Filed: Jul. 13, 2012
Latest Update: Feb. 12, 2020
Summary: 2, Loads lacking fly ash were not included when calculating the, loss amount for purposes of sentencing.Stevenson., 10, The Statement of Reasons is a written statement that the, sentencing judge must provide in each case in which a sentence, outside the guidelines range is imposed. Loss Order at 5.
United States Court of Appeals
For the First Circuit
No. 10-1739
UNITED STATES OF AMERICA,
Appellant,
v.
ROBERT PROSPERI,
Defendant, Appellee.
No. 10-1741
UNITED STATES OF AMERICA,
Appellant,
v.
GREGORY A. STEVENSON,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Boudin and Lipez, Circuit Judges,
and Smith,* District Judge.
Cynthia A. Young, Assistant United States Attorney, with whom
Carmen M. Ortiz, United States Attorney, was on brief, for
*
Of the District of Rhode Island, sitting by designation.
appellant.
E. Peter Parker for appellee Robert Prosperi.
Michelle R. Peirce, with whom Bruce A. Singal and Donoghue,
Barrett & Singal, P.C. were on brief, for appellee Gregory
Stevenson.
July 13, 2012
LIPEZ, Circuit Judge. The United States challenges the
sentences imposed on appellees Robert Prosperi and Gregory
Stevenson after their conviction of mail fraud, highway project
fraud, and conspiracy to defraud the government. Both appellees
were employees of Aggregate Industries NE, Inc. ("Aggregate"), a
subcontractor that provided concrete for Boston's Central
Artery/Tunnel project, popularly known as the "Big Dig." The
government charged that over the course of nine years Aggregate
knowingly provided concrete that failed to meet project
specifications and concealed that failure by creating false
documentation purporting to show that the concrete provided
complied with the relevant specifications. Several employees of
Aggregate, including Prosperi and Stevenson, were convicted of
criminal offenses for their roles in the scheme.
At sentencing, the district court calculated the
guidelines sentencing range ("GSR") for Prosperi and Stevenson as
87- to 108-months incarceration. Then, explaining fully its
rationale for a below-guidelines sentence, the court sentenced
Prosperi and Stevenson to six months of home monitoring, three
years of probation, and 1,000 hours of community service. The
government now appeals, arguing that under Gall v. United States,
552 U.S. 38 (2007), the sentences imposed by the district court
were substantively unreasonable and that the appellees' crimes
warrant incarceration.
-3-
We affirm. Although the degree to which the sentences
vary from the GSR gives us pause, the district court's explanation
ultimately supports the reasonableness of the sentences imposed.
The district court emphasized that its finding on the loss amount
caused by the crimes, the most significant factor in determining
the GSR, was imprecise and did not fairly reflect the defendants'
culpability. Hence it would not permit the loss estimate to unduly
drive its sentencing decision. Relatedly, it found that there was
insufficient evidence to conclude that the defendants' conduct made
the Big Dig unsafe in any way or that the defendants profited from
the offenses. The court then supplemented these critical findings
with consideration of the individual circumstances of the
defendants and concluded that probationary sentences were
appropriate. We cannot say that it abused its discretion in doing
so.
I.
A. The Big Dig's Need for Concrete
Boston's Central Artery/Tunnel project (the "Big Dig"),
lasting from 1991 to 2007, was one of the largest public works
projects in United States history at the time of its completion.
The project entailed replacement of a major elevated highway that
passed through central Boston with an underground expressway, as
well as the extension of I-90 to Logan Airport. The Massachusetts
Highway Department, and later the Massachusetts Turnpike Authority
-4-
("MTA"), both agencies of the Commonwealth of Massachusetts (the
"Commonwealth"), had primary responsibility for the project. The
final cost of the project, approximately $14 billion, was funded
jointly by the Commonwealth and the federal government.
Numerous private contractors were hired to help with the
construction, and many management responsibilities were delegated
to a joint venture between Bechtel Infrastructure and Parsons,
Brinkerhoff, Quade & Douglas, Inc. ("B/PB"). These two companies
worked as design consultants, performed engineering reviews, and
managed much of the construction. Because of the scale and cost of
the project, responsibility for construction of various sections
was apportioned among different general contractors, and B/PB
worked with each in a coordinating role. The general contractors
in turn contracted with various sub-contractors. In total, there
were approximately 150 individual construction contracts awarded to
private companies in connection with the Big Dig. Each of the sub-
contractors was bound by the contract specifications and schedules
that were set out in general contracts with the Commonwealth.
The Big Dig required approximately 4.2 million cubic
yards of concrete, 60 percent of which was provided by Aggregate.
For suppliers of concrete, the construction contracts required
that: 1) there be a certain mix design, or recipe, for the
concrete, based on the intended use; 2) the supplier have plants
with an automatic batching system that ensured the proper mixture
-5-
of each load, or batch, of concrete; 3) the sub-contractor have in
place recorders that captured information regarding the mix design,
as well as the date and time of batching for each load of concrete,
and provided a printout, called a "batch ticket," containing all of
the required information; 4) no additional water be added after the
concrete mixture was loaded into trucks for delivery; and 5) in
most circumstances, the concrete be in place at the construction
site within ninety minutes of the time it was mixed and loaded onto
trucks.
The batch tickets were especially important because they
served as a quality control mechanism. Aggregate's drivers would
give the batch tickets to B/PB inspectors as they delivered their
loads, and the tickets were left in a holding area close to the
placement so that inspectors or field engineers could check on the
characteristics of the concrete being placed. In particular,
inspectors needed to know the time that the concrete was loaded,
the mix design, the volume loaded, and the amount placed.
B. The Fraudulent Scheme
At some point in the mid-1990s, Aggregate began to supply
concrete to the Big Dig that failed to meet contract
specifications. Of primary concern was Aggregate's practice of
topping-off loads of leftover concrete, sometimes of a different
mix design, with fresh concrete meeting contract specifications,
and providing the entire load as if it were fresh concrete. Loads
-6-
including leftover concrete were known as "10/9" loads, which was
the radio call signal that drivers would use to let the dispatcher
know that they had leftover concrete. Historically, Aggregate had
provided 10/9 concrete to buyers on private projects, but it
initially refrained from doing so on the Big Dig.
The decision to use 10/9 concrete on the Big Dig was made
by the management of Aggregate's Ready-Mix Concrete Division.
Prosperi, who was the General Manager of the Division, and
Stevenson, who was its Operations Manager, played a major role in
making the decision and enforcing the policy. Once this policy was
in place, the practice of using 10/9 concrete became widespread at
Aggregate and leftover concrete was sent to the Big Dig on a daily
basis. On one occasion, after a group of drivers dumped old
concrete, Stevenson told them not to do so again and that they
would be disciplined if they did. Dispatchers were required to
keep logs of each use of leftover concrete and these logs were
provided to Prosperi, Stevenson, and others on a daily basis.
Using leftover concrete in this way creates safety
concerns because the concrete poured does not match the intended
mix design and may set more quickly than planned because of the
increased time between batching and placement. When he first
learned that 10/9 concrete was being sent to the Big Dig, Gerard
McNally, the head of Quality Control for Aggregate's Ready-Mix
Concrete Division, raised concerns about the practice, and
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particularly about using such concrete in structural elements, such
as roof pours. Despite his belief that it was improper, McNally
agreed, at Prosperi's request, to consult with dispatchers to
ensure that 10/9 loads were of a type that could be safely reused
on the Big Dig. As McNally put it, "I realized that that's the way
it was going to be, and that as far as I was concerned, a better
thing for me to do was to get on board with the idea."
Using the 10/9 logs, investigators were able to determine
approximately how many loads of leftover concrete Aggregate
provided to the Big Dig. From 1999 to 2004, Aggregate provided
approximately 2,638 such loads. Although the records collected
went back only to 1999, Aggregate's practice of sending leftover
concrete to the Big Dig dated from the mid-1990s. Using the
available records to estimate the total number of 10/9 loads
Aggregate provided to the Big Dig, the government estimated that
Aggregate provided approximately 5,300 loads of 10/9 concrete over
the life of the project without the knowledge of project
supervisors. These loads amounted to approximately 1% of all of
the concrete provided by Aggregate to the Big Dig and 0.6% of all
the concrete used in the project.
To conceal the 10/9 practice, Aggregate developed a
system that employees acknowledged was "designed to trick the
inspector." After fresh concrete was loaded with some portion of
leftover concrete, Aggregate employees would create a "dummy
-8-
ticket" showing that a complete fresh load of concrete, meeting
project specifications, had been loaded. To create the dummy
ticket, the computer running the batching system was put into
demonstration mode. Then the quantity and mix design called for by
the specifications was manually entered. After the dummy ticket
was printed, a copy was given to the driver to present to
inspectors at the Big Dig site. This became a regular procedure on
the Big Dig. In addition to this method, the clocks on the
batching computers would be set ahead to make it look like the load
had been batched later than it actually had, giving the drivers
more time to get the concrete to its destination.
Occasionally, inspectors would come to Aggregate's plant
to ensure that the proper procedures were being followed. When
this happened, the batchmen, the Aggregate employees who loaded
each truck, would call the dispatchers using the phrase "city
plant" to signal that inspectors were present and no 10/9 loads
should be sent out.
Additionally, there were instances when Aggregate ran out
of fly ash, an important ingredient in some of the mix designs.1
Aggregate supplied concrete to the Big Dig nonetheless, without
1
Fly ash, a coal residue, is an important element in certain
types of concrete because it improves the strength and durability
of concrete, increasing resistance to salts used to keep roads
clear of ice. Fly ash is particularly important for concrete mix
designs intended for use in bridges and tunnels. All of the
structural concrete used on the Big Dig required fly ash.
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informing project supervisors of the absence of fly ash. As with
the 10/9 loads, Aggregate would falsify batch tickets to make it
appear as if the concrete provided contained the requisite fly ash.
Although the problem with the supply of fly ash was intermittent,
it became so bad at one point that McNally informed Prosperi that
Aggregate had two choices: "either run straight cement [without fly
ash] or we stop loading." McNally testified that Prosperi
responded "[w]e never stop loading." It is unclear how many loads
of concrete without required fly ash were provided to the Big Dig.2
The use of non-specification, and especially leftover,
concrete was economically beneficial to Aggregate. Most obviously,
leftover concrete that was not re-used would have to be dumped or
recycled, an expensive process that Aggregate wished to avoid. It
was running out of space to store leftover concrete and was unable
to develop efficient alternative uses to deal with the quantities
of concrete that were leftover. Dumping leftover concrete was also
a time consuming process that pulled drivers and trucks away from
their delivery obligations. For all of these reasons, Aggregate
re-used as much concrete as possible and minimized the amount that
was dumped.
2
Loads lacking fly ash were not included when calculating the
loss amount for purposes of sentencing.
-10-
C. Sentencing
After this scheme came to light, Prosperi and Stevenson
were charged with: 1) one count of conspiracy to commit mail fraud
and make false statements on a highway project; 2) one count of
conspiracy to defraud the United States by submitting false claims;
3) eighty-three counts of making, and aiding and abetting the
making of, a false statement on a highway project; and 4) fifty
counts of mail fraud, and aiding and abetting mail fraud. McNally,
John Farrar, Marc Blais, and Keith Thomas, all Aggregate employees,
were charged with similar offenses.3 McNally and Thomas pled
guilty. After a sixteen-day jury trial, Farrar and Blais were
convicted on some counts and acquitted on others. Prosperi and
Stevenson were convicted on all counts.
1. The Loss Amount Finding
The amount of loss to be used in calculating the GSR was
a hotly contested issue at sentencing. The government and the
defendants submitted memoranda describing their positions on the
issue of loss, and the court held an evidentiary hearing on the
issue.
The government argued that pursuant to Application Note
3(F)(v) to § 2B1.1 of the United States Sentencing Guidelines
("USSG"), the amount of loss should be calculated as the total
3
As noted, McNally was the quality control manager for the
Ready-Mix Concrete Division. Blais, Farrar, and Thomas were each
dispatch managers or assistant managers in the Division.
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amount paid by the government for the concrete that failed to meet
project specifications, with no credit provided for the value of
the goods and services actually provided. Thus, the government
took the number of 10/9 loads delivered to the Big Dig between 1999
and 2004, 2,637 -- a number that was identified in Aggregate's
records -- and added to it another 2,700 loads, an estimate of the
number of 10/9 loads delivered prior to 1999 and on nights and
weekends. Finally, the government also included an estimated 1,200
loads of 10/9 concrete sent to other public construction projects
within Massachusetts. In total, these loads included approximately
64,163 yards of non-specification concrete. The government
asserted that the average price paid by the government per yard of
concrete was $80.90. Accordingly, the government argued that the
appropriate loss amount for Prosperi and Stevenson was
approximately $5.2 million.4
In contrast, Prosperi and Stevenson argued that there was
no loss attributable to them, because the Commonwealth got what it
contracted for and expected to receive. In particular, they noted
that the MTA certified to federal authorities that post-
4
The government characterized this as a conservative
estimate, noting that it did not take into account concrete
delivered to the Big Dig that did not contain required fly ash or
to which water had been impermissibly added. It also argued that
this figure was low because it did not include an amount for
reasonably foreseeable repairs necessitated by the use of non-
specification concrete, although it did not attempt to estimate
what repairs would be needed.
-12-
construction testing showed that the materials used in the project
conformed with applicable plans and specifications. The MTA did so
after the conduct at issue in this case came to light.
Additionally, Prosperi and Stevenson pointed to independent testing
commissioned by the government that focused on the areas of the Big
Dig believed to have received non-specification concrete. These
tests showed that, when completed, those sections of the project
met or exceeded standards for concrete strength and permeability.
Prosperi and Stevenson also noted that, considered as a whole,
little of the total amount of concrete sent to the Big Dig failed
to meet the relevant specifications.
From their perspective, the proper measure of loss was
the cost of repairs necessary to fix or replace inferior work.
Given their claim that the finished product met safety standards
and required no repairs, they argued that there was no monetary
harm. They also pointed out that there was no actual double-
billing for concrete, since the government did not pay for concrete
by the load, but instead paid by construction unit (e.g., per foot
of completed tunnel) without regard to the amount of concrete
actually used. Furthermore, they noted that pecuniary harm is not
an element of the crimes charged and that the government did not
attempt to prove pecuniary harm during trial.
The district court issued a memorandum explaining its
decision on the issue of loss. After summarizing the parties'
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positions, it stated, "Needless to say, much of this is not
helpful. In a case like this it is difficult to apply a mechanical
rule of sentencing." United States v. Prosperi, No. 06-10116, at
5 (D. Mass. May 6, 2010) (Memorandum and Order on Calculation of
Loss for Purposes of Sentencing) ("Loss Order"). The district
court noted that part of the rationale for using loss amount to
determine the GSR was to eliminate disparities between white- and
blue-collar offenders: "One of the goals of the Sentencing
Guidelines was to give greater equivalence between penalties for
white collar crimes like fraud and violent crimes like robbery.
One means chosen by the Sentencing Commission to accomplish this
goal was by giving greater weight to the amount of loss involved in
a scheme to defraud." Id. at 2. Cognizant of this purpose, it
explained:
Loss is certainly important, but the crimes at
issue do not fit the usual white collar crime
profile. There was no intent on defendants'
part to enrich themselves personally. Nor is
there any evidence that defendants intended to
do harm to the [Big Dig] project or to the
taxpaying public in any specific sense.
Id. at 5.
The court adopted the government's loss figure of $5.2
million, stating simply that, "[a]lthough neither the government or
the defendants' methodology can be termed precise, I think on the
whole the government's method of calculating loss is closest to the
mark."
Id. However, after making this choice, the district court
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put the parties on notice that it would not allow the loss figure
to drive its sentencing decision, stating that "I do not believe
the estimated loss figure -- given the nature of the case -- has
pivotal significance in fashioning an appropriate sentence,
something the parties might keep in mind in composing their
sentencing arguments and recommendations." Id.
The Probation Department shared the court's concern about
the significance of the loss amount. After the court issued its
Loss Order, the Probation Department revised the Presentence
Reports for both Prosperi and Stevenson in light of the court's
conclusion. The final paragraph of the Presentence Reports for
both Prosperi and Stevenson notes that "[t]he Court may wish to
consider whether the loss in this instance is overstated."
2. The Sentences
The district court's determination of the amount of loss
attributable to the defendants was pivotal in the calculation of
the applicable GSR. See USSG § 2B1.1. Under the guidelines, both
Prosperi and Stevenson were subject to a base offense level of 7.
Id. § 2B1.1(a)(1). The loss amount of $5.2 million increased the
offense level by 18.
Id. § 2B1.1(b)(1). Finally, both Prosperi
and Stevenson received an additional increase of four levels for
being organizers or leaders in the criminal scheme.5
Id.
5
The Presentence Reports for both Prosperi and Stevenson
explained that as general manager and operations manager of
Aggregate's Ready-Mix Concrete Division, respectively, the two were
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§ 3B1.1(a). Accordingly, both were subject to an adjusted offense
level of 29. Given the lack of any prior criminal history, the
district court calculated the GSR for both Prosperi and Stevenson
as 87- to 108-months imprisonment.
At the sentencing hearing, after noting the GSR, the
district court emphasized that it did not believe that the GSR,
driven largely by the loss estimate, accurately reflected the
defendants' culpability: "As far as I am concerned, the presentence
report and the Guidelines calculation, which we all recognize are
advisory, are influenced by the difficulty of assigning an accurate
loss value to the case, which is the critical element around which
the Guidelines are structured." The court observed that it settled
on a loss figure "[a]s a formal matter," and picked the
government's formula because "[it] was probably as good as any."
It added that "I would note parenthetically that without the 18-
point escalator, one would be looking at an 8- to 14-month range
with a Zone C alternative sentence available to the Court if the
Guidelines, again, applied in a mandatory fashion."6
involved in making the decision to send 10/9 concrete to the Big
Dig. The reports also noted that the two directed their co-
conspirators and acted as organizers and leaders of a criminal
activity involving five or more participants. See USSG § 3B1.1(a).
The court applied the four-level increase at sentencing without
further explanation, presumably relying on the reasoning of the
reports.
6
A Zone C alternative sentence would be a term of
imprisonment of one-half the minimum of the range, with the
remaining half comprised of community confinement or home
-16-
Having made these comments, the court asked to hear from
the parties. The government described a lack of accountability
generally among the companies and individuals who worked on the Big
Dig, as well as an alleged lack of remorse on the part of
Prosperi.7 It also suggested that there may be long-term
maintenance issues with the project because of the defendants'
conduct. The government attempted to tie the defendants' conduct
to a broader corporate culture of corruption, invoking Bernie
Madoff, the BP oil spill, and the financial crisis.8
detention. USSG § 5C1.1(d).
7
The government stated:
[After an unrelated accident], in investigating what went
on, the one theme, the recurring theme, was the lack of
personal responsibility by anyone who worked on that
project, the lack of corporate responsibility by any of
the companies who worked on that project, the lack of
accountability by the business community for what had
occurred on that project. Nobody was responsible for
anything. Everybody blamed everybody else. If it was a
contractor, they blamed the designer, they blamed the
suppliers. The suppliers blamed the contractors.
Bechtel, who was the construction manager, they blamed
everybody else.
It added that, "[e]ven in Mr. Prosperi's sentencing memorandum I
sense no admission of wrongdoing. I sense no remorse. . . . At
least in Mr. Stevenson's sentencing memo, I think he essentially
concedes that this was not industry practice, this was Aggregate
Industries' practice."
8
Early in its sentencing argument, the government stated:
[W]e not only saw it in this case, but it's exactly what
is going on today in front of Congress when they
investigate the collapse of the banking community on Wall
Street, when we have a massive oil spill in the Gulf of
-17-
Prosperi's counsel argued that the loss amount overstated
the defendants' culpability. He noted the numerous letters from
Prosperi's family, friends, and business associates attesting to
Prosperi's good character and role in the community. Additionally,
he reminded the court that Prosperi's wife suffered from a terminal
cancer and that Prosperi was an important caregiver for her.
Stevenson's counsel reminded the court that tests
performed after the scheme came to light indicated that the
finished structures ultimately met project specifications. He also
argued that there was no profit motive animating Stevenson's
conduct. Finally, he called the court's attention to Stevenson's
positive community activities, and his care for his disabled
daughter and elderly parents. Subsequently, Prosperi and Stevenson
each briefly spoke on their own behalf. They each apologized for
their actions and asked the court for leniency.
Mexico. There is clearly a lack of accountability and
unwillingness of the business community to take
responsibility for anything that went wrong, and that's
what I think we've dealt with throughout this case.
Later, in attempting to respond to the supportive letters sent to
the court on the defendants' behalf, the government stated:
[F]ive years ago if somebody were to talk about Bernie
Madoff, they would have said he's one of the biggest
philanthropists in the country. Today we know he's
behind the biggest fraud in the history of the United
States. So, you know, people have two sides to them and
can engage in criminal activity and also be loving family
members and productive members of the community.
-18-
The district court then explained its reasoning in
arriving at the sentences imposed. It acknowledged the numerous
letters it had received from the defendants' family, friends, and
community members, and noted that it found them "sincere,
supportive, and, I'm sure, an accurate portrayal of the defendants'
lives." It also observed that if any of the letter writers came to
Prosperi and Stevenson seeking advice in a similar situation, the
two defendants "would have been the first to say, 'This is morally
wrong, you shouldn't do this, this should not be the choice that
you should make.' Why they made that wrong choice for themselves,
as I say, is the piece of the puzzle that I find hardest to
answer." The court went on to state:
On the other hand, it is not clear to me why
these defendants were necessarily plucked out
to be the "poster children" -- if I may use
the phrase -- for a larger corporate culture
that I agree was morally lazy, and so focused
on the short term that it became heedless to
the consequences or impacts of the behavior
that it encouraged.
Responding to the government's invocation of the
financial crisis, the BP oil spill, and Bernie Madoff, the district
court explained:
It is tempting but ultimately, I think, an
abuse of my power as a sentencing judge to
hold these defendants responsible for all of
the excesses of modern corporate ills; nor can
I prospectively ask these defendants to bear
the weight of a speculative failure of the
Artery Project. I heard no evidence that that
is likely, but, beyond that, I do not think it
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is an appropriate factor at this point for me
to take into account at sentencing.
The court added that "I really cannot sentence a culture. I have
to sentence the defendants as human beings, and the real choice in
this case is what are the punishment alternatives."
Balancing the 18 U.S.C. § 3553(a) factors, the court
noted that, "There is one benefit, and only one, that I see in this
case to incarceration, and that is the sanction of deterrence that
a sentence [of incarceration] would pose for others." As for the
issue of incarceration and specific deterrence, the court added
that it saw no risk of recidivism on the part of either Prosperi or
Stevenson. It went on to note that "[i]ncarceration will incur a
large cost to taxpayers, and an even larger personal cost in Mr.
Prosperi's case to his ill wife and, to some degree, to Mr.
Stevenson's family, as I recognize that they both play important
roles as caregivers and caretakers in their families."
The district court concluded by noting, "I have given
perhaps more reflection to this than perhaps any but one or two
other sentences I have had to impose, and I have come to the
conclusion that an alternative to incarceration is the appropriate
sentence in this case." It added that, "I think [the defendants'
conduct] was wrong, and I have made it clear that I think it was
wrong; but I do think my decision is the correct one given all of
the factors that are at play." Accordingly, despite the GSR,
neither Prosperi nor Stevenson was sentenced to any term of
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imprisonment. Rather, each was sentenced to six months home
monitoring, three years probation, 1,000 hours of community
service, and a modest fine.9
In its Statement of Reasons supporting Prosperi's
sentence,10 the district court explained:
The advisory guideline range, while accurately
calculated, is not a fair representation of
the defendant's culpability. There is no
evidence that the defendant intended to enrich
himself personally or intended to harm the
[Big Dig] project or taxpaying public in any
specific sense. Instead, the defendant was
part of a corporate culture that did not
consider moral consequences or public harm.
The period of home confinement, community
service, and fine are punitive measures that
serve as deterrents, promote respect for the
law, and are just punishment given all of the
circumstances present in this case.
Additionally, the sentence imposed will allow
the defendant to be available to care for his
terminally ill wife and accompany her to
medical appointments. Given all of this, the
sentence imposed is sufficient, but not
greater than necessary and complies with
18:3553(a).
The Statement of Reasons for Stevenson was identical, except it
substituted, for the line regarding Prosperi's terminally ill wife,
9
Prosperi received a $15,000 fine and Stevenson a fine of
$5,000. The other defendants, who were sentenced after Prosperi
and Stevenson, also received probationary sentences, although their
sentences are not being appealed.
10
The Statement of Reasons is a written statement that the
sentencing judge must provide in each case in which a sentence
outside the guidelines range is imposed. It serves to explain the
facts justifying a sentence outside the advisory guidelines system.
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a statement that "the sentence imposed will allow the defendant to
meet his family obligations."
II.
We review the reasonableness of a sentence, whether
inside or outside the guidelines range, "under a deferential abuse-
of-discretion standard." Gall, 552 U.S. at 41. There are two
parts to this inquiry. First, we ask whether the district court
committed a procedural error in selecting a sentence.
Id. at 51.
This may include "failing to calculate (or improperly calculating)
the Guidelines range, treating the Guidelines as mandatory, failing
to consider the § 3553(a) factors, selecting a sentence based on
clearly erroneous facts, or failing to adequately explain the
chosen sentence."
Id. If an appellant makes no claim of
procedural error, as is the case here, we limit our review to the
substantive reasonableness of the sentence. See United States v.
Martin,
520 F.3d 87, 92 (1st Cir. 2008). "When conducting this
review, . . . [we] take into account the totality of the
circumstances, including the extent of any variance from the
Guidelines range."
Gall, 552 U.S. at 51.
Following the Court's decision in Gall, we have noted
that sentencing "necessitates a case-by-case approach, the hallmark
of which is flexibility." Martin, 520 F.3d at 91. Accordingly, "a
sentencing court should not consider itself constrained by the
guidelines to the extent that there are sound, case-specific
-22-
reasons for deviating from them." Id. However, if a court chooses
to impose a sentence outside of the guidelines range, "[t]he
court's reasons for deviation should typically be rooted either in
the nature and circumstances of the offense or the characteristics
of the offender; must add up to a plausible rationale; and must
justify a variance of the magnitude in question."
Id. From this,
it follows that "a major departure should be supported by a more
significant justification than a minor one."
Gall, 552 U.S. at 50.
Gall emphasizes the "very broad" discretion afforded
sentencing courts and the deference accorded their sentencing
decisions. United States v. Innarelli, 524 F.3d 286, 292 (1st Cir.
2008); see also United States v. Taylor,
532 F.3d 68, 70 (1st Cir.
2008) ("[O]ur review of substantive reasonableness is highly
deferential."); Martin, 520 F.3d at 98 ("Under Booker[, 543 U.S.
220 (2005),] and Gall, there is a heavy emphasis on a sentencing
court's informed discretion."). This deference is founded on
several "institutional advantages" possessed by the district court,
including "a superior coign of vantage, greater familiarity with
the individual case, the opportunity to see and hear the principals
and the testimony at first hand, and the cumulative experience
garnered through the sheer number of district court sentencing
proceedings that take place day by day."
Id. at 92 (citing Gall,
552 U.S. at 597-98). We have explained that "once the GSR is
properly calculated, 'sentencing becomes a judgment call' for the
-23-
court, and the court may construct a sentence varying from the GSR
'based on a complex of factors whose interplay and precise weight
cannot even be precisely described.'" Innarelli, 524 F.3d at 292
(quoting
Martin, 520 F.3d at 92).
Thus, "[t]he fact that the appellate court might
reasonably have concluded that a different sentence was appropriate
is insufficient to justify reversal of the district court," Gall,
552 U.S. at 51, and a district court's "choice of emphasis" when
considering relevant factors is not a ground for vacating a
sentence, United States v. Zapata,
589 F.3d 475, 488 (1st Cir.
2009). Ultimately, "[t]here is no single reasonable sentence in
any particular case but, rather, a universe of reasonable
outcomes," United States v. Walker,
665 F.3d 212, 234 (1st Cir.
2011), and "[w]e generally respect the district court's sentence as
long as the court has provided a plausible explanation, and the
overall result is defensible,"
Innarelli, 524 F.3d at 292.
III.
Guided by this legal framework, we address the
government's challenges to the substantive reasonableness of the
district court's sentences. The heart of the government's argument
is its repeated observation that the probationary sentences imposed
are an eighty-seven-month (100%) variance from the bottom of the
applicable guidelines range, and the related assertion that the
court's rationale for such a dramatic variance is not plausible.
-24-
As noted, the court observed at sentencing that "without the 18-
point escalator [due to the loss estimate], one would be looking at
an 8- to 14-month range with a Zone C alternative sentence
available to the Court if the Guidelines, again, applied in a
mandatory fashion." The government vigorously disputes the court's
view that the loss amount here was an unfair proxy for culpability.
Accordingly, our evaluation of the government's challenge to the
sentences turns in large measure on whether we find that the court
has offered a plausible explanation for its treatment of the loss
amount.
A. The Loss Amount
The court regarded the loss determination set forth in
its Loss Order, although required by the guidelines, as an
uncertain figure. The government paid for the Big Dig by
construction unit (e.g., per foot of completed tunnel). It did not
directly pay for concrete by the load. Thus, any estimate of the
price paid for the 10/9 concrete provided by Aggregate would be
imprecise. Additionally, the MTA certified to federal authorities
that the materials used in the construction of the Big Dig
conformed with applicable plans and specifications, even after the
conduct at issue in this case came to light. This certification
calls into question whether there was any actual monetary loss to
the government. Most importantly, independent testing commissioned
by the government, and focusing on the areas of the project
-25-
believed to have received non-specification concrete, showed that
those sections of the project met or exceeded standards for
concrete strength and permeability. None of the testing of samples
taken from the Big Dig indicated a need for repairs or specific
concerns regarding durability.
Presumably, the court relied on Application Note 3(F)(v)
to USSG § 2B1.1 in determining the loss amount. That note provides
that, "[i]n a case involving a scheme in which . . . goods for
which regulatory approval by a government agency was required but
not obtained, or was obtained by fraud, loss shall include the
amount paid for the property, services or goods . . . , with no
credit provided for the value of those items or services." USSG
§ 2B1.1 cmt. n.3(F)(v). Strict application of this advisory
application note in fashioning a sentence, without further
analysis, would treat this case identically to one in which the
defendants had provided no usable concrete in the 10/9 loads.
While this is the approach that the application note recommends,
the court was reluctant to use it in this case, given the MTA's
certification that the finished product met project specifications.
It is true that the evidence on the durability issue was
mixed. The same expert firm that performed the referenced tests
also concluded that Aggregate's practice of using leftover
concrete, and providing concrete without fly ash, could potentially
have serious durability consequences. At the evidentiary hearing
-26-
on loss, the government's expert witness stated that, despite the
fact that samples taken from the Big Dig passed relevant tests, "I
think I feel pretty confident there will be some long-term issues."
In particular, he stated that "I do believe there will be long-term
premature deterioration," but noted that any such deterioration
would be the product of a combination of factors, with the use of
non-specification concrete being only one. The expert also
acknowledged that the permeability tests that he relied upon to
reach this conclusion were not tests of samples that were taken
from the Big Dig itself, but instead were efforts to create
concrete similar to those samples by replicating the conditions
under which 10/9 concrete was used. In the face of this
contradictory evidence, the district court concluded that any
failure of the project was speculative and unlikely. The
government has not challenged this factual finding.
The government presented evidence that Aggregate
management and staff received bonuses based on the company's
profitability. The fraudulent scheme served to increase the
company's profitability, and hence it may have had an effect on
year-end bonuses. However, the evidence presented by the
government indicated that bonuses were introduced by the company in
1999, at least three years after Aggregate began to send 10/9
concrete to the Big Dig. Accordingly, the prospect of a larger
year-end bonus could not have been the motivation to enter into
-27-
this scheme or to continue it for its first three years.
Furthermore, there was no evidence that Prosperi and Stevenson
received any bonuses even after the policy was in place, much less
larger bonuses due to the fraudulent scheme.
On the basis of this record, the court found that the
defendants did not seek to enrich themselves personally and did not
personally benefit from the scheme. The court added that these
findings distinguished them from typical white-collar defendants.
Again, the government has not challenged the court's factual
findings on this issue.
In summary, several factors played into the court's
decision to treat the loss amount as an unfair proxy for
culpability. The loss amount finding itself was necessarily
imprecise. In light of the MTA's certification that the finished
product met project specifications, there was value in the concrete
provided. Testing of samples taken from the Big Dig showed no need
for repairs, and any link between the conduct of the defendants and
a future failure of the Artery Project was speculative and
unlikely. Finally, Prosperi and Stevenson did not personally
benefit from the scheme. Given these findings and considerations,
the district court offered a plausible explanation of its refusal
to allow the loss estimate to control its sentencing determination.
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B. Corporate Culture at Aggregate
In its Loss Order, the court noted, "What appears to have
been at play was a corporate culture in which pressure, much of it
self-generated, was exerted on defendants to perform service for
the short-term benefit of the organization without heed to the
moral consequences or public harm." Loss Order at 5. Similarly,
at sentencing, the district court stated, "[I]t is not clear to me
why these defendants were necessarily plucked out to be the 'poster
children' -- if I may use the phrase -- for a larger corporate
culture that I agree was morally lazy, and so focused on the short
term that it became heedless to the consequences or impacts of the
behavior that it encouraged." Finally, in the Statement of Reasons
for both Prosperi and Stevenson, the court made a third reference
to corporate culture, noting, "There is no evidence that the
defendant intended to enrich himself personally or intended to harm
the CA/T [Central Artery/Tunnel] project or taxpaying public in any
specific sense. Instead, the defendant was part of a corporate
culture that did not consider moral consequences or public harm."
The government makes much of those "corporate culture" statements,
arguing that "[b]y ascribing blame for the offenses of conviction
to the purported evils of the 'corporate culture' rather than to
the individual defendants themselves, the district court both
absolved Prosperi and Stevenson of responsibility for their
criminal actions and sentenced them based on the 'straw man' of
-29-
corporate culture rather than on Prosperi and Stevenson
themselves."
We read the court's "corporate culture" statements
differently. The reference to Aggregate's corporate culture in the
Statement of Reasons comes immediately after the district court
distinguished Prosperi and Stevenson from other white-collar
criminals by noting that they were not motivated by personal
enrichment. Thus, the reference to corporate culture was an
attempt to identify an alternative motive -- a single-minded
interest in the success of their company, and not to absolve the
defendants of all responsibility. Even in referring to Aggregate's
corporate culture, the court did not fail to take note of Prosperi
and Stevenson's role in creating that culture. In its Loss Order,
the court noted that the pressure on Prosperi and Stevenson
produced by Aggregate's corporate culture was largely self-
generated. Thus, the court acknowledged that Prosperi and
Stevenson each bore some responsibility for creating the corporate
culture that it condemned.
Also, Prosperi and Stevenson did receive more substantial
sentences than their co-defendants. As noted, they were each
sentenced to six months of home detention, three years of
probation, and 1,000 hours of community service. In contrast, the
other defendants, who held lesser positions within Aggregate's
Ready-Mix Concrete Division, received lesser sentences. Farrar
-30-
received three months home detention, three years probation, and
750 hours community service; Blais received three months home
detention, two years of probation, and 250 hours of community
service; McNally received no home detention, eighteen months
probation, and 200 hours of community service; and Thomas received
no home detention, one year probation, and 125 hours of community
service. Accordingly, the sentences imposed on Prosperi and
Stevenson do reflect their higher positions within the corporation
and their greater culpability.
C. Corporate Culture Generally
The government argues that the district court
misapprehended the government's position when it considered
Prosperi and Stevenson to be "singled out" for prosecution. In
support of this argument, the government cites the district court's
statement at sentencing that "[i]t is tempting but ultimately, I
think, an abuse of my power as a sentencing judge to hold these
defendants responsible for all of the excesses of modern corporate
ills." However, this statement is a response to the government's
sentencing argument, in which it stated:
[W]e not only saw it in this case, but it's
exactly what is going on today in front of
Congress when they investigate the collapse of
the banking community on Wall Street, when we
have a massive oil spill in the Gulf of
Mexico. There is clearly a lack of
accountability and unwillingness of the
business community to take responsibility for
anything that went wrong, and that's what I
think we've dealt with throughout this case.
-31-
Later in its argument, discussing the letters submitted on the
defendants' behalf, the government added:
[F]ive years ago if somebody were to talk
about Bernie Madoff, they would have said he's
one of the biggest philanthropists in the
country. Today we know he's behind the
biggest fraud in the history of the United
States. So, you know, people have two sides
to them and can engage in criminal activity
and also be loving family members and
productive members of the community.
Given these arguments, the court understandably felt that
the government was asking it to consider the "excesses of modern
corporate ills" in sentencing the defendants. The court refused to
do so, focusing instead on the actions of the defendants and their
personal circumstances.
D. Intent to Harm
In its Statement of Reasons, the court stated that
"[t]here is no evidence that the defendant[s] . . . intended to
harm the CA/T project or taxpaying public in any specific sense."
The government argues that the district court's reliance on this
finding does not justify the sentences imposed. In particular, the
government notes that they knowingly committed fraud, and many
fraud defendants do not specifically intend to harm their victims.
It points out that a person need not intend to harm a victim to be
held responsible for the foreseeable consequences of his actions.
That is a fair summary of an important legal proposition.
For its part, however, the court apparently thought it was more
-32-
relevant to the sentencing decision in this case that the
government had failed to establish that any particular harm had
resulted, or would result, from the defendants' actions.11 In its
brief, the government asserts, without any citation to the record,
that the court accepted the fact that the defendants' fraud "will
adversely affect large portions of the CA/T in the future." In
fact, the court found that the evidence presented did not indicate
a likelihood of a future adverse effect. The court characterized
any future harm as "speculative" and stated that "I heard no
evidence that that is likely."
Moreover, in distinguishing the defendants from other
white-collar fraud defendants, the court emphasized the absence of
an intent to harm the Big Dig, or any direct intent on the part of
the defendants to enrich themselves. This distinction remains
relevant in considering the cases cited by the government on
appeal, in which probationary sentences for fraud defendants have
been vacated for substantive unreasonableness. In United States v.
Livesay, 587 F.3d 1274 (11th Cir. 2009), which involved the billion
dollar HealthSouth fraud, the defendant was part of "an illegal
11
At the end of its initial brief, the government identifies
a less tangible harm caused by the defendants' conduct, noting that
the fraud undermined public confidence in the safety of the Big
Dig, as well as confidence in the ability of the government to
conduct its business. Although the government does not develop
this argument, it is a fair point that adds to our uneasiness with
the district court's decision. It should have been addressed by
the court in its explanation of the sentences.
-33-
scheme to artificially inflate HealthSouth's earnings and to
falsely report HealthSouth's financial condition." Id. at 1276.
In particular, the defendant "instructed HealthSouth's accounting
staff to manipulate various accounts" to produce a pre-determined
earnings per share, and also participated in preparing SEC filings
that he knew to be materially misstated.
Id. In vacating the
probationary sentence originally imposed, the Eleventh Circuit
emphasized that the fraud left "victims too numerous to be
counted,"
id. at 1278, including innocent shareholders who were
"bilk[ed]" out of over a billion dollars,
id. at 1279.
Furthermore, the court noted that the defendant substantially
enriched himself by his conduct.12
Id.
In another case relied upon heavily by the government,
United States v. Cutler,
520 F.3d 136 (2d Cir. 2008), the Second
Circuit reversed as substantively unreasonable the sentences of two
defendants convicted of bank and tax fraud. One defendant had been
sentenced to one year and one day of incarceration, and the other
to three years of probation. In rejecting these sentences, the
Second Circuit relied on several of the same arguments that the
government makes here, finding that the district court erred in
departing based on family circumstances and in deciding that the
loss overstated the defendant's culpability.
Id. at 163. However,
12
Another case cited by the government, United States v.
McVay, 447 F.3d 1348 (11th Cir. 2006), also concerns the
HealthSouth fraud and provides similar facts and reasoning.
-34-
in a case decided nine months after Cutler, the Second Circuit,
sitting en banc and citing Cutler, stated that, "[t]o the extent
that our prior cases may be read to imply a more searching form of
substantive review, we today depart from that understanding."
United States v. Cavera, 550 F.3d 180, 189 (2d Cir. 2008). The
Cutler decision is not helpful to the government's position.
E. Deterrence
The government argues that the sentences imposed are
contrary to Congress's stated policy of increasing sentences for
white-collar offenders to provide an adequate general deterrent.
As the government observes, Congress has noted that deterrence is
"particularly important in the area of white collar crime." S.
Rep. No. 98-225, at 76 (1983), reprinted in 1984 U.S.C.C.A.N. 3182,
3259. We have previously emphasized the importance of general
deterrence in white-collar crime. See United States v. Mueffelman,
470 F.3d 33, 40 (1st Cir. 2006) (stating importance of "the
deterrence of white-collar crime (of central concern to Congress),
the minimization of discrepancies between white- and blue-collar
offenses, and limits on the ability of those with money or earning
potential to buy their way out of jail").
By statute, the USSG must be "entirely neutral as to the
. . . socioeconomic status of offenders." 28 U.S.C. § 994(d). It
is impermissible for a court to impose a lighter sentence on white-
collar defendants than on blue-collar defendants because it reasons
-35-
that white-collar offenders suffer greater reputational harm or
have more to lose by conviction. See USSG § 5H1.2 (stating that
"[e]ducation and vocational skills are not ordinarily relevant in
determining whether a departure is warranted"); id. § 5H1.5
("Employment record is not ordinarily relevant in determining
whether a departure is warranted.");
id. § 5H1.10 (stating that
socioeconomic status is not relevant in determining a sentence).
We see no indication in the record that the court failed
to observe these directives. In explaining its view that the
sentences imposed provided an adequate deterrent, the court noted:
I think it is very difficult at times, for
those of us who are judges or prosecutors or
lawyers, to put ourselves in the shoes of a
person with no prior experience with the
criminal justice system who finds himself or
herself accused of a crime. I do not think,
sometimes, we fully recognize the anguish and
the penalty and the burden that persons face
when called to account, as these men are, for
the wrong that they committed.
This reasoning applies equally well to defendants convicted of
white-collar and blue-collar crimes. Also, we understand the
court's comments on the burdens of the criminal process to be a
comment on the specific deterrence of these defendants from any
future criminal conduct.
Additionally, the court understood and credited the
argument that incarceration increases the deterrent effect of a
sentence on others. It weighed this benefit of incarceration
against the costs of incarceration:
-36-
There is one benefit, and only one, that I see
in this case to incarceration, and that is the
sanction of deterrence that an incarcerated
[sic] sentence would pose for others. Beyond
that, society's interest in incarceration as
opposed to atonement does not weigh heavily.
There is no risk of recidivism on the part of
either of these defendants. Incarceration
will incur a large cost to taxpayers, and an
even larger personal cost in Mr. Prosperi's
case to his ill wife and, to some degree, to
Mr. Stevenson's family, as I recognize that
they both play important roles as caregivers
and caretakers in their families.
With this explanation, the district court fulfilled its obligation
to consider the importance of general deterrence in fashioning its
sentences. It decided for the reasons given that the other
interests at stake made a non-incarcerative sentence appropriate in
this case. It rejected the view that the interest in general
deterrence could only be served by incarceration.
F. Personal Circumstances
Finally, the government argues that the personal
circumstances of Prosperi and Stevenson do not distinguish them
from other similarly situated defendants and do not justify the
downward variance in this case. Under the guidelines, departures
from the GSR based on family circumstances are "ordinarily"
inappropriate save under stringent conditions. USSG § 5H1.6.
However, post-Booker, a judge may vary from the GSR, disagreeing
with details or even major premises, see Kimbrough v. United
States, 552 U.S. 85, 101 (2007) ("[A]s a general matter, courts may
vary from Guidelines ranges based solely on policy considerations,
-37-
including disagreements with the Guidelines."), but the variance
must be reasonable and, in almost all cases where a defendant has
a family, some hardship and disadvantage to them will result
wherever incarceration is part of the sentence.
Here, whether or not squarely within the exception set
forth in the guidelines, the circumstances of Prosperi's family are
atypical and powerful, both in justifying a variance and in the
home confinement actually chosen. At the time of sentencing,
Prosperi's wife was battling terminal cancer. She submitted a
letter to the district court stating that, "I depend on my husband
for almost everything. He is my caregiver, my love and he is
irreplaceable. I need him by my side." Similarly, her sister
submitted a letter stating that, "I fear that without [Prosperi] as
her caregiver, her optimism and hope will be diminished and will
have a devastating impact in her ongoing battle."
Most significantly, the doctor treating Prosperi's wife
submitted a letter to the court stating that her survival was "due,
in no small part to the . . . remarkable care and dedication of her
husband" and that "[s]he certainly would not be alive today without
his attentiveness and his capacity to recognize when she is in
trouble." The doctor added that "Mr. Prosperi's support has been
a critical factor in keeping [his wife] alive" and "I am quite
concerned about [her] ability to function without her husband."
-38-
While Stevenson presented evidence that he too served as
a caretaker for members of his family, his circumstances are not as
compelling. Stevenson played an integral role in the on-going care
for his adopted, badly disabled daughter, and said that he was the
primary caregiver for his elderly parents. Also, there were
numerous letters detailing Stevenson's charitable work and support
for friends and neighbors. Seemingly, his disabled daughter is
now adult and living in a group home, but there was evidence that
the family hoped to be able to bring their daughter, who will need
care indefinitely, to a facility near to the family home, allowing
Stevenson to play a role in providing care.
Furthermore, after concluding that Prosperi would not
receive a sentence of incarceration, the court was entitled to take
this fact into consideration in fashioning Stevenson's sentence.
See United States v. Tejeda, 481 F.3d 44, 60 (1st Cir. 2007) ("[A]
district court may consider disparities among co-defendants in
determining a sentence."). Stevenson was a subordinate of Prosperi
and seemingly participated in the fraudulent actions under the
superintendence of his superior -- not an excuse but a factor that
a judge might reasonably think argues against a higher sentence,
especially when for both men the family needs are poignant beyond
the ordinary.
We have been clear that, post-Booker, "[a] district court
. . . may take idiosyncratic family circumstances into account, at
-39-
least to some extent, in fashioning a variant sentence." Martin,
520 F.3d at 93. Although policy statements issued by the
Sentencing Commission are relevant in determining the type and
degree of idiosyncracy necessary to support a given variance, they
are not decisive.
Id. Here, for the reasons stated, the
particular circumstances of both Prosperi and Stevenson were a
permissible factor for the court to consider in imposing its
variant sentences.
IV.
As we said at the outset of this opinion, the degree to
which the sentences challenged in this appeal vary from the GSR has
given us pause. We are mindful of how rare it is to encounter a
variance of this magnitude. See United States v. Negroni, 638 F.3d
434, 446 (3d Cir. 2011) (noting, in a case involving a 70- to 87-
month GSR and a probationary sentence, that "[t]he parties have not
identified any case, and we have not found one, in which an
appellate court upheld a probationary sentence that so
significantly varied from the Guidelines range"). One can easily
argue that home confinement remains an unreasonably shallow
sentence for a serious and deliberate crime which had the potential
to cause large monetary loss and even physical harm to others.
Many judges would have imposed prison sentences in this case even
though no actual loss or harm was established, save possibly to
public confidence.
-40-
That said, "while the extent of the difference between a
particular sentence and the recommended Guidelines range is surely
relevant, courts of appeals must review all sentences -- whether
inside, just outside, or significantly outside the Guidelines range
-- under a deferential abuse-of-discretion standard." Gall, 552
U.S. at 41. As we have previously observed, "Gall teaches that it
is error to allow the dramatic nature of variance to unduly
influence our review for substantive reasonableness." United
States v. Thurston,
544 F.3d 22, 25 (1st Cir. 2008). We have
acknowledged that even when we believe that a § 3553(a) goal is not
met by a sentence, we must consider the totality of the
circumstances, and in particular whether the sentence sacrifices
that goal to satisfy other legitimate competing interests of the
sentencing regime.
Id. (finding three-month sentence reasonable
despite 63- to 78-month GSR).
In this case, the district court carefully explained its
sentencing decisions. Most significantly, the court explained why
the estimated loss amount was an unfair proxy for culpability, and
why it should not drive the sentencing process. Importantly, it
also found that there was insufficient evidence to conclude that
the defendants' conduct compromised the structural integrity of the
Big Dig, or that they sought to enrich themselves. Coupled with
the individual circumstances of the defendants, these findings
-41-
provided a "plausible explanation [for the sentences], and the
overall result is defensible." Innarelli, 524 F.3d at 292.
For the foregoing reasons, the judgment of the district
court is affirmed.
So ordered.
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