP from (1)
reclassifying Tupone as “partially” rather than totally disabled,

                               25
and (2) re-evaluating Tupone and, possibly, further reducing or
terminating his prospective eligibility for benefits. Even if
Tupone had reported his income on the first relevant 1032 form
(in 1998), and that disclosure had led to a re-evaluation by
OWCP and a prospective termination of his benefits, Tupone
could only have been subject to a partial reduction of his
benefits – based on profits earned in the previous year – for the
first year of the indictment period. Thus, nothing in the record
supports a finding that, had Tupone reported his income on any
or all of the relevant 1032 forms, the OWCP would have
completely terminated his benefits retrospectively, such that he
would have been entitled to no benefits at all for the entire
indictment period.

        Under the Guidelines, the Government has the burden of
showing the amount of loss resulting from criminal conduct.
The sentencing court, though it need not reach a precise figure
as to loss, must make a “reasonable estimate” of loss that must
be based on the “available information” in the record. U.S.S.G.
§ 2B1.1 app. note 3(C). Under the particular facts of this case,
the Government failed to show that full retroactive termination
of Tupone’s benefits – such that the loss resulting from
Tupone’s omissions would be equal to the entire amount of
benefits he received – was among the possible results of any re-
evaluation by OWCP. As such, a loss amount set at the entire
amount of benefits Tupone received during the indictment
period was not within the range of “reasonable estimate[s]” of
loss based on the evidence. Id.

                               26
       On this record, a loss calculation set at $54,432, the entire
amount of benefits received by Tupone during the indictment
period, is precluded by the evidence and constitutes an incorrect
application of the Guidelines. We conclude that the “available
information” in this case shows with adequate certainty that
Tupone’s false representations caused him to become an
“unintended recipient” of $7,320.50 in workers’ compensation
benefits. U.S.S.G. § 2B1.1 app. note 3(C), 3(F)(ii). We will
vacate the sentence imposed by the District Court, and we
instruct the Court on remand to recalculate Tupone’s total
offense level under the Guidelines based on a “loss amount” of
$7,320.50.

                                V.

       Finally, as noted above, the parties jointly assert that
Tupone’s case should be remanded for resentencing pursuant to
the Supreme Court’s decision in United States v. Booker. As
discussed in section IV.B., supra, we conclude that the case
should be remanded for resentencing in light of the incorrect
loss calculation. We further conclude that the Supreme Court’s
decision in Booker constitutes an independent ground for
remand of this case, and that the post-Booker, advisory
Guidelines regime – with the properly calculated offense level
– should be applied at resentencing.

       In United States v. Davis, 407 F.3d 162, 165 (3d Cir.
2005), we announced our intention to remand for resentencing

                                27
those cases in which sentence was imposed under the pre-
Booker mandatory Guidelines regime, was enhanced pursuant
to judge-found facts (other than the existence of prior
convictions), and was challenged on direct appeal:

      Furthermore, as noted by the Court of Appeals for
      the Sixth Circuit, “[w]e would be usurping the
      discretionary power granted to the district courts
      by Booker if we were to assume that the district
      court would have given [defendant] the same
      sentence post-Booker.” Failure to remand for
      resentencing, therefore, could adversely affect the
      fairness and integrity of the proceedings.
      Accordingly, defendants sentenced under the
      previously mandatory regime whose sentences are
      being challenged on direct appeal may be able to
      demonstrate plain error and prejudice. We will
      remand such cases for resentencing.Id. at 165. As
      the above language from Davis suggests, in order
      to qualify for resentencing under Booker, a
      defendant must object to his sentence at
      sentencing and reassert his argument on direct
      appeal. See U.S. v. Ordaz, 398 F.3d 236, 239 (3d
      Cir. 2005).

      Tupone obviously preserved the sentencing issue at his
sentencing hearing and now raises it on appeal before us. The
Government agrees that remand is appropriate under Booker.
The District Court imposed Tupone’s sentence under the pre-

                              28
Booker mandatory Guidelines regime, and the Court enhanced
Tupone’s offense level based on facts found by the Court, rather
than by the jury. The case is thus subject to Booker scrutiny and
appropriate for remand on that ground.

                              VI.

       For the foregoing reasons, the District Court’s conviction
will be affirmed. We will vacate the sentence imposed by the
District Court, and we will remand the case for resentencing.

                               29
STAPLETON, Circuit Judge, dissenting:

        I agree with my colleagues that the Sentencing
Commission intended the degree of punishment in situations of
this kind to turn on what the defendant received that he was not
entitled to receive rather than on the size of the transaction itself.
Ironically, however, the Court’s opinion, while giving effect to
this judgment of the Commission, refuses to acknowledge an
identical judgment of Congress reflected in a literal reading of
the text of § 1920. For this reason, I respectfully dissent.

       Section 1920 provides as follows:

       Whoever knowingly and willfully falsifies,
       conceals, or covers up a material fact, or makes a
       false, fictitious, or fraudulent statement or
       representation, or makes or uses a false statement
       or report knowing the same to contain any false,
       fictitious, or fraudulent statement or entry in
       connection with the application for or receipt of
       compensation or other benefit or payment under
       subchapter I or III of chapter 81 of title 5, shall be
       guilty of perjury, and on conviction thereof shall
       be punished by a fine under this title, or by
       imprisonment for not more than 5 years, or both;

                                 30
       but if the amount of the benefits falsely obtained
       does not exceed $1,000, such person shall be
       punished by a fine under this title, or by
       imprisonment for not more than 1 year, or both.

18 U.S.C. § 1920.

       Insofar as here relevant, the District Court read § 1920 to
provide that “whoever knowingly and willfully . . . makes a false
statement . . . in connection with the application for or receipt of
compensation or other benefit or payment shall be guilty of
perjury and . . . shall be punished by a fine . . . or imprisonment
for not more than 5 years, or both, . . . but if the amount of the
benefits . . . obtained does not exceed $1,000, such person shall
be punished by a fine . . . or imprisonment for not more than one
year, or both.”

       Congress could have enacted a coherent statute so
providing, but it did not. Section 1920, as enacted by Congress,
criminalizes precisely the conduct the District Court read it to
criminalize, but when it came to punishment Congress did not
make the degree of punishment turn on “the amount of the
benefits obtained.” Congress rather provided that the degree of
punishment would turn on the quantum of wrongful conduct
rather than the extent of the defendant’s dependence on the

                                31
government, i.e., on “the amount of the benefits falsely
obtained.” 18 U.S.C. § 1920 (emphasis supplied).9

       The District Court interpretation reads out of the statute
entirely the word “falsely,” thereby violating the rule of
construction that no statutory text should be ignored as
surplusage unless there is no other reasonable alternative. See
Bailey v. United States, 516 U.S. 137, 146 (1995) (employing
the canon to reject an interpretation of a criminal statute because
“[n]othing here indicates that Congress, when it provided these
two [different] terms, intended that they be understood to be
redundant. We assume that Congress used two terms because it
intended each term to have a particular, nonsuperfluous
meaning.”); United States v. Cooper, 396 F.3d 308 (3d Cir.
2005) (quoting TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001),

  9
    It is, of course, true that the “overall ‘design’ and ‘object’
of § 1920 is to criminalize the making of false statements in the
application and receipt of government benefits” and the judge’s
instructions to the jury would have been entirely appropriate
prior to the age of Apprendi. Op. at 12. I fail to perceive,
however, how this “militates in favor of the District Court’s
reading of the statute.” Id. The statute was enacted prior to
Apprendi, and in that context, the relevant text clearly related
only to the Court’s sentencing decision. If that text had referred
to “benefits obtained,” the statute could fairly be read to limit
the judge’s punishment discretion by a reference back to
“compensation, or other benefit or payment.” Congress chose,
however, to limit punishment in accordance with the amount of
“benefits falsely obtained.”
                                32
for the proposition that “a statute ought, upon the whole, to be
so construed that, if it can be prevented, no clause, sentence, or
word shall be superfluous, void, or insignificant”). Here, the
literal reading of the entire statute as written produces an
eminently reasonable result. Indeed, I regard it as far more
likely that Congress intended the punishment to turn on how
much the defendant received that he was not entitled to rather
than the size of the transaction itself. As I have indicated, this
is precisely the same judgment reached by the Sentencing
Commission as a result of its deliberations. See U.S.S.G. §
2B1.1, Application Notes § 3.(F)(ii) (For example, “if the
defendant was the intended recipient of food stamps having a
value of $100 but fraudulently received food stamps having a
value of $150, loss is $50” for enhancement purposes.). In
short, I would hold that § 1920 means what it literally says.

        Even if it could be said that § 1920 was ambiguous,
however, I would consider myself bound by the rule of lenity to
construe the statute in a manner that would produce the lighter
sentence in those cases where the two readings would produce
different results. United States v. $734,578.82 in U.S. Currency,
286 F.3d 641, 657 (3d Cir. 2002) (“[W]here a statute is punitive
in nature, the rule of lenity requires that any ambiguity in the
statute be resolved in favor of the claimant.”); United States v.
Fenton, 309 F.3d 825, 828 n.3 (3d Cir 2002) ([W]here . . . the
[Sentencing] Guidelines do not clearly call for enhancement, the
rule of lenity should prevent the application of a significantly
increased sentence.”).

                               33
        Because there was no determination by the jury as to
whether “the amount of the benefits falsely obtained” by Tupone
exceeded $1,000 and because there was testimony from Tupone
on the basis of which a juror might have a reasonable doubt
about whether that was the case, I would remand with
instructions that Tupone should be resentenced to no more than
a fine or imprisonment of one year, or both.