F I L E D
                                                                United States Court of Appeals
                                                                        Tenth Circuit
                    UNITED STATES CO URT O F APPEALS
                                                                    November 22, 2006
                                 TENTH CIRCUIT                      Elisabeth A. Shumaker
                                                                        Clerk of Court


 U N ITED STA TES O F A M ER ICA,

               Plaintiff - Appellee,                     No. 06-3166
          v.                                              (D. Kansas)
 D A V ID C. WITTIG ,                           (D.C. No. 02-CR-40140-JAR)

               Defendant - Appellant.



                            OR D ER AND JUDGM ENT *


Before HA RTZ, M cW ILLIAM S, and M cCO NNELL, Circuit Judges.


      This is David C. W ittig’s second appeal of his convictions on six charges

arising out of a fraudulent bank transaction. On the first appeal we reversed his

sentence because of errors in computing his offense level under the United States

Sentencing Guidelines (U SSG). See United States v. Weidner and Wittig, 

(10th Cir. 2006) (Wittig I). W e remanded for resentencing, noting that

the intervening Supreme Court decision in United States v. Booker, 

(2005), had held that the G uidelines are not mandatory so that the district court



      *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
should consider whether the sentencing factors set forth in 18 U.S.C. § 3553(a)

would require a non-G uidelines sentence. See 

. The

district court on remand imposed a higher sentence than before, and M r. W ittig

appeals. W e reverse again because of errors in calculating the G uidelines offense

level, errors that, in our view, were not harmless.

I.    B ACKGR OU N D

      M r. W ittig’s offense occurred in 2001 when he was the chairman of the

board, president, and chief executive officer of W estar Energy, Inc. (formerly

W estern Resources, Inc.), the largest electric utility company in Kansas.

M r. W ittig had substantial assets (a M arch 2001 financial statement reported a net

worth of over $33 million) and had been a customer of Capital City Bank for

several years. In 1998 he had borrowed $700,000 from the Bank to purchase a

home, and two years later he had obtained a $1 million line of credit to renovate

it. By 2001 his line of credit at the Bank had increased to $3.5 million.

      Clinton Odell W eidner II was president, chief executive officer, and

general counsel of the Bank. In early 2001 a bank customer inquired whether he

knew anyone interested in investing in a real estate project in Arizona (the

Project). The investment required $1.5 million. M r. W eidner asked M r. W ittig

whether he was interested. M r. W ittig declined, saying that he was focusing his

investment efforts on W estar. M r. W eidner then decided that he would pursue the

Arizona opportunity himself. Because he did not have the required $1.5 million,

                                          -2-
and because the Bank’s policies forbade such a large loan to an employee,

M r. W eidner approached M r. W ittig about a loan.

      Shortly thereafter, M r. W eidner prepared a proposal to increase

M r. W ittig’s line of credit from $3.5 million to $5 million. On the proposal he

stated that M r. W ittig would use the increase to fund renovations on his home,

purchase stock, and make business investments. After the Bank’s owner approved

the proposal, M r. W ittig and his w ife signed a “Change In Terms A greement”

which included a provision setting the annual interest rate at 5.39% . It also stated

that the W ittigs’ line of credit was being increased to $5 million, but M r. W ittig

crossed out the $5 million and wrote in $6 million. On April 30, 2001, he faxed

the signed agreement to M r. W eidner, $1.5 million was posted to his account, and

the same amount was posted as a withdrawal and sent to an Arizona title company

as M r. W eidner’s investment in the Project. The next day M r. W eidner executed

a promissory note to M r. W ittig for $1.5 million at an annual interest rate of 7% .

Both men failed to disclose this loan in various documents filed with the Bank.

During the next year M r. W eidner paid M r. W ittig $97,000 on the loan.

      After Bank officers discovered the improper loan in late 2001, a friend of

M r. W eidner’s forwarded funds to M r. W eidner’s Arizona Project partner, who

transferred the funds to M r. Wittig’s Bank account. M r. W ittig then paid down

his line of credit at the Bank by $1.6 million. W hen M r. W eidner resigned from

the Bank in April 2002, M r. W ittig was asked to increase the collateral for his

                                           -3-
line of credit by pledging additional W estar stock, increasing the mortgage on his

home, and assigning life-insurance benefits. M r. W ittig complied with the

request. H e paid off his line of credit three months later.

      An indictment charged M r. W ittig and M r. W eidner with one count of

conspiracy to submit false entries to a federally insured bank and to launder

money (by investing the loan proceeds), see 18 U.S.C. § 371; four counts of

making a false bank entry, see 18 U.S.C. § 1005; and one count of money

laundering, see 18 U.S.C. § 1957. M r. W ittig was found guilty on all six counts

after a jury trial in the United States District Court for the D istrict of K ansas.

      At sentencing, the district court determined that under the 2002 version of

the Sentencing Guidelines M r. W ittig’s base offense level was 6. The district

court then enhanced his offense level under two Guidelines provisions. Section

2B1.1(b)(1) increases the offense level for large pecuniary losses associated with

economic offenses. The loss can be actual or merely intended. See 

).

The court found that M r. W ittig and M r. W eidner each intended a loss of $1.5

million to the Bank. It found that although there was no actual loss to the Bank,

M r. W ittig could have reasonably foreseen that the B ank would suffer pecuniary

harm as a result of the loan transaction because M r. W eidner did not have funds

sufficient to repay the loan, and M r. W ittig never intended to repay the loan

himself. Accordingly, it increased M r. W ittig’s offense level by 16 levels to 22.

See 

                                            -4-
      The district court then applied the Guidelines gross-receipts enhancement,

which increased M r. W ittig’s offense level to 24. See 

(“If

the defendant derived more than $1,000,000 in gross receipts from one or more

financial institutions as a result of the offense, increase by 2 levels . . . . If the

resulting offense level . . . is less than level 24, increase to level 24.”) (This

provision was renumbered as § 2B1.1(b)(13)(A) in the 2005 version of the

Guidelines.). The court also applied the gross-receipts enhancement to

M r. W eidner. The commentary to the Guidelines forbids counting the same gross

receipts for more than one defendant:

      For purposes of subsection (b)(12)(A), the defendant shall be
      considered to have derived more than $1,000,000 in gross receipts if
      the gross receipts to the defendant individually, rather than to all
      participants, exceeds $1,000,000.

USSG § 2B1.1 cmt. n.9(A ) (renumbered as cmt. n.11(A ) in the 2005 version).

But the district court justified application of the enhancement to both

M r. W eidner and M r. W ittig essentially on the ground that M r. W ittig had

received $1.5 million from the Bank, whereas M r. W eidner had received $1.5

million from M r. W ittig.

      Because M r. W ittig had a criminal-history category of I, his Guidelines

sentencing range was 51 to 63 months. The district court sentenced him to six

concurrent terms of 51 months’ imprisonment followed by three years of

supervised release. It also ordered him to pay a $1 million fine.



                                            -5-
      On M r. W ittig’s appeal we held that the district court had erred in its

application of both the intended-loss and gross-receipts enhancements. See

-48. W ith respect to intended loss, we said that “the

district court did not adequately consider the amount of collateral provided by

M r. W ittig in determining the amount of loss under an intended loss theory.” 

Before the district court could ignore the collateral pledged (the

additional utility stock, life insurance benefits, and mortgage on his residence)

when determining intended loss, it first had to “determine that the defendant

intended to deprive the lender of its collateral.” 

district court

made no such finding, it “erred in calculating the amount of loss under the

intended loss approach.” 

the gross-receipts enhancement, we held that the district court “erred

in attributing the $1.5 million in gross receipts to both M r. W ittig and

M r. W eidner.” 

W e affirmed the enhancement as to M r. W eidner, but

reversed as to M r. W ittig. See 

W e noted, however, that after Booker

the Guidelines w ere no longer mandatory and the district court could

appropriately consider a range of factors, including the “nature and circumstances

of the offense,” when determining an appropriate sentence. Id.; see 18 U.S.C.

§ 3553(a). In this case, we added, those circumstances included “that M r. W ittig

and M r. W eidner each used the $1.5 million from the line of credit increase in




                                          -6-
different ways and derived some benefit from it.” 

. W e

vacated the sentence and remanded for resentencing. See 

      Before the resentencing hearing, the sentencing judge presided over a trial

of M r. W ittig on charges of engaging in a wide-ranging fraudulent scheme and

conspiracy during his tenure at W estar. See United States v. Wittig, 

1196, 1204 (D .Kan. 2000). W e will refer to the trial as the W estar Case.

M r. W ittig was found guilty on 39 counts of conspiracy, circumvention of internal

controls, wire fraud, and money laundering, and was sentenced to 18 years’

imprisonment. In addition, he was required to forfeit some of the items he had

pledged as collateral for the $1.5 million loan from the Bank. See United States

v. Wittig, No. 5:03-CR-40142JAR, 2006 W L 897599, *3 (D. Kan. April 3, 2006).

      Also before the resentencing hearing, the district court released M r. W ittig

on bond pending his initial appeal. On January 19, 2006, the court revoked the

bond upon finding that he had violated his conditions of release by engaging in

unreported and unauthorized financial transactions.

      The Presentence Investigation Report (PSR ) prepared for the resentencing

hearing calculated M r. W ittig’s offense level as the district court had at the initial

sentencing: his base offense level was 6, an intended loss of $1.5 million

justified a 16-level enhancement, and gross receipts of $1.5 million resulted in a

total offense level of 24. At the hearing on June 24, 2006, the district court again

used the gross-receipts enhancement to calculate M r. W ittig’s offense level. It

                                           -7-
expressed its understanding of our holding as saying that it had been error to

apply the $1.5 million in gross receipts to both defendants because “the district

court [had] not articulate[d] separate and independent and individual use of the

gross receipts.” A plt. App. Vol. I at 128. To avoid repeating this perceived error,

the district court enumerated the various ways that M r. W ittig and M r. W eidner

each benefitted from the $1.5 million loan. It stated that M r. W ittig benefitted

from an increased line of credit, interest payments from M r. W eidner, and the

expectation of a quid-pro-quo from M r. W eidner and the Bank to provide

financing for him to participate in an expected securities offering related to

W estar. The court found that “W ittig and W eidner individually and separately

and successively received the monies and used them in different manners and for

different purposes. . . . This does establish separate and individual receipt and

separate and individual use of the monies . . . .” 

It further made a

specific finding that M r. “W ittig did in fact derive the $1.5 million, as is required

by application of the gross receipts analysis guideline.” 

      As for intended loss, the district court acknowledged that “collateral

pledged should be given credit,” 

but added that much of the collateral

was subject to forfeiture because it was obtained by fraud, so the line of credit

was not “secured in a very secure fashion,” 

reasoned that “the

borrow er’s ability to pay is not an appropriate credit against intended loss




                                           -8-
[because] [i]f it were, it would be appropriate to call this credit the rich man’s

credit.” 

evidence from the W estar Case, the district court said

“that this particular [bank-fraud] transaction was part of a larger scheme in which

this defendant intended to cause loss to W estar Energy of more than $1

billion. . . . The Court necessarily takes those facts and circumstances into

account in fashioning a sentence under Section 3553(a).” 

      W hen the district court pronounced sentence, it stated that it was “in

essence applying both the gross receipts guideline and the intended loss

guideline.” 

But, it added, “even if the gross receipts guideline did not

apply or the intended loss would not apply, the underlying nature and

circumstances that [the court has] outlined in great detail here would still counsel

this Court under 3553 to apply the sentence that [the court is] about ready to

announce.” 

detailing how it determined M r. W ittig’s offense level, it

stated that his total offense level was 24, the criminal-history level was I, and the

Guidelines sentencing range was 51 to 63 months. It then “tentative[ly]” imposed

concurrent sentences of 60 months’ imprisonment on each count, and a $1 million

fine. 

      Next the district court stated that the tentative sentence was a reasonable

sentence in light of the § 3553(a) factors. The court began by emphasizing its

reliance on the Guidelines:

                                          -9-
      In reaching this determination the Court has considered: One, that
      the sentencing range developed from the application of the advisory
      guidelines incorporates a number of directives from Congress to the
      Sentencing Commission concerning the sentencing of offenders,
      including the purposes of sentencing set forth at 18 U.S.C. Section
      3553(a)(2). Therefore, a sentence imposed within the range
      determined by the guidelines may be given substantial weight in the
      determination of a just and reasonable sentence, in accordance with
      the provisions of 18 U.S.C. Section 3553(a)(2)(A) through (C).

It then noted M r. W ittig’s failure to accept responsibility, evidence

that he had engaged in new criminal behavior while on appeal bond, the lack of

mitigating factors, and the seriousness of his offense. It expressed its belief that

the sentence imposed promoted respect for the law and provided just punishment,

and that M r. W ittig’s conduct justified a sentence of the same length as his

codefendant. Finally, the court stated that the sentence would protect the public,

deter further criminal behavior, and allow M r. W ittig to receive correctional

treatment. The court did not, however, explain why the sentence imposed was

justified even if the G uidelines range w as only 0 to 6 months.

      The district court’s written sentence and Statement of Reasons was filed

several days later. It stated that the court was adopting the PSR, except that it

found that there was no intended loss under the Guidelines (despite the court’s

discussion of intended loss at the sentencing hearing). The court made no entry

in Section VI of the Statement of Reasons, entitled “Court Determination for

Sentence Outside the Advisory Guideline System.” 

                                          -10-
II.   D ISC USSIO N

      In 

, 259, the Supreme Court held that mandatory

application of the Guidelines violated the Sixth Amendment, excised that portion

of the statute that made them mandatory, and effectively rendered the Guidelines

advisory. W hen review ing a sentence post-Booker, we review for reasonableness,

applying a two-step analysis. See United States v. Kristl, 

, 1055

(10th Cir. 2006). “First, we must determine whether the district court considered

the applicable G uidelines range, review ing its legal conclusions de novo and its

factual findings for clear error. A non-harmless error in this calculation entitles

the defendant to a remand for resentencing.” 

conclude that the

district court correctly applied the Guidelines or that any errors were harmless,”

we proceed to the second step— considering whether the ultimate sentence

imposed was reasonable. United States v. Hernandez-C astillo, 

,

1129-30 (10th Cir. 2006).

      A.     Application of G uidelines

      W e hold that the district court again erred in computing M r. W ittig’s

offense level under the Guidelines. The base offense level for M r. W ittig’s crime

was 6. The only potential grounds for increasing it would be the gross-receipts

enhancement, see USSG § 2B1.1(b)(12)(A ), or the intended-loss enhancement,

see 

Neither ground applies.




                                        -11-
      M r. W ittig argues that the district court disregarded our holding in Wittig I

and impermissibly reapplied a gross-receipts enhancement to determine his

offense level. W e agree. Our prior opinion was categorical— “the district court

erred in attributing the $1.5 million in gross receipts to both M r. W ittig and

M r. W eidner.” 

. The district court read our opinion to

say that it was error to apply the $1.5 million in gross receipts to both defendants

because “the district court did not articulate separate and independent and

individual use of the gross receipts.” A plt. App. Vol. I at 128. W e do not share

that reading. At most our opinion noted that the cases relied on by M r. W ittig

could be distinguished from his case because “none . . . involved a series of

offenses in which each defendant successively used the receipts in a separate

fashion . . . .” 

. But to say that cases can be

distinguished means only that they do not control the present case; it is not to say

that their conclusions should be rejected. On the contrary, after noting the

distinguishing factors in M r. W ittig’s case, we still proceeded to hold that

M r. W ittig w as correct in challenging the applicability to his case of the gross-

receipts guideline. See 

use we permitted the district court to make

of the “gross-receipts” facts on remand was to consider them under § 3553(a) to

impose a non-G uidelines sentence. See 

      The parties dispute whether the district court also applied an intended-loss

enhancement in computing M r. W ittig’s Guidelines offense level. The

                                          -12-
government argues that the district court correctly determined the offense level by

applying an intended-loss enhancement. M r. W ittig, in contrast, argues that the

court’s Statement of Reasons specifically found no intended loss under the

Guidelines. The government urges us to apply the rule that when the oral

sentence pronounced at sentencing is inconsistent with the later written sentence,

the oral sentence controls. See United States v. Villano, 

, 1450

(10th Cir. 1987) (en banc) (plurality opinion). But that rule applies only to the

sentence— that is, “the punishment imposed,” 

not the explanation for

the sentence.

      In any event, the evidence before the district court would not support an

intended-loss enhancement. In Wittig I we noted that M r. W ittig’s loan was

collateralized and that to “ignore collateral in determining intended loss, the court

must first determine that the defendant intended to deprive the lender of its

collateral.” 

; see United States v. Schild, 

,

1201 (10th Cir. 2001) (borrower intended to deprive bank of collateral). The

district court on remand made no finding of such an intent, there was no evidence

that would support such a finding, and, indeed, we have been pointed to no

evidence that M r. W ittig intended the Bank to lose any money on its loan to him.

      Thus, it was error for the district court to increase M r. W ittig’s offense

level above the base offense level of 6. Given his criminal history category of I,




                                         -13-
his Guidelines sentencing range was 0 to 6 months, well below his actual sentence

of 60 months. W e now address whether this error w as harmless.

      B.     H armless Error

      The government argues that the sentence should be affirmed even if the

district court miscalculated M r. W ittig’s offense level because other factors make

the sentence reasonable and the court said that it would impose the same sentence

even if the gross-receipts and intended-loss enhancements did not apply. W e are

not persuaded.

      To begin with, the reasonableness of the imposed sentence is irrelevant to

the harmless-error analysis. A defendant is harmed by a reasonable sentence if

the court, absent the error, would have imposed a lesser, but still reasonable,

sentence. The government does not argue that M r. W ittig received the lowest

possible reasonable sentence.

      The alternative sentence requires somewhat more discussion. W e recognize

that we have relied on a district court’s expression of an alternative sentence in

determining that Booker error w as harmless. See, e.g., United States v. Serrano-

Dominguez, 

, 1224 (10th Cir. 2005). But those cases are readily

distinguishable. In those cases the district court had correctly calculated the

Guidelines sentencing range. The question was only whether the district court, if

it had known that it had discretion to vary from the Guidelines range, would have

exercised that discretion. A statement by the district court that it would not do so

                                        -14-
was an answer to that question. See 

that in fashioning alternative

sentence under § 3553(a) the court would apply “precisely the same sentence as

the guidelines require” (internal quotation marks omitted)).

      Here, however, the government asks us to assume that even if the district

court had known that the sentence imposed was a dramatic variance from the

highest possible Guidelines sentence, it would not have been influenced by that

knowledge. W e lack the government’s confidence in that assumption. After all, in

addressing the § 3553(a) factors the district court began by noting the substantial

weight to be given to the Guidelines in arriving at a sentence. W e cannot presume

that the court would not have been influenced by knowing that the sentence being

imposed was 10 times as long as the maximum under the Guidelines range.

M oreover, although the court gave reasons why it believed the imposed sentence

was reasonable, it failed to explain what “dramatic facts” justified “such an

extreme divergence from the best estimate of Congress’s conception of

reasonableness expressed in the Guidelines.” United States v. Cage, 

,

594 (10th Cir. 2006). Unmarked in the Statement of Reasons w as the section in

which the court must explain why it imposed a non-Guidelines sentence. The

court would need to explain what the Guidelines failed to take into account and

why that omitted factor is of such enormous consequence. See United States v.

Bishop, No. 05-3173, 2006 W L 3237027, at *10 (10th Cir. Nov. 9, 2006)

(justification must be proportional to the variance).


                                         -15-
      In addition, we doubt the relevance of some of the considerations apparently

relied on by the district court in imposing sentence. As previously noted, there is

no evidence to support a finding that M r. W ittig intended a loss to the Bank; and

the relationship of his loan to any loss intended to be inflicted on anyone else (in

the W estar Case) is simply too tenuous to justify a variance from a Guidelines

sentence. Indeed, if the district court is to use M r. W ittig’s conviction in the

W estar Case to increase his sentence in this case beyond what would be

appropriate as a result of considering his W estar conviction as part of his criminal

history, the court will need to point to specific evidence justifying the increase. In

other words, we understand why M r. W ittig’s sentence should reflect the criminal

history established by his convictions in the W estar case; but we fail to understand

why those convictions are otherwise relevant to his present sentence. The district

court said that there was evidence that M r. W ittig’s accommodation to

M r. W eidner was part of a quid-pro-quo arrangement in which the Bank would

later loan M r. W ittig and others the sums necessary to exercise rights to purchase

W estar stock, a central component of the scheme charged in the W estar case. The

government, however, has failed to point us to that evidence, and we note the

apparent inconsistency between the claim that M r. W eidner needed such a quid-

pro-quo inducement and the claim that exercise of the purchase rights was

extremely advantageous to M r. W ittig (thereby suggesting the attractiveness to the

Bank of financing the purchases).


                                           -16-
III.   C ON CLU SIO N

       W e VACATE M r. W ittig’s sentence and REM AND for resentencing in

accordance with this opinion. M r. W ittig’s m otion to enforce the mandate is

D EN IED .

                                      ENTERED FOR THE COURT


                                      Harris L Hartz
                                      Circuit Judge




                                        -17-