USCA1 Opinion
UNITES STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 95-1051
UNITED STATES OF AMERICA,
Appellant,
v.
GEORGE S. BENNETT, JR.,
Defendant, Appellee.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
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Selya, Cyr and Boudin,
Circuit Judges.
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William P. Stimson, Assistant United States Attorney, with whom
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Donald K. Stern, United States Attorney, was on brief for appellant.
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Morris M. Goldings, with whom John F. Aylmer, Jr. and Mahoney,
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Hawkes & Goldings were on brief for appellee.
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July 31, 1995
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CYR, Circuit Judge. Following our remand for resen-
CYR, Circuit Judge.
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tencing in United States v. Bennett, 37 F.3d 687 (1st Cir. 1994)
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("Bennett I"), which vacated a downward adjustment for acceptance
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of responsibility, the district court determined that the defen-
dant's restitutionary effort an element in its initial down-
ward adjustment ruling nonetheless warranted a downward
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departure from its recalculated guideline sentencing range
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("GSR"). The government again appealed, and we now remand for
resentencing within the recalculated GSR.
I
I
BACKGROUND
BACKGROUND
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We relate only the facts essential to an understanding
of the instant appeal. For further detail, the reader is invited
to see Bennett I, 37 F.3d at 689-92.
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A. Factual Background and Initial Sentencing
A. Factual Background and Initial Sentencing
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Appellee Bennett abused positions of trust with Daniel
Webster Mortgage Company, Inc. ("Daniel Webster"), by obtaining
more than ten fraudulent real estate loans based on Daniel
Webster's lines of credit with Plymouth Federal Savings Bank
("Plymouth Federal") and New Bedford Institution for Savings,
which Bennett applied toward the development of real properties
held in trust for the benefit of himself and his wife. The
fraudulent borrowing scheme involved aliases, false loan docu-
ments and concealment. Following its discovery by the Federal
Deposit Insurance Corporation during the spring of 1990, Daniel
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Webster and Plymouth Federal sued Bennett. On February 1, 1991,
the parties entered into a settlement agreement, requiring
Bennett to turn over cash and other property, including certain
improved properties which remained in his possession.
In late 1991, Bennett was indicted on nine felony
counts for fraudulently obtaining $900,000 from a financial
institution, see 18 U.S.C. 20 (1988) (defining "financial
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institution"), between August 1988 and October 1989. See 18
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U.S.C. 1344. Following his trial and conviction on all charg-
es, the district court calculated the total loss occasioned by
Bennett at $900,000, see U.S.S.G. 2F1.1(b), rejecting the
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government's contention that the total loss should include, as
relevant conduct, amounts fraudulently borrowed but not charged
in the indictment. The district court then deducted (1) the
$589,000 Bennett had repaid on the indictment loans prior to the
discovery of his crimes, and (2) the value to Daniel Webster
"at least $660,000" of the civil suit settlement agreement
entered into after Bennett's crimes had been discovered.
Having determined that no loss had been occasioned by
Bennett's fraud, the district court ruled that Bennett merited a
two-level downward adjustment, see U.S.S.G. 3E1.1, for accep-
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tance of responsibility by agreeing to settle the indictment
loans in full. The resulting Total Offense Level ("TOL") of 8,1
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1The TOL calculations at the first sentencing were as
follows:
2F1.1 (base offense level) 6
2F1.1(b)(1) (zero loss) 0
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together with a Criminal History Category of I, produced a GSR of
from 2 to 8 months' imprisonment, 24 to 36 months' supervised
release, and a $5,000 to $50,000 fine. The district court
sentenced Bennett to 24 months' probation and six months' home
detention, special assessments totaling $450, and no fine.
B. Bennett I
B. Bennett I
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On appeal in Bennett I we held that the district court
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had erred in excluding from the total loss calculation under
U.S.S.G. 2F1.1(b)(1), as relevant conduct, the losses resulting
from fraudulent borrowings not charged in the indictment, Bennett
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I, 37 F.3d at 694, and in crediting Bennett with "at least
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$660,000" for the civil suit settlement entered into after his
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crimes had been discovered. Id. at 695 ("'[T]he loss is the
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amount of the loan not repaid at the time the offense is discov-
ered, reduced by the amount the lending institution has recovered
(or can expect to recover) from any assets pledged to secure the
loan.'") (citing U.S.S.G. 2F1.1, n. 7(b)).2 Finally, Bennett
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2F1.1(b)(2) (more than minimal planning) 2
3B1.3 (abuse of position of trust) 2
3E1.1 (acceptance of responsibility) (2)
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TOL 8
2Bennett I established the following formula for calculating
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"actual loss" under U.S.S.G. 2F1.1 on remand:
1(a) the total dollar amount of the fraudulent loans
involved in the nine counts of conviction ($900,000);
and
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(b) the total dollar amount of all loans coming within the
"relevant conduct" guideline calculation ($526,000);
less
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4
I held that the two-level downward adjustment for acceptance of
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responsibility was clear error, since Bennett had neither demon-
strated genuine contrition nor made voluntary restitution by
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settling the civil suit, nor pled guilty to the charges in the
indictment, but instead denied the essential factual elements of
the charges throughout trial and at sentencing by maintaining
that he had never intended to defraud the banks. See id. at 696-
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98. We therefore vacated the first sentence and remanded for
resentencing. Id. at 700.
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C. Resentencing
C. Resentencing
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On remand the district court recalculated the total
loss at $837,000, after including the losses occasioned by the
fraudulent borrowings for which Bennett was not indicted, result-
ing in a TOL of 18.3 Following Bennett's request for a downward
departure, see 18 U.S.C. 3553(b), the district court identified
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2(a) the total dollar amount of all loans repaid by the
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defendant prior to May 3, 1990 ($589,000), the date
Bennett's unlawful activities were discovered; and
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(b) the total recoveries realized and reasonably to be
expected from all collateral pledged to secure the
fraudulent loans involved in all counts of conviction
and encompassed within the relevant conduct calcula-
tion.
See Bennett I, 37 F.3d at 695.
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3The recalculated TOL is comprised as follows:
2F1.1(a) (base offense level) 6
2F1.1(b)(1) (total loss of $837,000) 8
2F1.1(b)(2) (more than minimal planning) 2
3B1.3 (abuse of position of trust) 2
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TOL 18
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two factors ostensibly warranting a departure from the GSR.
First, Bennett had already served a portion of the original
sentence, including the entire six months' home detention term.
Second, the civil suit settlement constituted "an extraordinary
act that seldom occurs in the criminal courts. . . ." According-
ly, the district court granted a six-month downward departure
from the recalculated 27-month GSR minimum, based on the six
months' home detention term already served, combined with a
further 15-month downward departure for the "extraordinary act"
of entering into the civil suit settlement agreement to repay
$694,000.4 The district court then imposed the minimum six-
month prison term now under challenge on appeal.
II
II
DISCUSSION
DISCUSSION
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The United States contends that Bennett I foreclosed
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both a downward adjustment and a downward departure for accep-
tance of responsibility based on the civil settlement and Ben-
nett's belated expression of contrition at sentencing. See
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Bennett I, 37 F.3d at 696-98; see also U.S.S.G. 3E1.1 (permit-
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4As the government has not appealed the six-month downward
departure, we do not address it. But cf. United States v.
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Zackular, 945 F.2d 423, 425 (1st Cir. 1991) (rejecting home
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confinement as "official detention" for purposes of 18 U.S.C.
3585 (Credit for Prior Custody): "While a defendant's movement
may be severely curtailed by . . . home confinement, . . .
confinement to the comfort of one's own home is not the function-
al equivalent of incarceration in either a practical or a psycho-
logical sense."); see also Reno v. Koray, 115 S. Ct. 2021 (1995)
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(construing phrase "official detention," see 18 U.S.C. 3585(b),
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in light of Bail Reform Act of 1984, related sentencing provi-
sions and Bureau of Prisons guidelines).
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ting two-level downward adjustment for clear demonstration of
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acceptance of responsibility).
A. Downward Departure
A. Downward Departure
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A sentencing court may depart from the GSR "only in the
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extraordinary case -- the case that falls outside the heartland
for the offense of conviction . . . ." United States v. Jackson,
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30 F.3d 199, 201 (1st Cir. 1994); see also United States v.
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Rivera, 994 F.2d 942, 947-49 (1st Cir. 1993). The departure
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decision is subject to bifurcated review. United States v. Fahm,
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13 F.3d 447, 450 (1st Cir. 1994). First, all "quintessentially
legal" rulings underlying the decision to depart (viz., whether
the guideline language encourages, permits or forbids departure
for the kinds of reasons relied upon by the sentencing court) are
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reviewed de novo. Id. at 450 (quoting Rivera, 994 F.2d at 951).
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Second, the "heartland" determination itself is reviewed with
"full awareness of, and respect for, the trier's superior 'feel'
for the case." Rivera, 994 F.2d at 952 (citation omitted); see
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also Fahm, 13 F.3d at 450.
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1. Extraordinary Act
1. Extraordinary Act
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Following Bennett I, the district court found that the
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$660,000 settlement agreement constituted "an extraordinary act
that seldom occurs in the criminal courts," for which Bennett
"should be rewarded . . . ." The district court carefully
avoided explicit reliance on "acceptance of responsibility,"
apparently in deference to Bennett I, 37 F.3d at 698 (stressing
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that restitution must be "'genuinely voluntary, rather than
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motivated primarily by a collateral consideration such as a
desire to settle the civil lawsuit'") (quoting United States v.
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Miller, 991 F.2d 552, 553 (9th Cir. 1993)); cf. United States v.
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Hendrickson, 22 F.3d 170, 176 (7th Cir.) (rejecting civil forfei-
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ture, in light of its involuntary nature, as basis for finding of
"extraordinary acceptance of responsibility"), cert. denied, 115
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S. Ct. 209 (1994). Bennett I also held, however, that the civil
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suit settlement was not "genuinely voluntary," 37 F.3d at 698,
and that "'restitution is relevant to the extent it shows accep-
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tance of responsibility.'" Id. (quoting Miller, 991 F.2d at 553)
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(emphasis added). Consequently, whether or not the civil suit
settlement constituted an "extraordinary act," there has been no
showing that it formed a material basis for either a downward
adjustment or a downward departure, let alone for establishing
restitutionary conduct outside the "heartland." See Rivera, 994
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F.2d at 947.
As the only ground for the challenged downward depar-
ture had been foreclosed by Bennett I, which plainly held that
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the civil suit settlement was not genuinely "voluntary" within
the meaning of U.S.S.G. 3E1.1, see Bennett I, 37 F.3d at 698,
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and could not form the basis for a downward adjustment for
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acceptance of responsibility, it could afford no permissible
basis for the 15-month downward departure. See Miller, 991 F.2d
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at 553 (sentencing court may depart downward on basis of restitu-
tionary conduct only if it evinces an acceptance of responsibili-
8
ty substantially greater than that required for a downward
adjustment under U.S.S.G. 3E1.1).
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2. Overstated Loss and "Multiple Loss Causation"
2. Overstated Loss and "Multiple Loss Causation"
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On appeal, Bennett broaches for the first time the
alternative arguments that the 15-month downward departure should
be upheld either because the $837,000 total loss recalculation
significantly overstates the seriousness of his conduct, see
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U.S.S.G. 2F1.1, n. 7(b) (1994), or on the ground of multiple
loss causation. See, e.g., United States v. Rostoff, 53 F.3d
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398, 405 (1st Cir. 1995) (acknowledging that a downward departure
may be warranted in the "few instances" where ". . . a misrepre-
sentation . . . is not the sole cause of the loss. . . .")
(citing U.S.S.G. 2F1.1, n.11 (1987)); see also United States v.
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Gregorio, 956 F.2d 341, 345 (1st Cir. 1992).
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Although Bennett contends that the total loss is
overstated as a consequence of an economic downturn in the
regional economy, insofar as the record on appeal permits assess-
ment it undermines Bennett's claim. The valuation of the proper-
ty Bennett agreed to surrender under the terms of the civil suit
settlement was disputed at the initial sentencing; viz., the
government contending for $431,024.16, Bennett $684,000. At that
time, Bennett maintained that a slumping economy had reduced the
value of the settlement after the banks took title to the im-
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proved properties and other assets tendered by Bennett. The
district court accordingly rejected the lower valuation propound-
ed by the government, and found the settlement worth "at least
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$660,000." Subsequently, at resentencing, it placed the value of
Bennett's "extraordinary act" at $694,000.
Thus, not only did Bennett not proffer record evidence
of a sudden, unforeseen downturn in the regional economy that
significantly lowered the value of the properties financed with
his illegal borrowings, but throughout both prior sentencing
proceedings he maintained that market factors had not affected
these properties. We therefore hold both that the "multiple loss
causation" claim has not been preserved, see United States v.
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Dietz, 950 F.2d 50, 55 (1st Cir. 1991) ("[I]n connection with
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sentencing as in other contexts . . . arguments not seasonably
addressed to the trial court may not be raised for the first time
in an appellate venue."), and that it is unsupported indeed
contradicted by the record.
III
III
CONCLUSION
CONCLUSION
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As all available avenues for a downward departure have
been foreclosed, we vacate the second sentence imposed by the
district court and remand for resentencing within the guideline
sentencing range prescribed by the total offense level recalcu-
lated by the district court at the first resentencing.
SO ORDERED.
SO ORDERED.
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