Court Opinion

ID: 2962180
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:53:50.581989+00
Date Added: 2024-06-11T11:42:26.939878
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-2450        No. 93-1008                                    UNITED STATES,                                      Appellee,                                          v.                                  DOMENIC LOMBARDI,                                Defendant, Appellant.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                [Hon. Raymond J. Pettine, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                                Boudin, Circuit Judge,                                        _____________                            Coffin, Senior Circuit Judge,                                    ____________________                              and Oakes,* Circuit Judge.                                          _____________                                 ____________________            Robert  B.  Mann  with  whom  Mann  & Mitchell  was  on  brief for            ________________              ________________        appellant.            Margaret E.  Curran, Assistant United  States Attorney, with  whom            ___________________        Lincoln  C.  Almond, United  States  Attorney,  and  James H.  Leavey,        ___________________                                  ________________        Assistant United States Attorney, were on brief for appellee.                                 ____________________                                  September 24, 1993                                 ____________________        ___________________________        *Of the Second Circuit, sitting by designation.                 BOUDIN, Circuit Judge.   Domenic Lombardi pled guilty on                         _____________            August  12, 1992, to  six counts of  a nine-count superseding            indictment,  the  remaining  counts  being  dismissed  at the            government's behest.  The nature and interrelationship of the            charges is critical to an understanding of the case.                 Three  of  the  counts  to which  Lombardi  pled  guilty            charged conspiracy  to commit  mail fraud  (count I) and  two            acts of  mail fraud (counts III  and VI).  18  U.S.C.    371,            1341.    All  three counts  related,  at  least  in part,  to            Lombardi's   conduct   in  fraudulently   securing  insurance            proceeds  by  having  another  man  set  fire  to  Lombardi's            property.   One  of the  properties was  a building  owned by            Lombardi;  the  other was  a  mobile home  that  Lombardi was            renting to a tenant.                   Two further counts (VIII and IX) were for  depositing in            a  bank the  insurance  proceeds received  in the  respective            episodes.    18 U.S.C.     1957.   That statute  makes  it an            offense   to  engage  knowingly  in  a  monetary  transaction            involving criminally derived property of a value greater than            $10,000 where the property  resulted from one of a  number of            specified  offenses, including  mail fraud.1   The  remaining            count (VII)  was for using  a fire  to commit mail  fraud, 18                                            ____________________                 1As  shorthand,  we  refer  to  the  offense  as  "money            laundering."  In fact, there is a separate federal offense of            "laundering of  monetary instruments" under 18  U.S.C.   1956            with more demanding requirements and greater penalties.                                         -2-                                          2            U.S.C.     844(h), specifically,  the  setting  of the  fires            involved in the mail fraud counts.                 On  December  3,  1992,  the  district  court  sentenced            Lombardi  to 63 months, comprising concurrent and consecutive            sentences of varying amounts,  on the conspiracy, mail fraud,            and money  laundering counts;  to an  additional, consecutive            60-month sentence, which  is mandatory, on  the using a  fire            count; and to a  three-year term of supervised release.   The            district court also imposed  a $60,000 fine and ordered  that            Lombardi  pay  restitution  in  the  amount  of  $190,880.08,            representing losses to insurers.2                 On this appeal, Lombardi  has raised one seemingly novel            issue  under the  Sentencing  Guidelines,  and several  other            objections more  readily answered.  The  novel issue concerns            the grouping rules and presents an issue of law on  which our            review  is plenary.  United States v. Phillips, 952 F.2d 591,                                 _____________    ________            594 (1st Cir. 1991), cert. denied, 113 S. Ct. 113 (1992).  In                                 ____________            this effort we are aided by the careful sentencing memorandum            of the  district court explaining why  it rejected Lombardi's            position on  grouping.   We first describe  how the  district            court calculated Lombardi's sentence.                                            ____________________                 2The  November 1992 version of the Sentencing Guidelines            was in effect at  the time of the sentence, and our citations            in  this opinion  are to  that edition.   The  district court            considered post-sentence memoranda pursuant to Fed.  R. Crim.            P. 35.  On  December 10, 1992, the district  court reaffirmed            its sentence, vacating the  original sentence and imposing it            again.                                         -3-                                          3                 The  court first  separated  the  conspiracy/mail  fraud            counts  into one group  of offenses and  the money laundering            counts into another.   U.S.S.G.   3D1.2  (grouping of closely            related  counts).  The using  a fire count  was excluded from            the grouping  rules because  the statute imposes  a mandatory            consecutive sentence.   See U.S.S.G.    3D1.1(b).   Then, the            court calculated the  base offense level for each group, that            being  in each of the groups here  involved the level for the            highest-level  count  in the  group.    U.S.S.G.    3D1.3(a).            Based  in part on the dollar amounts involved, the base level            for the conspiracy/mail fraud group was 16, U.S.S.G.   2F1.1,            and  for money  laundering  the base  offense  level was  17.            U.S.S.G.   2S1.2                 Then--and  this  is  the point  critical  to  Lombardi's            argument--the district court increased the base offense level            for  the money laundering group  by 2 levels,  to 19, because            the  guideline for  money laundering  provides as  a specific            offense  characteristic that a two-level increase is required            "[i]f  the defendant knew that the funds were the proceeds of            any  . . . specified unlawful activity" other than narcotics.            U.S.S.G.   2S1.2(b)(B).  "Specified unlawful activity" refers            to a list of crimes, including mail fraud.  See  id.   2S1.2,                                                        ___  ___            application note 1; 18 U.S.C.     1956(c)(7), 1961(1).  Since            Lombardi committed  the mail frauds, it  is unquestioned that                                         -4-                                          4            he knew that the  funds laundered were obtained  through mail            fraud.3                 Under the  grouping rules,  the offense level  where one            group is level 19 and the other level 16 is derived by taking            the higher level and increasing it  by 2 levels.  U.S.S.G.               3D1.4  (prescribing  two-level  increase  where  the  offense            levels  for  the two  groups are  within  four levels  of one            another).  This combined offense level of 21 was then reduced            by two levels for  acceptance of responsibility.  U.S.S.G.               3E1.1(a).   The resulting final offense level of 19 was used,            in  conjunction with Lombardi's  substantial criminal history            (category V), to specify the range--57 to 71 months--on which            his  63 month  sentence was based.   See  U.S.S.G. sentencing                                                 ___            table.  As  earlier noted, the sentence for the  using a fire            count was separately determined, and it is not in issue.                 Lombardi's  central claim  on  this appeal  is that  the            money  laundering   counts  should  not   have  been  grouped            separately but  should have been  included in a  single group            with  the  conspiracy/mail fraud  counts.   If so,  the money            laundering counts  would have  represented the  highest level            count  in this single group, producing an offense level of 19                                            ____________________                 3The  money   laundering  offense  under   section  1957            requires  that  the  launderer  know that  the  proceeds  are            derived  from criminal  activity but  it explicitly  does not            require that the launderer  know that the activity is  one of            those   "specified  unlawful   activit[ies]"  named   in  the            statutes.  18 U.S.C.   1957(c).                                         -5-                                          5            for the single group.  After reducing this figure to level 17            for acceptance of responsibility, the sentencing  range fixed            by the sentencing table would have been 46 to 57 months, well            below the 63 months actually imposed.                 The rules  for grouping  of closely related  counts, set            forth  in  U.S.S.G.    3D1.2,  largely  eliminate  cumulative            punishment for  multiple counts  in the same  group (although            one count  may comprise a specific  offense characteristic or            adjustment for another count in the group).  The introductory            commentary says that a single group combines "offenses [that]            are  closely   interrelated,"   U.S.S.G.,  part   D,   intro.            commentary, and  the guideline  for grouping closely  related            counts says  that it  covers "counts  involving substantially            the  same harm," U.S.S.G.    3D1.2.  But  this is background:            what controls are the four subsections of the  guideline that            say precisely when grouping shall occur.                 Subsection (a) of section  3D1.2 applies when the counts            involve  the same victim and the same act or transaction, and            the  latter  requirement is  clearly not  met here  since the            fraud and money laundering are distinct acts.  Subsection (b)            applies  when there is the  same victim and  multiple acts or            transactions  that  have a  common  objective  or comprise  a            common  plan.  The guidelines are clear that, for purposes of            these  subsections,  the victim  of  fraud  is the  insurance            company and the victim  of money laundering is society.   See                                                                      ___                                         -6-                                          6            U.S.S.G.   3D1.2,  application note  2.  To  the extent  that            Lombardi  is relying  upon  subsection (b),  the argument  is            foreclosed.                 Lombardi's best, and main, argument hinges upon U.S.S.G.               3D1.2(c)  which  provides  that counts  shall  be  grouped            together  [w]hen one of the counts embodies conduct                      that is  treated  as a  specific  offense                      characteristic  in,  or other  adjustment                      to, the guideline  applicable to  another                      of the counts.            Because knowledge that the money laundered funds were derived            from mail fraud was a specific  offense characteristic in the            guideline applicable to the money laundering counts, Lombardi            contends  that  section 3D1.2(c)  governs  in  this case  and            requires  that all  five  counts--conspiracy/mail  fraud  and            money laundering--be grouped together.                   Neither  Lombardi  nor  the  government  has  found  any            decision that directly  addresses this issue.   In our  view,            the  better reading of section  3D1.2(c) is that  it does not            apply to this case.  The "conduct" embodied in the mail fraud            counts is  the various acts constituting  the frauds, coupled            with the  requisite intent to deceive;  the "specific offense            characteristic," in  U.S.S.G.   2S1.2(b)(1)(B),  is knowledge            that the funds  being laundered  are the proceeds  of a  mail            fraud.   It happens that  Lombardi's knowledge of  the funds'            source derives  from the fact  that he committed  the frauds,                                         -7-                                          7            but that does not make the fraudulent acts the  same thing as            knowledge of them.                 Lombardi's  reading  would   also  create  a  disturbing            anomaly in the  guideline's application.   One who commits  a            fraud and launders the money  (thereby knowing of its source)                  ___            is normally  more culpable than  one who merely  launders the            money   knowing   of  its   source.      Yet  if   Lombardi's            interpretation were adopted,  a defendant  would get  exactly            the same total offense  level whether the defendant committed            the mail fraud or merely knew that someone else had committed            it: in either case, all five  counts would be a single group,            and  the money laundering count would generate a level 19 (17            as  the base  offense  level  and  a  2  level  increase  for            knowledge of source).   The anomaly is not conclusive  but it            reinforces our inclination to read the guidelines literally.                 If there is any discomfort in the interpretation, it may            come less  from  the illusion  of double  counting than  from            other sources.  Some might think it odd to punish a defrauder            separately  for depositing  his  ill-gotten gains  in a  bank            rather than spending  the money  outright.  But  that is  the            consequence of  a deliberate  policy choice by  Congress, and            one that is much easier to  understand when one thinks of the            relationship  between  bank  deposits,  money  laundering and            organized  crime.  As for the choice to increase the sentence            because the defendant knew  the "specific" criminal source of                                         -8-                                          8            the funds,  one may quarrel with  the Sentencing Commission's            policy but the intent is clear.                 The logic of  the guidelines is easier  to understand if            one  substitutes a  more potent (but  hypothetical) "specific            offense characteristic."  Thus, suppose a defendant burgled a            house,  found it inhabited, and returned a week later to burn            it down (knowing  from the burglary  that it was  inhabited).            No one would cavil at treating knowledge of inhabitation as a            specific offense characteristic to enhance the arson while at            the  same  time punishing  the  defendant for  burglary.   In            Lombardi's  case, it  is harder  to understand  why knowledge            that the  laundered money  came from  mail fraud,  instead of            merely from some unspecified  criminal source, should enhance            the  sentence for  money laundering.   But  the principle  of            imposing an  enhancement, based on  knowledge of a  crime the            defendant himself committed, is the same.                 Accordingly, we conclude that  Lombardi's interpretation            of the guidelines fails and that both his mail fraud and  his            knowledge that the  source of  the laundered  funds was  mail            fraud may play separate roles in enhancing his sentence.  The            apparent severity of the result should not be overstated: the            probable effect is  a sentence about  six months longer  than            Lombardi would otherwise  have received.  It  should also not            be forgotten that the same guideline grouping rules manage to            combine a level 19 offense with a level 16 offense to produce                                         -9-                                          9            a  combined offense level of  only 21 (instead  of 35) before            the final adjustment, a charity far more significant than the            two point increase that is at issue here.                 Lombardi's remaining arguments warrant  less discussion.            He  asserts  that his  age (58  at  the time  of sentencing),            physical  ailments,  and  mental-health problems  required  a            downward departure.  Admitting that discretionary refusals to            depart downward are not  appealable, United States v. Lauzon,                                                 _____________    ______            938  F.2d 326, 330  (1st Cir.), cert. denied,  112 S. Ct. 450                                            ____________            (1991), Lombardi  contends that the district  judge must have            believed   that  it  lacked  authority  to  depart  downward.            Suffice it to say that there is no evidence that the district            court  doubted its  authority to depart.   Departures  on the            grounds asserted  are comparatively  rare, e.g.,  U.S.S.G.                                                          ____            5H1.1, 5H1.4,  and in the  ordinary case  no explanation  for            declining to do so is required.                 Error is  also premised on the  district court's failure            to   give  Lombardi   a   third  point   for  acceptance   of            responsibility, as permitted by  a newly adopted provision of            the guidelines, where the defendant either:                 1.  timely provid[es]  complete information  to the                 government  concerning his  own involvement  in the                 offense; or                 2. timely notify[ies] authorities of  his intention                 to enter  a plea of guilty,  thereby permitting the                 government  to   avoid  preparing  for   trial  and                 permitting  the  court  to  allocate  its resources                 efficiently.                                         -10-                                          10            U.S.S.G.   3E1.1(b).   Although  the district  court made  no            explicit  findings  in denying  a  third  point, the  court's            sentence followed shortly after the prosecutor argued against            the  extra   point,  and  we  may  fairly   assume  that  the            prosecutor's arguments were accepted.                 As  to  the  first   branch  of  section  3E1.1(b),  the            prosecutor  argued that  Lombardi  did  not provide  complete            information  as to  his involvement  because he  had withheld            specific information that the prosecutor described.   Neither            at  the  hearing nor  in his  brief  on appeal  does Lombardi            answer  this charge.    The second  branch requires  "timely"            notification of the  guilty plea to permit  the government to            avoid the expense of preparing for trial.  Since Lombardi did            not plead  guilty until  after the  jury had  been empaneled,            well after the government had prepared for trial,  he plainly            did not meet the requirement.                 Lombardi's  next argument  is  that the  district  court            erred in imposing  a $60,000  fine as part  of the  sentence.            Although he asserts  that the  court "did  not consider"  his            financial resources,  the  court did  in  fact take  note  of            information bearing on  these resources, including Lombardi's            transfer to his son of a  13.3 percent interest in the family            business  and  an  $85,853  receivable.    According  to  the            government,  Lombardi   had  obtained  about   $190,000  from            insurance fraud (reflected  in the restitution  order) during                                         -11-                                          11            the  prior three years.   The district court  also noted that            the probation officer had encountered difficulty  in securing            complete financial information from Lombardi.                     Under  the guidelines,  the presumption  is that  a fine            will be imposed, and the burden is upon the defendant to show            that a fine is  not warranted.  United States v.  Savoie, 985                                            _____________     ______            F.2d 612 (1st Cir. 1993).  On this record, we  think that the            district court  could fairly  conclude that Lombardi  had not            long  before  been in  possession of  sums  ample to  pay the            $60,000 fine and that  their absence had not  been adequately            explained.   A defendant has  little incentive to  help in an            inventory  of his  assets, and  a busy  federal judge  is not            required to conduct an audit before imposing a fine.4                 Lastly, Lombardi  argues that the court  should not have            imposed  a restitution  order, under  the Victim  and Witness            Protection Act,  18 U.S.C.    3663-64,  requiring Lombardi to            repay  the $190,000 obtained  from insurers.   Apart from the            lack of  explicit  findings  of  financial  condition,  which                                            ____________________                 4Citing United States v.  Spirolpoulos, 976 F.2d 155 (3d                         _____________     ____________            Cir. 1992),  Lombardi also says  that the  fine was  unlawful            because  its purpose was to pay the cost of his incarceration            and  supervision.  Whether or not this court would follow the            Third  Circuit need  not  be decided  here.   Compare  United                                                          _______  ______            States v. Turner, 998 F.2d  534 (7th Cir. 1993)  (disagreeing            ______    ______            with  the Third  Circuit).   In Spirolpoulos,  the sentencing                                            ____________            court imposed  a flat  fine and  then a  per diam amount  for            incarceration costs.   Here, the court imposed  only the flat            fine, the judgment labels  it a "fine," and it  is irrelevant            that  the  judgment form  has  a  boilerplate statement  that            "[t]he  fine  includes  any  costs  of  incarceration  and/or            supervision."                                         -12-                                          12            Savoie  holds are  not required,  985 F.2d  at 620,  see also            ______                                               ________            United  States v. Ahmad, 1993 U.S. App. LEXIS 21587 (7th Cir.            ______________    _____            1993),  Lombardi's  brief argues  that  such  a liability  is            unrealistic when there is little evidence of actual assets or            future earning power.   We  agree that on  this record  there            might be  no basis for  an affirmative finding  that Lombardi            does or necessarily  will have $190,000 available to pay such            restitution.                 But  we fail to  see why such  a record  basis should be            required.   Lombardi does not deny that the money was secured            from the insurers by fraud, and the whereabouts of the entire            $190,000 is at  least uncertain, as are  his future prospects            of  income.   While  the judgment  requiring restitution  may            prove fruitless, it may also be  of some use if Lombardi ever            secures  new assets or the insurance  companies wish to prove            that  assets  held nominally  by  family  members are  really            Lombardi's.  In all events,  the statute merely requires  the            court to "consider" financial condition, among other factors,            18  U.S.C.     3664(a);  there  is no  requirement  that  the            defendant  be found able  to pay now.   See  Ahmad, 1993 U.S.                                                    ___  _____            App.  LEXIS 21587,  at  *4-5.   In  framing this  restitution            order,  the district  court  did not  abuse its  considerable            discretion.                 Affirmed.                 ________                                         -13-                                          13