Court Opinion

ID: 197316
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:27:08+00
Date Added: 2024-06-11T17:26:46.677468
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UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

No. 95-1395
                    UNITED STATES OF AMERICA,

                            Appellee,

                                v.

                       MICHAEL D. SHADDUCK,

                      Defendant, Appellant.

                                           
                                                     
No. 95-1396
                    UNITED STATES OF AMERICA,

                            Appellee,

                                v.

                       ANDREA D. SHADDUCK,

                      Defendant, Appellant.

                                           
                                                     

No. 96-1342
                    UNITED STATES OF AMERICA,

                            Appellee,

                                v.

                       MICHAEL D. SHADDUCK,

                      Defendant, Appellant.

                                           
                                                     

          APPEALS FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. Morris E. Lasker,* Senior U.S. District Judge]
                                                                    

                                           
                                                     

                  
                            

   *Of the Southern District of New York, sitting by designation.

                              Before

                       Cyr, Circuit Judge,
                                                   

                 Campbell, Senior Circuit Judge,
                                                         

                    and Stahl, Circuit Judge.
                                                      

                                           
                                                     

   James B. Krasnoo with whom Law Offices of James B. Krasnoo was on
                                                                       
brief for appellants.
   Mark J.  Balthazard, Assistant United States  Attorney, with whom
                                
Donald K. Stern, United States Attorney, was on brief for appellee.
                       

                                           
                                                     

                          April 24, 1997
                                           
                                                     

                                2

          CYR,  Circuit Judge.    Appellants  Michael and  Andrea
                    CYR,  Circuit Judge
                                       

Shadduck  challenge  the  judgments of  conviction  and  sentence

entered against them for  bankruptcy fraud, see 18 U.S.C.    152,
                                                         

following their four-day  jury trial.  We affirm the convictions,

but vacate, in part, the  sentence imposed upon Michael  Shadduck

and remand for resentencing.  

                                I
                                          I

                           BACKGROUND1
                                     BACKGROUND
                                               

          Appellant  Michael  Shadduck  ("Shadduck"), a  self-em-

ployed insurance salesman, invested in several insurance policies

and a  pension fund  with Guardian Investor  Services Corporation

("Guardian").  Three days before the Shadducks filed  their joint

chapter 11 petition on  June 4, 1993, Shadduck had  requested the

maximum loan  advances available on four  Guardian life insurance

policies.   The chapter 11 petition,  unaccompanied by schedules,

listed liabilities  totaling $2,269,381.13 to the  twenty largest

unsecured creditors. 

          On the  day the  joint chapter  11 petition  was filed,

Mrs.  Shadduck drew  an $8,000 check  on their  personal checking

account and  endorsed it over to her  husband.  Three days later,

                    
                              

     1Viewing the  evidence in  the light  most favorable to  the
verdicts, we recite the  facts as the jury reasonably  could have
found  them.  United  States v. Josleyn,  99 F.3d 1182,  1185 n.1
                                                 
(1st  Cir. 1996), cert. denied, 117 S.  Ct. 959 (1997).  We note,
                                        
however,  that  the  record  on appeal  is  woefully  incomplete,
particularly as  it includes no district  court trial transcript.
Of course,  the proponent of a  claim must "bear the  brunt of an
insufficient record  on appeal."  Real v.  Hogan, 828 F.2d 58, 60
                                                          
(1st. Cir. 1987).  See also LaRou v. Ridlon, 98 F.3d 659, 664 n.8
                                                     
(1st Cir. 1996).

                                3

four checks totaling $124,383.66 were deposited in a bank account

in the  name of John Shepard, a friend of Shadduck.  Three checks

had been issued to Shadduck by Guardian and  represented portions

of the aforementioned loan proceeds, as well as policy dividends.

The fourth was the  $8,000 check withdrawn by Mrs.  Shadduck from

the joint account three days earlier.  

          At the  creditors meeting  on June 14,  Shadduck denied

having made any payment in excess  of $600 to any creditor within

the 90-day period preceding June 4, denied having a bank account,

and disavowed  any beneficial interest either  in insurance poli-

cies or a  pension plan.   Mrs. Shadduck,  who was continuing  to

write checks  on their joint  checking account during  this time,

remained  silent  as her  husband  made these  misrepresentations

under oath. 

          Following  the creditors  meeting,  two other  Guardian

checks,  totaling $13,346.01,  payable to  Shadduck and  endorsed

over to Shepard, were deposited in the Shepard account.  Two days

later Shadduck gave Shepard a  $73,900 check, drawn on Shadduck's

Guardian pension plan and endorsed over to Shepard.  At the time,

the Shadduck pension plan account contained $118,339.05.  On July

19,  1993, a $33,517.36 check  was drawn on  the Shadduck pension

plan account, representing  the balance in the pension plan after

the required $10,921.69 withholding for federal income tax.

          On July 1, the  Shadducks filed their bankruptcy sched-

ules, signed the  same day  under penalty  of perjury,  asserting

that  they had no interest in pension plans or insurance policies

                                4

and, further, that  they had  no bank account.   Throughout  this

entire period,  however, Shadduck had  funds in his  pension plan

and Mrs.  Shadduck  continued  to  write checks  on  their  joint

checking account.    Shepard subsequently  drew  checks  totaling

$171,211.12  to Shadduck on September 29 and November 2, 1993, in

amounts mirroring the checks  Shadduck had issued to Shepard  the

previous  June.   Three  of  these  checks, totaling  $17,134.70,

explicitly  noted  that  the proceeds  represented  pension  plan

funds.  

          The Shadducks were indicted on January 19, 1994:  he on

four counts,  for concealing assets  and falsely stating  that he

had  no bank  account,  insurance policies,  or pension  plan, in

violation  of 18  U.S.C.    152; she  on one  count,  for falsely

stating she had  no bank  account.  At  trial, Shadduck  admitted

making false statements but nevertheless insisted that he had not

listed  the pension plan funds on the schedules because they were

exempt, even though  he concededly  had failed also  to list  any

pension plan funds as property  claimed exempt.  Shadduck further
                                                        

testified  that the  monies  invested in  the insurance  policies

belonged to  clients who  had requested  that he  invest approxi-

mately  $85,000 in their behalf.   Shadduck admitted making false

statements at the  creditors meeting and on the bankruptcy sched-

ules, but vouchsafed  that his wife had not  known what was going

on.

          After  the jury returned  guilty verdicts  against both

defendants, the district court sentenced Shadduck to twenty-seven

                                5

months' imprisonment,  including enhancements based on  the total

intended loss, see U.S.S.G.    2F1.1(b)(1) (Nov. 1994), violation
                            

of a judicial order, id.   2F1.1(b)(3)(B), and  defrauding multi-
                                  

ple victims, id.    2F1.1(b)(2)(B).  Shadduck appeals his convic-
                          

tions  and sentence.   Mrs.  Shadduck, who  was sentenced  to two

years' probation, principally challenges her conviction.2

                                II
                                          II

                            DISCUSSION
                                      DISCUSSION
                                                

1.   Andrea Shadduck 
          1.   Andrea Shadduck
                              

          Andrea Shadduck concedes that she  purchased the $8,000

bank check with funds  drawn from the joint checking  account and

endorsed it  to  her  husband,  that she  signed  the  bankruptcy

schedules  listing no bank account,  and that she remained silent

at the  creditors meeting  while her husband  falsely represented

that they had  no bank  account.  She  nonetheless contends  that

there  was insufficient  evidence that  she intentionally  made a

false statement,  since  her husband  testified  to her  lack  of

knowledge. 

          There  was ample  evidence  to support  the conviction.

The  jury  reasonably could  infer  from  all the  circumstances,

especially  the  timing of  the  various  transactions, that  she

possessed the requisite  fraudulent intent.   She drew an  $8,000

                    
                              

     2Although  both appellants  challenge  the    2F1.1(b)(3)(B)
enhancement,  the  district  court imposed  a  downward departure
before sentencing Mrs. Shadduck  to probation.  United  States v.
                                                                        
Shadduck, 889 F. Supp. 8, 11-12 (D.Mass. 1995).  Thus, no purpose
                  
would  be served by  remanding for resentencing  in these circum-
stances. 

                                6

bank check on the unscheduled joint checking account the very day

she  and  her husband  signed and  filed  their joint  chapter 11

petition.   She signed the bankruptcy schedule stating she had no

bank account, yet continued  to draw checks on the  joint account

for  more than  three  months, even  after  her husband,  in  her

presence, falsely denied the existence of any such account at the

creditors meeting.   This circumstantial evidence alone supported

a reasonable  inference  that her  motive  in making  the  $8,000

withdrawal  from the joint checking  account on the  eve of bank-

ruptcy was  to prevent  its  disclosure to  creditors.   Finally,

fraudulent intent  was readily inferable  from the fact  that the

Shadducks  omitted from  their joint  list of  claimed exemptions

only  the property  not elsewhere  disclosed as  assets  on their

schedules.3   Moreover, the jury was free to discredit the excul-

patory  testimony  offered  by  her  husband,  United  States  v.
                                                                       

Restrepo-Contreras, 942 F.2d 96,  99 (1st Cir. 1991), and  we are
                            

not  at liberty to presume otherwise, see United States v. Laboy-
                                                                           

Delgado,  84 F.3d 22, 26  (1st Cir. 1996)  (noting that appellate
                 

court must "resolve all disagreement regarding the credibility of

witnesses to the government's behoof").

2.   Michael Shadduck 
          2.   Michael Shadduck 
                               

                    
                              

     3Mrs. Shadduck also urges us to consider testimony presented
by her counsel  at a postjudgment  hearing to correct  Shadduck's
sentence  pursuant to 28 U.S.C.    2255.   Counsel testified that
the joint  checking account  had been inadvertently  omitted from
the schedules.  In  evaluating a challenge to the  sufficiency of
the  evidence on direct appeal, however, we may consider only the
evidence presented at trial.  See United States v. Laboy-Delgado,
                                                                          
84 F.3d 22, 26 (1st Cir. 1996). 

                                7

     a.   Supplemental Jury Instruction4
               a.   Supplemental Jury Instruction
                                                 

          Shadduck  claims the  jury verdict  was tainted  by the

response to a question submitted by the jury.5  Although Shadduck

would have us isolate the trial court's supplemental instruction,

the law  is clear that it "'must be  viewed in the context of the

overall charge.'"   United States  v. Femia, 57 F.3d  43, 47 (1st
                                                     

Cir.) (quoting Cupp  v. Naughten, 414  U.S. 141, 146-47  (1973)),
                                          

cert. denied,  116 S.  Ct. 349  (1995).   The general  charge had
                      

explained, with respect to  each count, that the jury  would need

to determine whether the alleged false statements and concealment

had been "knowing" and  "fraudulent."  There was no  objection to

                    
                              

     4We "review the  propriety of jury instructions for abuse of
discretion."   United States v.  Mitchell, 85 F.3d  800, 809 (1st
                                                   
Cir. 1996).  

     5Shadduck further  complains, for  the first time,  that the
following  comment about the weather caused the jury to hurry its
deliberations: 

          Now  it's 3 o'clock in the afternoon.  It's a
          pretty  nasty afternoon  in case  you haven't
          been  able to  see  the weather  in the  jury
          room.  Counsel and I  are willing to stay  as
          long as you wish.   What I normally do  - and
          what  I will  do -  is about 4  o'clock, I'll
          come down and I  would normally excuse you at
          that time  unless the jury or  a majority, at
          least, of the jury  believes that they are so
          close to completing the case that they'd like
          to  stay a little bit  longer.  But if that's
          not the case,  then I will excuse  you to re-
          sume on Monday morning.

There is nothing  in this  comment to suggest  that the jury  was
pressured to rush  its verdicts.   Rather, the  trial judge  made
abundantly clear that he was willing to remain  as long as neces-
sary  that  afternoon  or  to  reconvene  the  following  Monday.
                                   
Moreover,  the defense failed to object to this reasonable proce-
dure. 

                                8

the general charge.

          Several hours  after retiring  to deliberate,  the jury

inquired  in writing  whether  there would  be  a change  in  the

ownership of certain  funds invested in an annuity contract under

the  name of  one  Leonard Roy  were the  jury  to find  Shadduck

guilty.   The trial judge  replied that there was  no evidence on

which to base a response to their inquiry and that  they were not

to consider this collateral matter in arriving at their verdicts.

The court added: 

          You  should decide  whether you  believe that
          [Shadduck] intentionally made a  false state-
          ment or he did not  make a false statement in
          regard to  this material.  That  is the issue
          before you.

Shadduck objected that  a further instruction was required to the

effect that the jury would need to determine whether Shadduck had

made the  statements "fraudulently."   After explaining  that its

response  was  consistent  with  its earlier  and  more  detailed

charge, the court denied the request.  Later, Shadduck unsuccess-

fully moved for a mistrial on the ground that the response to the

jury  inquiry effectively  had eliminated an  element of  the of-

fense.

          Viewed  in the context of the  entire charge, and given

the  clear  signal from  the trial  judge  that the  jury inquiry

related to a collateral matter not appropriate  for their consid-

eration, the response  was entirely  proper.  It  did nothing  to

disturb, let alone  gainsay, the  very clear  instruction in  the

general  charge; viz., that  the jury must  determine whether the
                               

                                9

alleged conduct had been  undertaken "knowingly" and "fraudulent-

ly."

               Now,  . . . the  offenses . .  . are al-
          leged to have been done "knowingly and fraud-
          ulently."
               An act or failure  to act is "knowingly"
          done if it's done voluntarily  and intention-
                                                                 
          ally and  not because of mistake  or accident
                        
          or any other innocent reason.
               The  purpose of requiring  that the gov-
          ernment .  . .  prove that a  defendant acted
          "knowingly" is to insure  that no one is con-
                                                                 
          victed because of an  act, or failure to act,
                                  
          due to a mistake or an accident or some - any
          innocent reason.
               An act or failure to act is "fraudulent-
          ly" done if it is done willfully and with the
                                                                 
          intent  to  deceive  or cheat  any  creditor,
                                                                 
          trustee or bankruptcy judge.
                                               
               An act or failure  to act is "willfully"
          done if it is done voluntarily and intention-
                                                                 
          ally and  with a specific intent  to do some-
                                                                 
          thing which the law  forbids; that is to say,
                                                                
          for bad purpose  either to disobey or  disre-
                                   
          gard the law.
          ....
               The intent with which an act is done may
          also be  inferred from the nature  of the act
          itself.  Accordingly, intent, willfulness and
          knowledge  are  usually  established by  sur-
          rounding  facts and  circumstances as  of the
          time  the acts  in question  occurred  or the
          events took  place and the  reasonable infer-
          ences to be drawn from them.

(Emphasis added.)  Thus,  the court defined both "knowingly"  and

"fraudulently" through direct reference to  the voluntariness, as

well  as the  general and  specific intent,  animating Shadduck's

conduct.

          Against  the backdrop of this earlier detailed instruc-

tion, we are not persuaded that any significant risk of confusion

arose from the subsequent  umbrella response to the jury  that it

was to decide whether  Shadduck "intentionally" made false state-

                                10

ments.  See United States v. Yefsky, 994 F.2d 885,  899 (1st Cir.
                                             

1993) (instruction  on "intent,"  rather than  "specific intent,"

held adequate given court's  earlier definition of "willfully" as

encompassing specific intent); United States v. Nichols, 820 F.2d
                                                                 

508,  511 (1st Cir.  1987) (unnecessary  to instruct  on specific

intent "[g]iven  the  extensive  instruction  on  'knowingly  and

willfully' [delivered] moments earlier").

     b.   Calculation of Intended Loss (U.S.S.G.   2F1.1)
               b.   Calculation of Intended Loss (U.S.S.G.   2F1.1)
                                                                  

          The  district  court  imposed an  eight-level  sentence

enhancement based on  its finding that  Shadduck had intended  to

cause loss  totaling $246,280.   See  U.S.S.G.    2F1.1, comment.
                                              

(n.7).  ("[I]f  [the] loss  that the defendant  was intending  to

inflict can  be determined,  this figure  will be  used if it  is

greater  than the actual loss.").  On appeal, Shadduck claims for

the first  time that  the loss  calculation,  which included  the

loans obtained  against the  Guardian insurance policies  and the

funds  withdrawn from the pension plan, must be set aside because

those  monies were in all  events exempt under  Bankruptcy Code  

522, hence  not subject  to  administration in  bankruptcy.6   As
                    
                              

     6Shadduck further claims, and the  government concedes, that
the  presentence report  ("PSR") initially  "double  counted" the
$8,000  removed  from the  joint  checking  account  the day  the
Shadducks filed  for bankruptcy.  Although  the government claims
that  the error  was  corrected in  an  amended PSR,  the  record
contains no PSR.   In all events, any  such double counting would
have been harmless, since the total-loss category was unaffected.
See  U.S.S.G.    2F1.1(b)(1)(I)  (eight-level  increase  for loss
             
exceeding $200,000 but less than $350,000).  Thus, addressing the
error, if any, could have no effect on the sentence.   See United
                                                                           
States  v. Sepulveda, 15 F.3d 1161, 1199 (1st Cir. 1993) (noting,
                              
in context  of drug-quantity calculation, that  "[i]t is unneces-
sary to address an allegedly erroneous sentencing computation if,

                                11

Shadduck  failed to  object  below,  we  review only  for  "plain

error."   United States  v. Carrington,  96 F.3d  1, 6 (1st  Cir.
                                                

1996),  cert. denied, 65 U.S.L.W. 3648 (U.S. March 24, 1997) (No.
                              

96-8027); see also Koon v. United States, 116 S. Ct. 2035 (1996);
                                                  

United States v. Olano,  507 U.S. 725, 734 (1993)  ("plain error"
                                

means "obvious" error); see also Fed. R. Crim. P. 52(b).  
                                          

          The  present  contention   assumes,  contrary  to   our

caselaw,  that property  of the  debtor  neither claimed  nor set

apart as  exempt would not  have been subject  to administration.

See Petit v. Fessenden, 80 F.3d 29, 33 (1st Cir. 1996); Mercer v.
                                                                        

Monzack, 53 F.3d 1, 3  (1st Cir. 1995), cert. denied, 116  S. Ct.
                                                              

1317 (1996); see  also 11  U.S.C.   522(l)  (requiring debtor  to
                                

list property claimed exempt); Fed. R. Bankr. P. 4003(b).  As the

Supreme Court recently held, Bankruptcy  Code   522(l) and  Bank-

ruptcy Rule  4003(b) are  to be  interpreted  in accordance  with

their  literal intendment.  See  Taylor v. Freeland  & Kronz, 503
                                                                      

U.S. 638, 643-45 (1992); see also Mercer, 53 F.3d at 3.
                                                  

          Virtually all property of the debtor, except as provid-

ed in  Bankruptcy Code   541(b),(c)(2)&(d),  becomes "property of

the estate"  by operation of law without  regard to whether it is

listed on  the schedules.   Id.    541(a).    Shadduck has  never
                                         

argued that these pension  plan monies were not "property  of the

                    
                              

and  to the extent that, correcting it will not change the appli-
cable offense level").

                                12

estate,"7  but only that they  were not subject  to process under

applicable state law.8  

                    
                              

     7Bankruptcy Code   541(c)(2)  excludes from "property of the
estate"  an interest in a  trust subject to transfer restrictions
enforceable under applicable nonbankruptcy law.  See Patterson v.
                                                                        
Shumate,  504 U.S. 753, 757-58  (1992).  Patterson  held that the
                                                            
antialienation  provisions  in  ERISA-qualified plans  constitute
transfer restrictions for    541(c)(2) purposes, hence such plans
are not  "property of the estate."   Id. at 760.   See also In re
                                                                           
Yuhas,  104 F.3d 612, 614-16 (3d Cir. 1997) (IRA funds not "prop-
               
erty of estate");  In re Meehan, 102  F.3d 1209, 1214  (11th Cir.
                                         
1997) (same).   Not only was this argument not  raised below, but
there  is  no record  evidence,  see supra  n.1,  that Shadduck's
                                                    
pension plan even contained transfer restrictions.

     8Nor  does the record on appeal indicate that this claim was
preserved below.  Shadduck contends that Mass. Gen. Laws ch. 235,
   34A,  exempts pension  plan funds  which  do not  exceed seven
percent of the debtor's total income  within the five-year period
preceding bankruptcy, and that  Mass. Gen. Laws ch. 175,    119A,
exempts  insurance policies  under  certain conditions.   In  any
event, this argument proves too much. 

                                13

          Were  we to  adopt  the regime  advocated by  Shadduck,

property  fraudulently  concealed  throughout  the  course  of  a

bankruptcy proceeding nonetheless  would become exempt by  opera-

tion  of law.9  By  contrast, property duly  claimed exempt by an

honest debtor does not  become exempt by operation of  law unless

no  "party in interest" objects to the exemption claim within the

allotted thirty-day period.  See In re Edmonston, 107 F.3d 74, 76
                                                          

(1st Cir. 1997);  11 U.S.C.   522(l); Fed. R.  Bankr. P. 4003(b).

Thus, the  argument advanced by Shadduck  would short-circuit the

exemption-claim screening process  explicitly envisioned in  Fed.

R. Bankr. P. 4003(b), which  provides that the thirty-day limita-

tion on objections  to exemption  claims "does not  begin to  run

until  the  debtor  lists  the  'property  claimed  as  exempt.'"

Mercer, 53  F.3d at 3 (quoting  Fed. R. Bankr. P.  4003(b)).  See
                                                                           

also Petit,  80 F.3d at  33 ("Unless and  until a debtor  files a
                    

timely claim of exemptions, however, as required by the Bankrupt-

cy Code and the  Federal Rules of Bankruptcy Procedure,  there is

no 'list of property claimed exempt' for the trustee or creditors

to oppose.").   We therefore  reject it and  affirm the  district

court's "intended loss" calculation.

                    
                              

     9Shadduck seeks to supplement the record with "newly discov-
ered evidence" which allegedly establishes that these monies were
considered  exempt  by the  bankruptcy  court  even though  never
claimed  exempt.    The  supplemental submissions      a  hearing
transcript in  which the  bankruptcy judge  took  a matter  under
advisement, and a letter from counsel for the trustee  suggesting
that  the bankruptcy court might find that the pension plan funds
were not reachable by creditors    establish nothing of the sort.
We simply  note, therefore,  that the so-called  "evidence" would
not have affected the outcome. 

                                14

     c.   Enhancement for Violating a Judicial
               c.   Enhancement for Violating a Judicial
                                                        
          Order (U.S.S.G.   2F1.1(b)(3)(B))10
                    Order (U.S.S.G.   2F1.1(b)(3)(B))
                                                    

          (i)  Judicial Order
                    (i)  Judicial Order
                                       

          The district court imposed  a two-level enhancement  on

the ground that Shadduck had  violated a judicial "order," within

the meaning of U.S.S.G.   2F1.1(b)(3)(B) (1994) (prescribing two-

level enhancement for  violating "any judicial or  administrative

order,  injunction, decree, or  process"), by repeatedly flouting

the obvious  intendment behind the Bankruptcy  Rules and Official

Forms that all property  of the debtor be disclosed.   See United
                                                                           

States v. Shadduck, 889 F. Supp. 8, 10 (D. Mass. 1995).  See also
                                                                           

United States v.  Bellew, 35  F.3d 518, 520-21  (11th Cir.  1994)
                                  

(affirming  enhancement  because  Bankruptcy  Rules  and Official

Forms are "judicial orders").  

          Shadduck  contends that  the term  "order," as  used in

section 2F1.1(b)(3)(B), contemplates only a specific order,  such

as a consent decree  or an adjudicative order or  mandate entered

pursuant to judicial  direction.   He argues that  to uphold  the

enhancement absent  a specific  order would permit  its automatic

application in any bankruptcy fraud case, simply by virtue of the

forum  in which the false statements were made and without regard

to  the  aggravated criminal  intent  which  the enhancement  was

designed  to redress.  As hereinafter discussed, we are unable to

agree  that a  bankruptcy rule  or official  form is  a "judicial

                    
                              

     10The guideline interpretation underlying the district court
ruling is  reviewed de novo.  United States v. Garcia, 34 F.3d 6,
                                                               
10 (1st Cir. 1994).

                                15

order," as the term is used in section 2F1.1(b)(3)(B).

          First,  it is  clear  that the  bankruptcy judge  never

entered  an  order specifically  directing  Shadduck  to disclose

property  of the debtor.  See Bankruptcy Code   541(a), 11 U.S.C.
                                       

   541(a).  The  district court  implicitly acknowledged  as much

through its reliance on  the several verification requirements in

the Official Forms,  see Official  Bankr. Forms 1,  6, 11  U.S.C.
                                  

(requiring  debtor's signature  verifying assertions  in petition

and schedules); Fed. R. Bankr. P. 1008 (mandating verification of

forms); 9011 (signature  constitutes representation by  signatory

that information provided is  true).  See Shadduck, 889  F. Supp.
                                                            

at 10; see also Bellew, 35 F.3d at 520.   Thus, as the bankruptcy
                                

court entered no "order, injunction or decree" directing Shadduck

to disclose property of the debtor, the  enhancement cannot stand

unless the district court correctly determined that the universal

admonitions in the various Official Forms and/or Bankruptcy Rules

applicable to all  debtors in  bankruptcy proceedings  constitute

"judicial  or  administrative  order[s]"  within  the meaning  of

U.S.S.G.   2F1.1(b)(3)(B).

          We turn to the  guideline commentary for further assis-

tance.  See Stinson v. United  States, 508 U.S. 36, 42-43  (1993)
                                               

("Commentary  which  functions  to  interpret  [a]  guideline  or

explain how it is to  be applied controls.") (internal  quotation

marks omitted); see also  United States v. Weston, 960  F.2d 212,
                                                           

219 (1st Cir. 1992).  The  application note accompanying U.S.S.G.

  2F1.1(b)(3)(B) focuses upon violations of prior orders, injunc-
                                                           

                                16

tions,  and decrees.  See  U.S.S.G.   2F1.1,  comment. (n.5) (ad-
                                   

verting  to defendant's  "knowledge of  the prior  decree or  or-

der").11  The accompanying exemplar describes a defendant who had

been  enjoined in  a prior  proceeding from  engaging  in certain

conduct, but who violated the injunction anyway by committing the

fraud  for which he was awaiting  sentence.  Id., see supra n.11.
                                                                     

Thus,  the  commentary makes  clear  that the  rationale  for the

enhancement  is  to  redress  the  "aggravated  criminal  intent"

inherent in  violating a  prior order specifically  enjoining the
                                               

defendant, or  an entity the defendant  controlled, from engaging
                   

in  the fraudulent conduct which formed the basis for the offense

of conviction.  U.S.S.G.   2F1.1, comment. (backg'd).

          In  the instant  case,  no pertinent  order, decree  or

                    
                              

     11The application note provides in full:

          Subsection  (b)(3)(B) provides  an adjustment
          for violation of  any judicial or administra-
          tive order, injunction,  decree, or  process.
          If it  is established that an  entity the de-
                                                                 
          fendant  controlled was a  party to the prior
                                                                 
          proceeding, and the  defendant had  knowledge
                                                                 
          of the prior decree or order, this  provision
                                                                 
          applies even if the  defendant was not a spe-
                                                                 
          cifically named  party  in that  prior  case.
                                                                
          For example, a  defendant whose business  was
          previously enjoined from selling  a dangerous
          product,  but  who  nonetheless   engaged  in
          fraudulent conduct to sell the product, would
          be subject  to this provision.   This subsec-
          tion  does  not  apply  to  conduct addressed
          elsewhere in the  guidelines; e.g., a  viola-
                                                      
          tion of a condition of  release (addressed in
           J.7 (Offense Committed While on Release)) or
          a violation of probation (addressed in  4A1.1
          (Criminal History Category)).

(Emphasis added.)

                                17

injunction ever entered prior to the bankruptcy fraud perpetrated

by Shadduck, either in the bankruptcy proceeding itself or in any

prior  judicial  or  administrative  proceeding.    To  be  sure,

Shadduck attempted to  cover up the  bankruptcy fraud with  false

statements in the petition and  schedules submitted to the  bank-

ruptcy  court, see Official Bankr. Forms  1, 6, 11 U.S.C, as well
                            

as  under oath  at the  creditors meeting.   Thus,  by concealing

property of  the debtor notwithstanding the  copious admonitions,

instructions,  and  verifications  in the  Bankruptcy  Rules  and

Official  Forms,  Shadduck  unquestionably  committed  bankruptcy
                                                                           

fraud.  See 18 U.S.C.   152.
                     

          Nevertheless, if the government cannot demonstrate that

a prior order,  decree or injunction prohibited the defendant (or
                 

an entity controlled by the debtor) from engaging  in the type of

fraudulent  conduct which  formed the  basis for  his conviction,

there  has  been no  showing that  the  defendant acted  with the

aggravated criminal intent  envisioned by the Sentencing  Commis-
                    

sion in section 2F1.1(b)(3)(B),  as illustrated by the applicable

guideline text and commentary.  See United States v. Carrozzella,
                                                                          

105  F.3d  796, 800  (2d Cir.  1997)  (the defendant  "violated a

command not to  file false accounts, but  the command was  a rule

applicable  to all  [debtors]  and not  specifically directed  to

him.").12

          The  nearest  likeness   to  a  section  2F1.1(b)(3)(B)
                    
                              

     12We express no view regarding whether a departure  might be
based  upon conduct that does not come squarely within U.S.S.G.  
2F1.1(b)(3)(B).

                                18

"order"  contained in the Official  Forms is the  "Notice of Com-

mencement  of  Case Under  Chapter  11  of the  Bankruptcy  Code,

Meeting of Creditors, and Fixing of Dates," Official  Bankr. Form

9, 11 U.S.C.,  which is  mailed by the  bankruptcy court  clerk's

office to  the  debtor and  all creditors.   Virtually  identical

variations  on Form  9 are  entered routinely in  most bankruptcy

proceedings.   Form 9 bears the preprinted name of the Bankruptcy

Court Clerk, acting  "for the  court," see id.,  and directs  the
                                                        

debtor to appear  at the  meeting of creditors  to provide  sworn

testimony.  Id.  In the latter respect, Form 9 is no more akin to
                         

a judicial order than is the administration of the oath itself.

          Official Form  9 resembles in  considerable measure the

official  letter  of  warning   discussed  in  United  States  v.
                                                                       

Linville, 10 F.3d 630 (9th Cir. 1993), with  respect to which the
                  

Ninth Circuit explained:

          It is  pellucid that there is  a vast differ-
          ence between ignoring  prior decrees,  orders
          and injunctions after being subject to formal
          proceedings,  and  ignoring  letters and  the
                                                                 
          like, no matter how official they might look.
                        
          To hold otherwise  would compel  enhancements
                                                                 
          in every criminal case where a defendant  was
                                                                 
          told by  someone in  authority that  what she
                                                                 
          was  doing was illegal,  rather than limiting
                                                                 
          them to more  relatively unusual cases  where
                                                                 
          someone violated  a specific court  or agency
                                                                 
          order or adjudication.
                                         

Id. at 632-33 (emphasis added).  Similarly, the notice of meeting
             

of  creditors mailed by the bankruptcy clerk is an advisory which

rises  neither to the level  of a judicial  nor an administrative

order under any conventional meaning of the term.

          Thus,  neither section  2F1.1(b)(3)(B) itself,  nor the

                                19

relevant  commentary, supports  the enhancement  rationale relied

upon  below,  since their  language  plainly  indicates that  the

enhancement  was meant  to  apply to  defendants who  have demon-

strated a heightened mens  rea by violating a prior  "judicial or
                                                             

administrative  order,  decree,  injunction  or  process."    See
                                                                           

U.S.S.G.    2F1.1(b)(3)(B), comment.  (n.5), (backg'd).   Were an

enhancement to be predicated  on the ground that Official  Form 9

constitutes a "judicial order," it would become applicable in all

bankruptcy  fraud cases, simply by  virtue of the  forum in which

the false statements were  made and without regard to  the aggra-

vated  criminal  intent it  was designed  to  redress.   Any such

automatic  application  in  bankruptcy  fraud  cases,  especially

absent  the required  mens rea,  would work  an amendment  of the
                                        

guideline, see  id.   2F1.1(b)(3)(B) (prescribing minimum offense
                             

level  of ten after enhancement); see id.   2F1.1(a) (setting BOL
                                                   

at six).  As we can discern no hint that the  Commission meant to

distinguish bankruptcy  fraud from  other frauds in  this regard,

see U.S.S.G.    2F1.1, comment. (backg'd)  (explaining that fraud
             

guideline  "is designed  to  apply to  a  wide variety  of  fraud

cases"), we  conclude that  the two-level enhancement  imposed on

Shadduck   for   violating   a   judicial   order   (U.S.S.G.    

2F1.1(b)(3)(B)) was erroneous and cannot stand.

          (ii) Judicial Process
                    (ii) Judicial Process
                                         

          The  government  contends,  in  the  alternative,  that

Shadduck  violated a  "judicial .  . .  process," see  U.S.S.G.  
                                                               

2F1.1(b)(3)(B), by committing a bankruptcy fraud which abused the

                                20

bankruptcy  process itself.   See United  States v.  Messner,    
                                                                      

F.3d     , 1997  WL  67847, *8  (10th  Cir. 1997)  (holding  that

bankruptcy  fraud constitutes  violation of  "judicial process");

United  States v. Welch, 103  F.3d 906, 908  (9th Cir. 1996) (per
                                 

curiam)  (same); United States  v. Michalek, 54  F.3d 325, 330-33
                                                     

(7th Cir. 1995) (same); United States v. Lloyd, 947 F.2d 339, 340
                                                        

(8th Cir.  1991) (same).   We  decline to address  the claim  for

several reasons.

          First, the district court  explicitly declined to reach

the question after holding that Shadduck had violated a  judicial

order.  Shadduck,  889 F. Supp.  at 10.   Second, no  exceptional
                          

circumstance warrants  our consideration of the  claim before the

district court (as it is free to do) has occasion  to consider it

on remand.  See United States v. Morales-Diaz,  925 F.2d 535, 540
                                                       

(1st Cir. 1991).   Third, the issue is not free from  doubt.  See
                                                                           

Carrozzella, 105 F.3d at  799-802 (questioning rationale employed
                     

in  cases which hold that "abuse" of bankruptcy proceeding itself

constitutes  "violation" of judicial  "process"); see also United
                                                                           

States v. Krynicki,  689 F.2d  289, 292 (1st  Cir. 1982)  (before
                            

addressing issue  first raised on appeal,  appellate court should

consider whether correct resolution is clear).

     d.   Multiple-Victims      Enhancement      (U.S.S.G.       
               d.   Multiple-Victims      Enhancement      (U.S.S.G.       
                                                                           

2F1.1(b)(2)(B))
          2F1.1(b)(2)(B))
                         

          The  district  court  imposed a  two-level  enhancement

pursuant to U.S.S.G.   2F1.1(b)(2)(B), based  on its finding that

Shadduck had engaged in a scheme to defraud more than one victim.

                                21

Shadduck, 889 F. Supp. at 11.  Shadduck complained below that his
                  

crime was victimless, in that the monies he concealed were exempt

and, therefore, that neither the trustee nor the creditors can be

considered victims.   On  appeal, however, Shadduck  presses only

two arguments:  (i) the trustee  alone qualifies as a victim, and

(ii)  the multiple-victims  enhancement, in  tandem with  the en-

hancement under U.S.S.G.    2F1.1(b)(3)(B), see supra pps. 14-19,
                                                               

amounted to impermissible "double counting."  As neither argument

was raised  below, we review only for  "plain error."  See United
                                                                           

States v. Lilly, 13 F.3d 15, 17-18 (1st Cir. 1994).  
                         

          There is  no merit in  the contention that  the trustee

alone was victimized by  the concealment.  As used  in subsection

2F1.1(b)(2)(B), the  phrase "'[s]cheme  to defraud more  than one

victim,' . . .  refers to a design or plan to obtain something of

value  from  more than  one person.    In this  context, 'victim'

refers  to the person or entity from  which the funds are to come

directly."  U.S.S.G.   2F1.1, comment. (n.3).  Thus, the relevant

commentary makes clear  that the primary victims  of a bankruptcy

fraud, for the most part, are the individual creditors.

          Nevertheless,  as  the  representative  of  the  debtor

estate, see Bankruptcy Code   323(a),  11 U.S.C.   323 (a), it is
                     

incumbent upon the  trustee to  collect and reduce  to money  all

nonexempt  assets of  the estate,  id.    704 (1).   Accordingly,
                                                

although  the trustee has no prepetition claim to property of the

debtor and therefore  does not  qualify as a  "creditor," a  pre-

scribed portion of the  net recoveries from any "property  of the

                                22

estate" administered by the trustee comprises a priority cost  of

administration  as   provided  in  Bankruptcy  Code       326(a),

330(a)(1),  503(b)(1)(A)  & 507(a)(1).    Consequently,  not only

creditors but the  chapter 7  trustee as well  may be  victimized

directly  by a  bankruptcy fraud  to the  extent it  deprives the

estate of assets otherwise subject to administration.

          Moreover, it is likewise clear that Shadduck schemed to

obtain  something of value.  By concealing pension plan funds and

insurance policies  which were neither  claimed nor set  apart as

exempt,  Shadduck  attempted to  retain  property  of the  estate

otherwise  subject to  administration for  the benefit  of credi-

tors.13   See Taylor, 503  U.S. at 643-44;  Mercer, 53 F.3d  at 3
                                                            

(property claimed  exempt is  initially "property of  the estate"

and  becomes exempt  only  if there  is  no timely  objection  to

exemption claim). 

          The second  challenge Shadduck  makes to  the multiple-

victims enhancement     that it amounts  to impermissible "double
                    
                              

     13As the Ninth Circuit has noted: 

          Clearly the false statement [the debtor] made
          in  relation  to  his  bankruptcy  estate was
          intended  to result  in an  undervaluation of
          the estate in bankruptcy and the availability
          of less  money to satisfy the  demands of the
          creditors.    Thus, [the  debtor]  would have
          "obtained something  of value from  more than
          one  person," that being  whatever portion of
          the  estate to which the creditors were enti-
          tled but which was hidden by the false state-
          ment.

United States v.  Nazifpour, 944  F.2d 472, 474  (9th Cir.  1991)
                                     
(per  curiam).   See also  Michalek, 54 F.3d  325, 330  (7th Cir.
                                             
1995) (concealing assets harms trustee and creditors).

                                23

counting"  when  imposed with  the  enhancement  for violating  a

judicial order    need  not be discussed at  this time given  our

decision to set aside the  latter ruling.  See supra pps.  14-19.
                                                              

Consequently, we affirm the two-level enhancement  imposed pursu-

ant to U.S.S.G.   2F1.1(b)(2)(B).

                                24

                               III
                                         III

                            CONCLUSION
                                      CONCLUSION
                                                

          For the foregoing  reasons, appellants' convictions are

affirmed.    Andrea Shadduck's  sentence  is  affirmed.   Michael

Shadduck's  sentence is affirmed in part and vacated in part, and

the case is remanded to the district court for resentencing.

          So Ordered.
                    So Ordered.
                              

                                25