USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-2450
No. 93-1008
UNITED STATES,
Appellee,
v.
DOMENIC LOMBARDI,
Defendant, Appellant.
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APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge]
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Before
Boudin, Circuit Judge,
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Coffin, Senior Circuit Judge,
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and Oakes,* Circuit Judge.
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Robert B. Mann with whom Mann & Mitchell was on brief for
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appellant.
Margaret E. Curran, Assistant United States Attorney, with whom
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Lincoln C. Almond, United States Attorney, and James H. Leavey,
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Assistant United States Attorney, were on brief for appellee.
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September 24, 1993
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*Of the Second Circuit, sitting by designation.
BOUDIN, Circuit Judge. Domenic Lombardi pled guilty on
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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
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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.
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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,
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594 (1st Cir. 1991), cert. denied, 113 S. Ct. 113 (1992). In
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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.
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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.
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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,
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application note 1; 18 U.S.C. 1956(c)(7), 1961(1). Since
Lombardi committed the mail frauds, it is unquestioned that
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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
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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
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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).
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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
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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,
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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)
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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
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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
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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,
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938 F.2d 326, 330 (1st Cir.), cert. denied, 112 S. Ct. 450
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(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.
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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.
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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
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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
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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
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4Citing United States v. Spirolpoulos, 976 F.2d 155 (3d
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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
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States v. Turner, 998 F.2d 534 (7th Cir. 1993) (disagreeing
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with the Third Circuit). In Spirolpoulos, the sentencing
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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."
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Savoie holds are not required, 985 F.2d at 620, see also
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United States v. Ahmad, 1993 U.S. App. LEXIS 21587 (7th Cir.
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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.
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App. LEXIS 21587, at *4-5. In framing this restitution
order, the district court did not abuse its considerable
discretion.
Affirmed.
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