USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 96-1110
UNITED STATES OF AMERICA,
Appellee,
v.
SCOTT A. HENSLEY,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Judge,
___________
Cyr and Lynch, Circuit Judges.
______________
____________________
Miriam Conrad, with whom Federal Defender Office was on brief for
_____________ _______________________
appellant.
Annette Forde, Assistant United States Attorney, with whom Donald
_____________ ______
K. Stern, United States Attorney, was on brief for appellee.
________
____________________
August 5, 1996
____________________
CYR, Circuit Judge. Defendant Scott Allen Hensley
CYR, Circuit Judge
______________
challenges the restitutionary sentence imposed upon him by the
district court, thus presenting this court with its first occa-
sion to interpret and apply the 1990 amendments to the Victim and
Witness Protection Act ("VWPA"), 18 U.S.C. 3663-64 (1994).
Finding no error, we affirm the district court judgment.
I
I
BACKGROUND
BACKGROUND
__________
After a federal grand jury indicted him for, among
other things, devising and executing a scheme to obtain merchan-
dise under false pretenses from various computer-products dis-
tributors across the country, Hensley pled guilty to all counts,
thereby conceding the following facts as alleged in the indict-
ment.1
On April 1, 1995, under the alias "Robert Halford,"
Hensley rented a box at Mail Boxes, Etc. ("MBE"), 510 Common-
wealth Avenue, Boston, Massachusetts. On April 14, he telephoned
companies in California, New York, Texas, and New Jersey, and
using the name "Halford," placed orders for computer equipment in
behalf of a fictitious company, American Telemark, purportedly a
division of AT&T, for delivery to the MBE address in Boston.
Hensley remitted five forged checks via Federal Express, in
____________________
1The charges included mail fraud, 18 U.S.C. 1341 (1994);
wire fraud, id. 1343; making or possessing counterfeit securi-
___
ties, id. 513; interstate transportation of counterfeit securi-
___
ties, id. 2314; and receipt of stolen goods transported in
___
interstate commerce, id. 2315.
___
2
amounts ranging from $20,000 to $31,000 and bearing the AT&T
logo. Once the computer equipment arrived, Hensley used the
alias "William Noonan" to rent storage space and a U-Haul truck
to transport the equipment. On his next visit to the MBE,
Hensley was arrested by the FBI.
After Hensley pled guilty and before sentencing, the
government learned that he had committed additional fraudulent
acts during the same time period. According to the undisputed
__________
facts set forth in the presentence report ("PSR"), see United
___ ______
States v. Benjamin, 30 F.3d 196, 197 (1st Cir. 1994) (failing to
______ ________
object bars appellate challenge to facts stated in PSR), on March
30, 1995, Hensley had used the "William Noonan" alias to rent a
second box at another MBE location, on Newbury Street in Boston.
On April 3, "Noonan" placed an $837.86 telephone order for
computer software with Creative Computers, a California company,
for delivery to the Newbury Street MBE. He tendered a counter-
feit money order drawn on a Boston Check Cashiers ("BCC") company
account, which was dishonored after he absconded with the Cre-
ative Computers software. Hensley issued three more counterfeit
BCC money orders in payment for another computer order placed
with ATS Technologies ("ATS"), a credit card bill, and a car
rental.
Although the charged conduct resulted in no actual
losses because the equipment was recovered, the PSR recommended
that Hensley reimburse the car rental company ($500.00), the
credit card company ($725.00), Creative Computers ($837.86), and
3
ATS ($1,026.12), each of which had accepted a counterfeit BCC
money order. Hensley objected that the four companies were not
victims of the offense of conviction as the indictment did not
charge him with passing the counterfeit money orders. Following
briefing and oral argument, the district court found that ATS had
sustained no loss, and that neither the credit card bill nor the
car rental came within the scope of the offense of conviction.
The court nonetheless ruled that the Creative Computers acquisi-
tion was within the alleged scheme to defraud. The court accord-
ingly directed Hensley to make restitution to Creative Computers,
and Hensley appealed.
II
II
DISCUSSION
DISCUSSION
__________
Federal courts possess no inherent authority to order
restitution, and may do so only as explicitly empowered by stat-
ute. United States v. Gilberg, 75 F.3d 15, 22 (1st Cir. 1996).
_____________ _______
The VWPA authorizes restitutionary sentences by the district
courts for the benefit of victims of federal offenses. As
Hensley's criminal conduct and conviction occurred after November
29, 1990, the effective date of the Crime Control Act of 1990,
the 1990 VWPA amendments govern our decision.2
The VWPA provides that "[t]he court . . . may order . .
. restitution to any victim of such offense." 18 U.S.C.
___ ______ __ ____ _______
____________________
2Gilberg, 75 F.3d at 20-22. Moreover, the Sentencing Guide-
_______
lines do not purport to expand the sentencing court's authority
to order restitution. U.S.S.G. 5E1.1(a)(1) (1995) (incorporat-
ing the VWPA).
4
3663(a)(1) (emphasis added). Prior to the 1990 amendments, the
VWPA had been interpreted by the Supreme Court as limiting resti-
tution to the "loss caused by the specific conduct that [was] the
________ _______
basis of the offense of conviction." Hughey v. United States,
______ _____________
495 U.S. 411, 413 (1990) (emphasis added). The Hughey Court
______
therefore reversed a restitutionary sentence which had been based
on the total loss attributable to all counts in an indictment
___
charging unauthorized use of credit cards and theft by a Postal
Service employee, rather than on the loss attributable to the one
count to which Hughey had pled guilty. Id. at 422.
___
After Hughey, this court held that the specific conduct
______ ________ _______
underlying a mail fraud conviction, which requires proof of a
broader scheme to defraud, includes only the particular mailing
charged and not the entire mail fraud scheme. United States v.
_____________
Cronin, 990 F.2d 663, 666 (1st Cir. 1993); accord United States
______ ______ _____________
v. Newman, 49 F.3d 1, 11 (1st Cir. 1995) (wire fraud). Thus, we
______
adopted the more narrow and lenient majority view during the
interim preceding the 1990 amendments to the VWPA. Cronin, 990
______
F.2d at 666.
The present controversy requires us to reexamine Cronin
______
in light of the 1990 amendments. Consistent with the minority
view we rejected in Cronin, in 1990 Congress amended the VWPA to
______
provide that "a victim of an offense that involves as an element
_ ______ __ __ _______ ____ ________ __ __ _______
a scheme, a conspiracy, or a pattern of criminal activity means
_ ______ _____
any person directly harmed by the defendant's criminal conduct in
___ ______ ________ ______ __ ___ ___________ ________ _______ __
the course of the scheme, conspiracy, or pattern." 18 U.S.C.
___ ______ __ ___ ______
5
3663(a)(2) (emphasis added). As Hensley concedes that a scheme
to defraud is an element of the mail and wire fraud offenses to
which he pled guilty, see United States v. Sawyer, 85 F.3d 713,
___ ______ ______ ______
723 (1st Cir. 1996), the district court correctly applied VWPA
3663(a)(2) in this case. Compare United States v. Reed, 80 F.3d
_______ ______________ ____
1419, 1423 (9th Cir. 1996) ("felon in possession" offense does
not require proof of scheme).
Under current VWPA 3663(a)(2), the district court may
order restitution to every victim directly harmed by the
defendant's conduct "in the course of the scheme, conspiracy, or
pattern of criminal activity" that is an element of the offense
of conviction, without regard to whether the particular criminal
__________ ________
conduct of the defendant which directly harmed the victim was
_______
alleged in a count to which the defendant pled guilty, or was
even charged in the indictment. United States v. Henoud, 81 F.3d
_____________ ______
484, 488 (4th Cir. 1996) (unnamed victim); United States v.
______________
Kones, 77 F.3d 66, 70 (3d Cir. 1996) (providing example); United
_____ ______
States v. Pepper, 51 F.3d 469, 473 (5th Cir. 1995). Thus, the
______ ______
outer limits of a VWPA 3663(a)(2) restitution order encompass
all direct harm from the criminal conduct of the defendant which
was within any scheme, conspiracy, or pattern of activity that
was an element of any offense of conviction. See Kones, 77 F.3d
___ _____
at 70 (discussing causation requirement).
Although Hensley acknowledges the expansiveness of the
1990 amendments, he contends that the fraudulent order placed
with Creative Computers was not within the same scheme embraced
6
by the offense to which he pled guilty. We approach this claim
by examining the terms of the indictment and the plea agreement.
Henoud, 81 F.3d at 488. For the most part, courts require that
______
the indictment "specifically" define the scheme in order to
ensure that the restitutionary amount not exceed the harm direct-
ly caused the victim of the scheme embraced by the offense of
conviction, id.; see also United States v. Bennett, 943 F.2d 738,
___ ___ ____ _____________ _______
741 (7th Cir. 1991) (noting amorphous nature of "scheme" con-
cept), cert. denied, 504 U.S. 987 (1992). Nevertheless, the
_____ ______
courts of appeals consistently have upheld restitutionary sen-
tences based simply on evidence sufficient to enable the sentenc-
ing court to demarcate the scheme, including its "mechanics . .
.[,] the location of the operation, the duration of the criminal
activity, [and] the methods used" to effect it. Henoud, 81 F.3d
______
at 489-90 n.11; Pepper, 51 F.3d at 473; United States v. Turino,
______ _____________ ______
978 F.2d 315, 318-19 (7th Cir. 1992) (collecting cases), cert.
_____
denied, 508 U.S. 975 (1993). Hensley concedes that the
______
indictment adequately defined the scheme, but faults the district
court for focusing on the broad "boilerplate" language in the
indictment, rather than the specific conduct alleged. We think
the 1990 amendments to the VWPA and the relevant caselaw, see,
___
e.g., Turino, 978 F.2d at 318-19 (discussing Seventh Circuit
____ ______
cases), preclude so narrow a definition of the "scheme" element,
which amounts to an attempt to revive the Hughey holding discard-
______
ed by Congress in the 1990 VWPA amendments. See supra pp. 4-5.
___ _____
Hensley pled guilty to an indictment alleging that he
7
devised and executed a scheme in Boston to obtain merchandise by
false pretenses from specific computer-products distributors
around the country, which extended roughly from April 1 to April
25, 1995. Thus, the indictment adequately detailed the offense
of conviction, as well as the underlying scheme to defraud, so as
to enable the district court reliably to fashion a restitutionary
sentence which fairly reimbursed any victim directly harmed by
Hensley's criminal conduct during the course of the scheme
involved in the offense of conviction.
As a fallback position, Hensley claims that the Cre-
ative Computers software purchase was not part of the scheme
underlying the offense of conviction, even under the broad
definition we now adopt. Restitution orders normally are re-
viewed only for "abuse of discretion," Gilberg, 75 F.3d at 20,
_______
and their subsidiary factual findings only for "clear error."
United States v. Savoie, 985 F.2d 612, 617 (1st Cir. 1993)
______________ ______
(victim loss); United States v. Sarno, 73 F.3d 1470, 1503 (9th
_____________ _____
Cir. 1995), cert. denied, 116 S. Ct. 2553 (1996), and petition
_____ ______ ___ ________
for cert. filed, U.S.L.W. , (U.S. June 27, 1996) (No. 95-
___ _____ _____ __ ___
9478).
At the outset, we note that the cases on restitutionary
sentences cast little light on how the sentencing court is to
determine whether a criminal defendant's conduct was part of a
unitary scheme. However, we agree with the government's sugges-
tion, to which Hensley takes no exception, that it is useful to
consult the analogous caselaw on duplicitous indictments and
8
variance of proof. See, e.g., United States v. Morse, 785 F.2d
___ ____ _____________ _____
771, 774-75 (9th Cir.) (mail fraud), cert. denied, 476 U.S. 1186
_____ ______
(1986). Thus, in determining whether particular criminal conduct
comprised part of a unitary scheme to defraud, the sentencing
court should consider the totality of the circumstances, includ-
ing the nature of the scheme, the identity of its participants
and victims, and any commonality in timing, goals, and modus
operandi. Id. Accord United States v. Morrow, 39 F.3d 1228,
___ ______ _____________ ______
1233-34 (1st Cir. 1994) (conspiracy), cert. denied, 115 S. Ct.
_____ ______
1328 (1995).3
We do not agree that there were too many differences
between the fraudulent acquisition from Creative Computers and
the conduct alleged in the indictment to permit the district
court to rule that the former acquisition came within any alleged
unitary scheme to defraud. The undisputed evidence plainly
supported the district court finding that Hensley launched the
unitary scheme with the Creative Computers purchase, by renting
the two drop boxes at MBE locations in Boston within two days of
____________________
3We reject the assertion by Hensley that this interpretation
permits restitution for "any loss caused by defendant's fraudu-
lent conduct, no matter how unrelated to the specific scheme at
issue." The district court finding that the counterfeit money
orders Hensley used to "pay" a credit card bill and a car rental
bill were not part of the scheme underlying the offense of
conviction illustrates the limits upon a sentencing court's
authority to order restitution under the 1990 VWPA amendments.
Moreover, the criteria we endorse for determining whether various
conduct comprised a single scheme serves as a guide to both the
initial restitutionary sentencing decision and appellate review,
and, in keeping with the amendatory statute, allows the sentenc-
ing court substantial, though not unbridled, discretion to
reimburse crime victims.
9
one another, placing all the fraudulent orders for goods with
computer-products suppliers (similar victims) within less than
two weeks, using interstate wires in each instance, and "paying"
for the goods with counterfeit instruments. This abundance of
proof on the commonality of the victims, timing, and modus
operandi utterly precludes a finding of clear error. See Savoie,
___ ______
985 F.2d at 617.
III
III
CONCLUSION
CONCLUSION
__________
As the district court correctly concluded that Creative
Computers was a victim of the offense of conviction for purposes
of the restitution statute, its $837.86 restitutionary sentence
must be affirmed.
AFFIRMED.
AFFIRMED
________
10
