
USCA1 Opinion

	




          November 3, 1994                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                ______________________          No. 93-1732                                    UNITED STATES,                                      Appellant,                                          v.                               GEORGE S. BENNETT, JR.,                                 Defendant, Appellee.                                   _______________                                     ERRATA SHEET                                     ERRATA SHEET               The  opinion of this Court  issued on September  20, 1994 is          amended as follows:               On page 23, delete footnote 14.               On  page 29,  fourth  line from  the bottom,  after  ". .  .          clearly erroneous."   Add  new footnote (and  renumber subsequent          footnotes).  The text of the new footnote is as follows:                    Having stressed that post-trial acceptance of                    responsibility  is  the  exception  and  must                    normally be borne  out by pre-trial  actions,                    we  nevertheless do  not intend  to establish                    any   blanket   rule;  the   guideline's  own                    application note leaves open  the possibility                    of exceptions.   But we do  think that unless                    some  obvious  basis  is  apparent  from  the                    record,  it  may  be difficult  to  uphold  a                    reduction in  cases where the  defendant went                    to trial, asserted his  or her innocence, and                    has  nothing substantial  in the way  of pre-                    trial conduct  to show earlier  acceptance of                    responsibility -- unless  the district  court                                      ______                    is  able to point  to some  persuasive reason                    for  this determination.    Thus, even  where                    there   may   ordinarily   be    no   special                    requirement  for  a statement  of  reasons in                    making  sentence  determinations, cases  like                    this one may  present situations in which  an                    explanation  by the  district court  is as  a                    practical matter essential to  establish that                    the  guideline's  rather stringent  standards                    for   post-trial    conversions   have   been                    satisfied.                                                 UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1732                                    UNITED STATES,                                      Appellant,                                          v.                               GEORGE S. BENNETT, JR.,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Edward F. Harrington, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                         Campbell, Senior Circuit Judge, and                                   ____________________                              Lagueux, District Judge.*                                       ______________                                 ____________________            William  P.  Stimson, Assistant  U.S.  Attorney,  Economic  Crimes            ____________________        Division,  with whom Donald K.  Stern, United States  Attorney, was on                             ________________        brief for appellant.            Morris M.  Goldings, with  whom John  F. Aylmer,  II and  Mahoney,            ___________________             ____________________      ________        Hawkes & Goldings were on brief for appellee.        _________________                                 ____________________                                  September 20, 1994                                 ____________________                                    ____________________        *Of the District of Rhode Island, sitting by designation.                      CAMPBELL, Senior Circuit Judge.  George S. Bennett,                                ____________________            Jr.,  defendant-appellee,  was  formerly  a  general manager,            officer,  and director  of  Daniel Webster  Mortgage Company,            Inc.,  which originated, underwrote, and sold mortgage loans.            Bennett was also an  attorney.  On December 2,  1991, Bennett            was charged,  in a nine-count indictment,  with violating the            bank   fraud  statute,  18  U.S.C.      1344  (1988).1    The            indictment alleged that, from August 1988 until October 1989,            Bennett  obtained nine  loans     corresponding  to the  nine            counts    totaling $900,000 by, among other things, providing            knowingly false  and  misleading information  concerning  the            identity of the  borrower or borrowers and  by concealing his            and his wife's interest in the loans.                      On February  16, 1993,  a jury  trial began  in the            United   States   District   Court   for  the   District   of                                            ____________________            1.  18 U.S.C.   1344 provides:                      Whoever  knowingly executes,  or attempts                      to execute, a scheme or artifice                              (1)    to   defraud    a   financial                      institution; or                           (2) to  obtain  any of  the  moneys,                      funds,  credits,  assets, securities,  or                      other  property owned  by,  or under  the                      custody  or  control   of,  a   financial                      institution,   by   means  of   false  or                      fraudulent pretenses, representations, or                      promises;                      shall be  fined not more  than $1,000,000                      or imprisoned not more than 30 years,  or                      both.                                         -4-            Massachusetts.   Eight  days  later, the  jury found  Bennett            guilty on all nine counts.  Following a sentencing hearing on            May 18 and 19, 1993,  the district court sentenced Bennett to            twenty-four  months probation with six months home detention.            He  was  also ordered  to pay  a  special assessment  of $450            pursuant to 18 U.S.C.   3013 (1988).  Judgment was entered on            May 24,  1993.   The Government  appeals from the  sentence.2            We vacate and remand for resentencing.                                          I.                                      BACKGROUND                                      __________            A.   The Scheme                 __________                      Daniel  Webster  Mortgage  Company,  Inc.  ("Daniel            Webster"),   which  maintained   a  place   of  business   in            Marshfield,   Massachusetts,    originated   and   underwrote            residential  mortgage loans  for consumers.   To  finance its            mortgage  underwriting  activities,  Daniel Webster  borrowed            money under lines-of-credit that it maintained with  Plymouth            Federal Savings Bank ("Plymouth Federal")    a federal mutual            savings  bank  with  its   principal  place  of  business  in            Plymouth, Massachusetts     and  New Bedford  Institution for            Savings  (NBIS)      a  state-chartered  bank  based  in  New                                            ____________________            2.  Bennett  cross-appealed  from  the  conviction,  but  the            cross-appeal was later voluntarily dismissed pursuant to Fed.            R. App. P. 42(b).                                         -5-            Bedford,  Massachusetts.3  To obtain line-of-credit advances,            Daniel  Webster needed only to contact the banks by telephone            and  provide a borrower's name and an amount to be disbursed.            After making a mortgage loan, Daniel Webster would assign the            promissory  note  and  the  accompanying  mortgage  from  its            customer  to  whichever  bank  advanced the  funds.    Daniel            Webster would also  record the mortgage and the assignment at            the  appropriate registry of  deeds.  When  the mortgage loan            was sold  on the secondary  market, Daniel Webster  would use            the proceeds to repay the principal borrowed from the lending            bank, plus accrued interest.                       George  S. Bennett,  Jr.  was  general  manager  of            Daniel  Webster from August 1985  until May 3,  1990, when he            was asked to resign.   He was also an officer of  the company            from May  1986 and a  director from April  1987.  On  May 20,            1988,  Bennett  obtained  two  mortgage  loans   from  Daniel            Webster,  each for $159,000.   Bennett  used the  proceeds to            purchase   two   parcels  of   real   property  in   Hingham,            Massachusetts.  Title to these parcels was taken in the names            of two nominee realty trusts, Prospect Woods Realty Trust and            Prospect Forest Realty Trust.  Bennett and his wife, Patricia            A. Bennett, were  the sole beneficiaries  of each trust,  and            Mrs. Bennett  was appointed trustee.   Bennett's plan  was to                                            ____________________            3.  We will  refer to Plymouth Federal  and NBIS collectively            as "the banks."                                         -6-            develop  two homes on the  parcels, occupy one,  and sell the            other.                      In  or   about  September  1988,   Bennett  applied            directly  to  Robert E.  Dawley,  then-president of  Plymouth            Federal, for financing to construct the two residences on the            Hingham property.  He sought loans of $410,000  and $425,000.            Dawley thought that Plymouth  Federal should not lend Bennett            this  money.   Accordingly,  after  consulting  with Plymouth            Federal's   loan   committee,   Dawley   rejected   Bennett's            applications.                      Thereafter,  Bennett used his  position with Daniel            Webster  to cause  the banks  to lend  him money  under their            lines-of-credit.4    On  more than  ten  separate  occasions,            Bennett  obtained  advances  under  the   lines-of-credit  by            misrepresenting to  the banks that he  was financing mortgage            loans underwritten by Daniel Webster in its regular course of            business.   To conceal  his personal  interest in  the loans,            Bennett,   on  many  occasions,  gave  the  banks  fictitious            borrower names such as "Woods," "Forest," "Foster," "Floras,"            "Powers,"  and "Kallan."   Although  Bennett and/or  his wife            executed promissory  notes and  mortgages for each  new loan,                                            ____________________            4.  Eight  of  the loans  described  in  the indictment  were            originally funded  using advances  from the Plymouth  Federal            line-of-credit, and one such loan was funded using an advance            from the NBIS line-of-credit.  By May 1990, however, Plymouth            Federal  had purchased all the  loans at issue  that had been            charged to the NBIS line-of-credit.                                         -7-            Bennett  failed to record any of the mortgages or assign them            to the banks.  Consequently, the line-of-credit advances were            effectively unsecured, and Bennett avoided creating a  public            record  of his  borrowing activity.   Bennett also  created a            lender loan  file for each  new loan that  contained "filler"            documents        such   as  settlement   statements,   credit            applications,  title  insurance  policies,  and  real  estate            appraisals        that,  upon   close  inspection,   bore  no            relationship to the particular  loan.  Rather, many of  these            documents  were  photocopies  of  the  materials  prepared in            connection with the two $159,000 loans obtained by Bennett in            May 1988.   To avoid  detection, Bennett kept  the promissory            notes, mortgages, and loan  files in his personal possession.                      In  or  about March  and  April  1990, the  Federal            Deposit  Insurance  Corporation   (FDIC)  examined   Plymouth            Federal, including  the Daniel Webster  line-of-credit.   One            examiner demanded the supporting documentation for a $125,000            advance  under  the  name   "Bennett"      Count  7   of  the            indictment.    In  response, Bennett  provided,  among  other            things, a promissory  note, a mortgage, and  an assignment of            the  mortgage  to Plymouth  Federal.   The  mortgage  and the            assignment  had recording stamps,  bearing instrument numbers            36241 and  36242, indicating that  they had been  received by            the Plymouth County  Registry of  Deeds on May  12, 1989,  at                                         -8-            12:12 p.m.  On further inspection,  however, the mortgage and            the assignment were found to be unrecorded, and the recording            stamps to have been forged.   A search at the Plymouth County            Registry  of  Deeds  revealed  that  the  instrument  numbers            belonged to documents filed in an unrelated transaction.                      The full extent of Bennett's borrowing was revealed            on  or  about  May  3,  1990.    Plymouth  Federal  thereupon            terminated its line-of-credit, putting Daniel  Webster out of            business.  Bennett was asked to resign from Daniel Webster.                      On  May  22,  1990,  Plymouth  Federal  and  Daniel            Webster  sued  Bennett, claiming,  inter  alia,  that he  had                                               ___________            committed fraud.   Bennett denied liability.   On February 1,            1991,  the  parties  entered  into  a  settlement  agreement.            Bennett agreed to turn over  to Plymouth Federal certain cash            and  other  property,  including  the  part  of  the  Hingham            property  that had not earlier been sold.  The district court            found the value of  the cash and property transferred  in the            settlement to be "at least" $660,000.            B.   The Flow of Funds                 _________________                      During the  civil law suit, Bennett,  in answers to            interrogatories, listed  the loans that he  had obtained from            May 20, 1988, through March 1, 1990.  The Government provides            the  following chart, which  includes the  nine transactions,            designated A through I, charged in the indictment:                    Whether             "Borrower   Date      Princ.                    Charged/            Name" on    Princ.    Balance                                         -9-            Date    Design.   Amount    Bank Docs.  Repaid    (5-3-90)            ____    _______   ______    __________  ______    ________            5-20-88   no      $159,000  Bennett        -      $159,000            5-20-88   no       159,000  Bennett        -       159,000            7-5-88    no       180,000  Bennett     9-30-88            8-11-88   yes (A)   40,000  Woods       9-22-88              9-22-88   no       185,000  Bennett    10-13-88              9-22-88   yes (B)   90,000  Forest       7-7-89              10-4-88   no       100,000  Bennett        -       100,000            10-4-88   yes (C)  141,700  Woods        7-7-89            10-4-88   yes (D)  145,300  Foster       7-7-89            3-31-89   yes (E)   75,000  Woods          -        75,0005            3-31-89   yes (F)  105,000  Floras       7-7-89            5-12-89   yes (G)  125,000  Bennett        -       125,000            8-2-89    yes (H)   67,000  Powers       9-30-89            10-2-89   yes (I)  111,000  Kallan          -      111,000            3-1-90    no       108,000  Sou             -      108,000                              ________                        ________                            $1,791,000                        $837,000            As  the Government's  chart indicates,  several of  the loans            were  repaid  before May  3,  1990, the  date  when Bennett's            offense was discovered.   According to Bennett, the remaining            loans  were  repaid  when  he  entered  into  the  settlement            agreement   with  Daniel  Webster  and  Plymouth  Federal  on            February 1, 1991.            C.   Sentencing                 __________                      At  sentencing,  the  Government  maintained  that,            because  Bennett's  scheme  to  defraud continued  after  the            November 1, 1989, amendment  to the loss table in  U.S.S.G.                                              ____________________            5.  The Government's appellate brief indicates that this loan            was actually repaid on September 30, 1989.  Bennett states in            his  brief, however, that he  did not repay  the $75,000 loan            until February 1, 1991.   This later date is  consistent with            representations made by the Government to the district court.            Accordingly, we will assume  that the $75,000 loan  was still            outstanding  as of  May  3,  1990.    If  our  assumption  is            incorrect,  the  district  court  should  make  the necessary            correction on remand.                                         -10-            2F1.1(b)(1), there was  no ex post  facto problem created  by                                       __ ____  _____            using       as  is  ordinarily done      the version  of  the            Guidelines Manual that was in  effect (i.e, November 1, 1992)                                                   ___            when Bennett was sentenced.  The Government also argued  that            (1)  in  addition  to  the $900,000  in  charged  loans,  the            district court  should consider $1,016,000 in  other loans as            relevant conduct, for  a total loss  of $1,916,000;6 (2)  the            $1,916,000 loss figure should not  be reduced to reflect  any            repayments made by Bennett because this was not a "fraudulent            loan  application"  case within  the  meaning  of U.S.S.G.               2F1.1, comment. (n.7(b)); (3) Bennett did nothing to manifest            any appreciation of  the criminality of his  conduct; and (4)            the  district court  should apply  upward adjustments  to the            offense  level  under  U.S.S.G.      2F1.1(b)(2)  and  3B1.3.            Accordingly,  the  Government  urged  the district  court  to            determine Bennett's Total Offense Level as follows:                        2F1.1(a) (base offense level)                 6                        2F1.1(b)(1)(M) (loss of $1,916,000)          12                        2F1.1(b)(2) (more than minimal planning)      2                        3B1.3 (abuse of position of trust)            2                                                                     __                                TOTAL OFFENSE LEVEL                  22                                            ____________________            6.  On appeal, the Government maintains that the total amount            of charged and  uncharged transactions amounts  to $1,791,000            as  opposed to $1,916,000.  See chart, supra.  The Government                                        ___        _____            explains that,  at sentencing, the $1,916,000 figure included            a  $236,000 loss on  the "Kallan" loan (Loan  I).  On further            reflection,  however,  the   Government  concedes  that  only            $111,000 of this loan  can be shown to have  been funded with            bank money.                                           -11-            This offense level, says  the Government, would have resulted            in a  sentencing range of 41 to 51 months incarceration and a            fine range of $7,500 to $75,000.                      The   district  court   refused   to   accept   the            Government's position.   Finding  that the  last date  of the            offense  of conviction was October 2, 1989, it decided to use            the November  1, 1988,  Guidelines Manual     which contained            the  loss  table in  effect prior  to  the November  1, 1989,            amendment    to avoid  violating the Ex Post Facto  Clause of            the United  States Constitution.   Moreover, for  purposes of            calculating  the loss to the banks, the district court, after            a two-day  sentencing hearing during which  it considered the            issue, included only those loans, totaling $900,000, that had            been charged in the indictment.  From this gross loss figure,            the  district court subtracted (1) the  amount of the charged            loans that Bennett had repaid prior to the May 1990 discovery            of  his  crime (i.e.,  $589,000), and  (2)  the value  of the                            ____            February 1991  settlement with  Plymouth  Federal and  Daniel            Webster.7   Accordingly,  the district  court  concluded that            the net loss to the  banks was $0.  It said,  "[I]t's obvious            that  what was charged in  this case as  criminal conduct was            $900,000, and that all of it,  every cent, was paid off prior                                            ____________________            7.  The  exact  value  of  the settlement  agreement  is  not            entirely  clear.  The presentence report  pegged the value at            $694,707.15.  The district court said the value was "at least            $660,000."                                         -12-            to the initiation of any criminal proceeding."  Moreover, the            district  court   determined   that  Bennett   had   accepted            responsibility for his conduct.   In light of these findings,            the district court  calculated Bennett's Total  Offense Level            to be 8.   According to the Government, the  district court's            computations were as follows:                        2F1.1 (base offense level)                    6                        2F1.1(b)(1) (zero loss)                       0                        2F1.1(b)(2) (minimal planning)                2                        3B1.3 (abuse of position of trust)            2                        3E1.1 (acceptance of responsibility)         -2                                                                     __                           TOTAL OFFENSE LEVEL                        8            Based  on this  Total  Offense Level  and Bennett's  Criminal            History Category  (I), the district court  concluded that the            sentencing range was 2  to 8 months imprisonment, with  24 to            36 months  supervised release,  and that  the fine  range was            $5,000  to  $50,000.     Nevertheless,  the  district   court            sentenced  Bennett to 24 months  probation with 6 months home            detention.    He was  also directed  to  pay $450  in special            assessments.  No fines were imposed.                                               II.                      The  Government  argues  that  the  following three            errors were  committed during sentencing: the  district court            improperly (1) calculated loss under  U.S.S.G.   2F1.1(b)(1),            (2)  granted Bennett  a  downward adjustment  in his  offense            level  for accepting  responsibility  pursuant to  U.S.S.G.                                           -13-            3E1.1, and (3) used the November  1, 1988, Guidelines Manual.            We turn to each of these arguments.            A.   The District Court's Loss Calculation                 _____________________________________                 1.   Relevant Conduct                      ________________                      The Government argues that the district court erred            in calculating the banks' losses by refusing to  consider any            loans  except  the  ones   for  which  Bennett  was  charged.            According  to  the Government,  U.S.S.G.     1B1.3   requires            sentencing courts to consider  relevant conduct, even if such            conduct  does not fall within  any count of  conviction.  The            district court  should, it  says, have included  in the  loss            calculation  the  other  loans  for  which  Bennett  was  not            indicted.  Bennett replies that the district court determined            that evidence of the uncharged loans was too meager to amount            to relevant conduct under U.S.S.G.   1B1.3.                        To  resolve  these  arguments,  we  need to  decide            whether  the district court  determined, as a  matter of law,                                                     ___________________            that, in  calculating the loss, it would disregard loans that            were not alleged in the indictment, or whether it determined,            as  a matter  of  fact, that  the  Government had  failed  to            ______________________            establish, by a preponderance  of the evidence, the existence            of relevant non-indicted loans.8  With regard to the former,                                            ____________________            8.  In  United States  v.  Williams, 10  F.3d  910 (1st  Cir.                    _____________      ________            1993), we said, "Only after the government has met its burden            of  establishing,  by a  preponderance  of  the evidence,  `a            sufficient  nexus between  the  [extraneous] conduct  and the            _________________            offense  of conviction,'  may  the sentencing  court, in  its                                         -14-                      "[t]he  legal  determination  as  to  the                      proper interplay among related guidelines                      is  subject to  plenary review."   United                                                         ______                      States v. Schultz, 970 F.2d 960, 962 (1st                      ______    _______                      Cir. 1992),  cert. denied,     U.S.     ,                                   ____________                      113  S.  Ct.  1020,  122 L.  Ed.  2d  167                      (1993).  Therefore, we review de novo the                      district   court's  application   of  the                      relevant  conduct  guideline, U.S.S.G.                         1B1.3,   to   the   [fraud   or   deceit]                      guideline, U.S.S.G.   [2F1.1].            United States v.  Carrozza, 4  F.3d 70, 74  (1st Cir.  1993),            _____________     ________            cert. denied,     U.S.   , 114 S. Ct. 1644, 128 L. Ed. 2d 365            ____________            (1994).  Regarding the latter, "[a]bsent a mistake of law, we            review `relevant conduct' findings  for clear error."  United                                                                   ______            States  v. Williams, 10 F.3d 910, 913 (1st Cir. 1993) (citing            ______     ________            United States v. Wood, 924 F.2d 399, 403 (1st Cir. 1991)).            _____________    ____                      The  transcript  of  Bennett's  two-day  sentencing            hearing   strongly   indicates   that   the   district  court            determined, as a matter  of law, that it would  not consider,            in  establishing the loss to  the banks, loans  that were not            alleged  in the  indictment.   At the  very beginning  of the            sentencing hearing, the district court asked:                      And   how   much   money  was   obtained,                      according  to  the  counts?   Because  my                      understanding  is that  the determination                      of how much time the guidelines call for,                      is it determined on the amount charged in                      the counts?                                            ____________________            sound discretion, make a `relevant conduct' adjustment."  Id.                                                                      ___            at 913 (quoting  United States  v. Sklar, 920  F.2d 107,  110                             _____________     _____            (1st Cir. 1990)) (emphasis added in Williams).                                                ________                                         -15-            A  short  time  later,  the  district court  engaged  in  the            following colloquy with the Government:                      MR. STIMSON:   You have to  live with the                      guidelines, your Honor.                      THE COURT:  I understand you have to look                      at the  guidelines,  but I'll  tell  you,                      when  you  start  getting  into  relevant                      conduct  that is  not charged,  that goes                      against  my sense  of  justice.   I don't                      mind  sentencing  somebody  on  something                      that he's been charged with.  When you're                      trying   to   get   [$]800,000  more   on                      something he's not charged with, there is                      something that is unjust about it. . . .                      MR.   STIMSON:       Your   Honor,    the                      government's position is  based upon  the                      total amount of each loan.                           Now, we can put[] aside for a moment                      the issue  of whether we're  talking just                      about  the loans  that were  described in                      the indictment or about the other loans.                      THE  COURT:   I  want  to  go with  those                      charged in the indictment.                      MR. STIMSON:  Okay.                      THE COURT:  Because  if you're asking for                      any more time than that, it's going to be                      tried.    I'm not  sentencing  anybody on                      time [sic] that  he's not been  tried on.                      I'm  not going  to.   So  stick with  the                      [$]900,000  as  charged or  anything else                      that  you say is  charged within the nine                      counts.                Towards the end of  the first day of the  sentencing hearing,            the district court stated the manner in which it was inclined            to calculate the net loss to the banks:                           I'll  tell you  [w]hat, have  we all                      got  the  issue, and  I  want  it on  the                      record.    [T]he  issue  is  this:    The                      $900,000 charged less  money paid back to                                         -16-                      the victim bank in whatever form prior to                      the initiation of criminal  action . .  .                      iswhat I amgoing to determineas the law.9            The  district court  further  said that  it  was "willing  to            disregard the relevant conduct."                       During the  second day  of the sentencing  hearing,            the  district court once again visited  the issue of relevant            conduct.  In  this regard, it made the following observations            and findings:                      I  can  see  that  maybe   a  significant                      portion, if not all of the charged loans,                      ha[s] been  paid.  However, we  have this                      concept of related conduct.  It's obvious                      that,   although   he's  paid   off  over                      $900,000 and maybe close to [$1,200,000],                      he hasn't paid off all the related loans.                      So   if  I   do  not   take  those   into                      consideration, then you may have a short-                      lived victory, because the upper [c]ourt,                                            ____________________            9.  The  parties  dispute  whether  the  last  word  of  this            statement was "law" or "loss."  On June 3,  1994, counsel for            Bennett filed  an affidavit  of Patricia A.  Casey-Price, the            official  court  reporter  at Bennett's  sentencing  hearing.            Attached  to   the  affidavit  were  revised   pages  of  the            sentencing hearing transcript, indicating that the court  had            said "loss" not "law."  Subsequent to oral argument, however,            the Government submitted a supplemental affidavit of Patricia            A. Casey-Price, dated June  9, 1994.  In it  she said, "Based            upon a careful review of my  stenographic notes, . . . I have            concluded that . . .  I in fact recorded the word  `law,' not            the word `loss.'"                 The  parties did  not follow  the correct  procedure for            correcting the record. See Fed. R. App.  P. 10(e) (describing                                   ___            the   correct  procedure  for  correcting  or  modifying  the            record).  But the  difference between "law" and "loss"  is of            little consequence.  In either  event, the district court was            setting forth the legal framework in which it was inclined to            calculate the net loss.                                             -17-                      I  am absolutely confident, [is] going to                      require   them   to    be   taken    into                      consideration.                                         ***                           On  the  other hand,  there  is some                      relevant  conduct  resulting in  debts in                      excess  of  $900,000,  which   under  the                      current interpretation  of the guidelines                      has to be considered.                           When the  so-called relevant conduct                      is  considered,  that   is  matters   not                      charged, there  is a  debt  owing.   It's                      very  difficult  to  determine what  that                      precise  amount is, but it's my judgment,                      based  on all the  evidence in  the case,                      that  it's  somewhere between  [$100,000]                      and $200,000.                           So  I'm in  a  position,  were I  to                      sentence strictly with respect to charged                      conduct,  the  loss   I  would  find   is                      nothing.  If I am  to sentence him on the                      basis  of  charged  conduct  and  related                      activity, the loss is  between [$100,000]                      and $200,000.            Notwithstanding   its  conclusion  that  there  was  relevant            conduct and that the  net loss to the banks,  if the relevant            conduct were  considered, was between $100,000  and $200,000,            the district court sentenced Bennett only on the basis of the            loans  for which  he was charged,  finding a net  loss to the            banks of $0.  It explained:                           Here is  what I'm going  to have  to                      do, have it set up for a new trial.                           In  some  types  of  cases  relevant                      conduct is appropriate.   Loss under  the                      cases  is  not  just  mathematical,  it's                      intended loss.    My judgment,  based  on                      hearing  this case,  and  the  amount  of                      money  that's  been  paid  back  by  this                      defendant,  [is] that  it was  always his                      intention  to  [re]pay the  money.   That                                                           ____                      being so, there  is no  evidence in  this                      _________________________________________                                         -18-                      record,  in  the  trial  or  in  anything                      _________________________________________                      that's   happened   subsequent   thereto,                      _________________________________________                      that's going to allow me,  in determining                      _________________________________________                      the  [e]lusive  concept  of  cause,10                                                             to                      _________________________________________                      take into consideration loans  which were                      _________________________________________                      not subject to any criminal charge[;] nor                      _________________________________________                      has anyone said  that they were  false in                      _________________________________________                      any way.                      _______                           So the first decision I'm  making is                      that  I'm  concerned with  loss resulting                      from criminal conduct, because that's all                      that's really relevant to  the sentencing                      of this individual.   That being so, it's                      obvious  that what  was  charged in  this                      case  as  criminal conduct  was $900,000,                      and that all of  it, every cent, was paid                      off  prior  to   the  initiation  of  any                      criminal proceeding.              (emphasis and footnote added).                      In  light of  the court's  comments, we  see little            merit in Bennett's insistence  that the district court found,            as a matter of fact, that the Government did not establish by            a  preponderance of  the  evidence that  the uncharged  loans            amounted to relevant conduct.  Rather the court's message was                                            ____________________            10.  The  parties  dispute  whether  Judge   Harrington  said            "cause"  or "loss."    On  June  3,  1994,  counsel  for  the            defendant submitted the affidavit of Patricia A. Casey-Price,            the  court stenographer,  in which  she indicated  that Judge            Harrington  had said  "loss."   However, in  a June  9, 1994,            supplemental affidavit, filed by  the Government, Ms.  Casey-            Price said,  "[After] listening to the  magnetic audiotape of            the May 19,  1993[,] proceedings, I  have confirmed that,  on            May 19, 1993, Judge Harrington in fact used the word `cause,'            not the word `loss.'"                 As  we described, see supra note 9, the parties have not                                   ___ _____            followed the proper procedure for  correcting the transcript.            See Fed.  R. App. P. 10(e).  In  any event, we see nothing to            ___            be gained by asking the district court to clarify the record.            Our decision  is not  influenced by whether  Judge Harrington            said "cause" or "loss."                                         -19-            that, no matter what the evidence, it was not  going to "take            into  consideration  loans  which  were not  subject  to  any            criminal  charge[s]."     Any  possible  doubt   as  to  this            interpretation is  removed by the court's  finding that there            was relevant conduct, which, if considered, would result in a            net  loss to  the  banks of  between  $100,000 and  $200,000.            Because  the court  thought  it unfair  to consider  relevant            conduct here, it sentenced  Bennett only on the basis  of the            loans for which he was charged and convicted, concluding that            the net loss to the banks from these was $0, and disregarding            the losses on other loans.                        A  sentencing   court  may  not,   however,  simply            disregard relevant conduct.  E.g., United States v. Restrepo,                                         ____  _____________    ________            946  F.2d 654,  655  (9th Cir.  1991) (accepting  defendant's            argument that the  Sentencing Guidelines severely reduce  the            district court's sentencing discretion and require  the court            to consider the sentencing effect of uncharged crimes), cert.                                                                    _____            denied,     U.S.    , 112  S.  Ct. 1564,  118 L.  Ed. 2d  211            ______            (1992); Lauren Greenwald, Relevant  Conduct and the Impact of                                      ___________________________________            the  Preponderance  Standard  of   Proof  Under  the  Federal            _____________________________________________________________            Sentencing Guidelines:  A Denial  of Due  Process, 18  Vt. L.            _________________________________________________            Rev. 529, 530 (1994) ("The guidelines altered the effect that            these aggravating  factors had on sentencing  by changing the            judge's consideration of  relevant conduct from discretionary            to mandatory."); see  United States v. Schaper, 903 F.2d 891,                             ___  _____________    _______                                         -20-            897-98 (2d Cir. 1990) (finding error  in the district court's            refusal  to  consider  amounts  of narcotics  that  were  not            charged   in  the   indictment   because  "[t]he   Sentencing            Guidelines clearly provide . . . that a sentencing court must            consider   a  defendant's  involvement   with  quantities  of            narcotics not charged in the count(s) of conviction when such            conduct was undertaken in  the same course of conduct  as the            offense of conviction").  Accordingly, we vacate the sentence            and remand for resentencing.   On remand, the district  court            shall include in  the loss calculation  the dollar amount  of            any and all uncharged loans that constitute relevant conduct.                 2.   Deductions from the Loss                              ________________________                      In calculating the loss  to the banks, the district            court credited Bennett with,  inter alia, the estimated value                                          __________            of his February 1, 1991, settlement of the civil suit brought            against  him by  Plymouth Federal  and Daniel  Webster.   The            Government assigns error, citing, U.S.S.G.   2F1.1,  comment.            (n.7(b)) (Nov. 1, 1993):11                       In fraudulent loan application  cases and                      contract procurement cases,  the loss  is                                            ____________________            11.  Application Note 7(b), in  its present form, took effect            on November  1, 1992.   Hence, it was  not in  the Guidelines            Manual used  by  the district  court.   Nevertheless,  it  is            appropriate  to consider  Note 7(b)  because it  represents a            clarification, not a  substantive change,  of the  Sentencing            Guidelines.   See  U.S.S.G. App.  C, amend.  470; U.S.S.G.                             ___            1B1.11(b)(2) ("[I]f a court applies an earlier edition of the            Guidelines  Manual,  the   court  shall  consider  subsequent            amendments, to the extent that such amendments are clarifying            rather than substantive changes.").                                          -21-                      the actual loss to  the victim (or if the                          __________________________                      loss has not yet come about, the expected                      loss).    For  example,  if  a  defendant                                _______________________________                      fraudulently    obtains    a   loan    by                      _________________________________________                      misrepresenting the value of  his assets,                      _________________________________________                      the loss  is the  amount of the  loan not                      _________________________________________                      repaid  at  the   time  the  offense   is                      _________________________________________                      discovered,  reduced  by  the amount  the                      _________________________________________                      lending institution has recovered (or can                      _________________________________________                      expect  to  recover)   from  any   assets                      _________________________________________                      pledged  to secure  the  loan.   However,                      _____________________________                      where  the intended loss  is greater than                      the actual loss, the  intended loss is to                      be used.            (emphasis added).  The Government contends that, in light  of            Note 7(b), the district court, in calculating the actual loss            to the  banks, could not  credit Bennett with  amounts repaid            after  May  3, 1990,  the  date his  offense  was discovered.            Bennett counters that the district court  properly considered            the  amount of his settlement    which came ten months before            he was indicted     in  calculating the  banks' actual  loss.            Bennett cites United  States v. Gallegos, 975 F.2d  712 (10th                          ______________    ________            Cir. 1992), in which the Tenth Circuit said that a settlement            agreement entered  into between the defendant  and the victim            bank  after the offense was discovered could "be viewed as an            offset."  Id. at 712-13.                      ___                      Notwithstanding   the  Tenth   Circuit's  decision,            Application  Note 7(b) is  binding on the  federal courts.12             Stinson v. United States,    U.S.   ,  113 S. Ct. 1913, 1915,            _______    _____________            123 L. Ed.  2d 598  (1993) ("[C]ommentary  in the  Guidelines                                            ____________________            12.  The Tenth  Circuit cited Application Note  7(b), but did            not discuss it.                                         -22-            Manual   that   interprets  or   explains   a   guideline  is            authoritative  unless  it  violates  the  Constitution  or  a            federal  statute,  or  is  inconsistent with,  or  a  plainly            erroneous reading  of, that guideline.").   The parties agree            that  Application  Note  7(b)  applies  to  "fraudulent  loan            application  cases and  contract  procurement cases  . . . ."            Note 7(b) instructs how to calculate the actual loss in cases            where   "a   defendant  fraudulently   obtains   a   loan  by            misrepresenting  the value  of  his assets."   Here,  Bennett            fraudulently obtained line-of-credit advances by, among other            things, misrepresenting the existence    and, a fortiori, the                                                          _ ________            value    of residential mortgages.  Accordingly, as Note 7(b)            goes on  to describe, "[T]he loss  is the amount  of the loan            not  repaid at the time the offense is discovered, reduced by            the  amount the  lending  institution has  recovered (or  can            expect  to recover)  from any  assets pledged  to  secure the            loan."  Because  the parties  agree that the  full extent  of            Bennett's  borrowing   activity  (i.e.,  his   offenses)  was                                              ____            discovered on May 3, 1990, the district court erred in giving            Bennett  credit for payments made after that date.  It should            have  calculated the  "actual loss"  to the  victim banks  as            follows:                      1.    The  amount  of  the illegal  loans                      (i.e.,  those  for   which  Bennett   was                       ____                      convicted),                                          plus                                         -23-                      2.  the amount of  the loans constituting                      relevant conduct,                                          less                      3.   the amount of  the loans in  1 and 2                      that  Bennett  had repaid  as  of May  3,                      1990,                                         less                      4.   the  amount  the victim  banks  have                      recovered (or can expect to recover) from                      any assets pledged to secure the loans in                      1 and 2.            This is the framework adopted by other courts of appeals that            have construed Application Note 7(b).  E.g., United States v.                                                   ____  _____________            Jindra, 7 F.3d  113, 114  (8th Cir. 1993)  (holding that,  in            ______            light  of Application Note 7(b),  the loss was  the amount of            the loans outstanding when the offense was discovered because            the defendant  did not  pledge assets  to secure  the loans),            cert. denied,     U.S.   , 114 S.  Ct. 888, 127 L.  Ed. 2d 82            ____________            (1994);  United States v. Menichino,  989 F.2d 438, 441 (11th                     _____________    _________            Cir.  1993)   ("[I]n  a  loan   application  case   involving            misrepresentation of  assets, the loss  is the amount  of the            loan  not  repaid  at the  time  the  offense is  discovered,            reduced  by   the  amount  the  lender   could  recover  from            collateral.").             B.   Downward Adjustment for Acceptance of Responsibility                 ____________________________________________________                      The Government  contends  that the  district  court            erred in granting Bennett  a two-level downward adjustment in            his offense level  pursuant to U.S.S.G.   3E1.1 because there                                         -24-            is  nothing  in the  record  to support  its  conclusion that            Bennett  accepted responsibility for  his criminal conduct.13            It insists that, from the time Bennett's crime was discovered            and  through his  sentencing hearing, Bennett  never conceded            that he had engaged in bank fraud or expressed any remorse or            contrition  for his  conduct.    Furthermore, the  Government            submits that  Bennett's settlement with Plymouth  Federal and            Daniel Webster was not  a "voluntary payment of restitution,"                                       _________            U.S.S.G.   3E1.1, comment.  (n.1(c)) (Nov. 1, 1993) (emphasis            added), that  would entitle Bennett to  a downward adjustment            in his  offense level.   Bennett responds  that the  district            court's decision  was justified  by his settlement  offer and                                            ____________________            13.  Apparently, the  district court adopted  the presentence            report's recommendation  when it awarded  Bennett a two-point            reduction for acceptance of  responsibility.  That report, as            amended on November 1, 1992, said, inter alia:                                               __________                      On 2/1/91, prior to  Bennett's indictment                      on the instant offense, he entered into a                      settlement  agreement  with the  Plymouth                      Federal Savings Bank  in which a  portion                      of restitution was paid by the defendant.                      The payment of restitution  suggests that                      the defendant has accepted responsibility                      for his  actions.  Per [U.S.S.G.   3E1.1,                      comment.  (n.1(c))  (Nov.  1, 1993)],  in                      determining whether a defendant qualifies                      for  the   acceptance  of  responsibility                      reduction,   appropriate   considerations                      include voluntary  payment of restitution                      prior    to   adjudication    of   guilt.                      Considering the fact that restitution was                      paid  prior to the  guilty verdict in the                      instant matter, Bennett will be granted a                      two-level  reduction  for  acceptance  of                      responsibility.                                         -25-            eventual settlement with Plymouth Federal  and Daniel Webster            prior to  conviction, and by his  demonstration of contrition            and remorse at the sentencing hearing.  We cannot agree.                      Although  a  district  court's  conclusion  that  a            defendant has accepted responsibility  "is entitled to  great            deference  on review[,]"  U.S.S.G.     3E1.1, comment.  (n.5)            (Nov. 1, 1993); e.g., United States v. Royer, 895 F.2d 28, 29                            ____  _____________    _____            (1st Cir. 1990)  (describing "clearly erroneous" standard  of            review), there  must be some articulable  basis or foundation            for it, e.g., United  States v. Amos, 952 F.2d  992, 995 (8th                    ____  ______________    ____            Cir. 1991), cert. denied,    U.S.   , 112 S. Ct. 1774, 118 L.                        ____________            Ed. 2d  432 (1992).  We  find no such basis  for the district            court's decision.                      To begin with, U.S.S.G.   3E1.1 "is not intended to            apply to a defendant who puts the government to its burden of            proof  at trial by denying  the essential factual elements of            guilt, is convicted, and only then admits guilt and expresses            remorse."14    U.S.S.G.     3E1.1, comment.  (n.2)  (Nov.  1,                                            ____________________            14.  This version  of Application Note 2  became effective on            November 1, 1990.  Hence, it was not included in the November            1,  1988,  Guidelines  Manual  used by  the  district  court.            Application Note 2 in that manual read:                      Conviction  by trial does  not preclude a                      defendant  from consideration  under this                      section.    A   defendant  may   manifest                      sincere contrition even  if he  exercises                      his  constitutional  right  to  a  trial.                      This  may  occur,  for example,  where  a                      defendant goes  to  trial to  assert  and                      preserve  issues  that do  not  relate to                                         -26-            1993) (footnote not in original).  Bennett pleaded not guilty            to all nine counts and denied "the essential factual elements            of  [his] guilt."   During  his opening  statement, Bennett's            counsel asserted and suggested,  among other things, that (1)            there  was  nothing "out  of  the  ordinary" about  Bennett's            loans, (2) the lending banks were adequately secured, (3) the            slumping real  estate market,  not Bennett's  conduct, caused            Plymouth  Federal's losses,  and  (4) Bennett  never had  any            intent to  defraud the  banks.  Bennett's  counsel reiterated            this  last point at the very end of his closing argument when            he said, "And  I suggest no intent to defraud  has been shown            beyond a reasonable doubt on this evidence."                      After he  was convicted, Bennett apologized  to his            family and said that he accepted the verdict, but steadfastly            maintained  that he had never intended  to defraud the banks.            At  the close  of the  sentencing hearing,  Bennett  told the            district court:                           I just want to say . . . how sorry I                      am  to  have been  the  force  behind the                      series of events that  led to this  trial                      in  February,  to the  sentencing hearing                                            ____________________                      factual   guilt   (e.g.,   to    make   a                                         ____                      constitutional challenge to a  statute or                      a challenge  to  the applicability  of  a                      statute to his conduct).            See U.S.S.G. App. C, amend. 351.   As we described, see supra            ___                                                 ___ _____            note  11,   it  is   appropriate  to  consider   the  current            Application  Note  2  because it  constitutes  a  clarifying,            rather  than   a  substantive,   change.    See   U.S.S.G.                                                           ___            1B1.11(b)(2).                                         -27-                      here in a criminal case.  That I've put a                      terrible  burden   on  my  wife   and  my                      children  and my  mother and  sisters and                      the rest  of my family who  has supported                      me through it.  I never intended to . . .                                      _________________________                      defraud anybody.    I never  intended  to                      _______________                      harm anybody.                           I'm not here to fight the verdict, I                           ____________________________________                      accept   the  verdict.     I  had  simply                      _____________________                      intended to  try  to build  a  couple  of                      houses, and at a time when it looked like                      a good thing to  do[  ]one to live in and                      one  to sell  to  make  it an  affordable                      project.    And   when  I,  after  having                      discussed with the bank over  a period of                      six months for construction financing for                      that project, and eventually being turned                      down, or at least they failed to make the                      loan to  me, I responded poorly  to it in                      the way that I financed it.            (emphasis  added).   Even  assuming  the above  was  meant to            express  remorse or contrition,  Application Note 2 expressly            says that  U.S.S.G.    3E1.1 is  not intended  to apply to  a                                             ___            defendant who challenges essential factual elements of guilt,            is  convicted,  and  only  then admits  guilt  and  expresses                                 __________            remorse.                      This  is  not  to say  that  by  going  to trial  a            defendant necessarily loses  his opportunity  for a  downward            adjustment  under U.S.S.G.   3E1.1.   Application Note 2 goes            on to state:                      Conviction  by  trial  .  .  .  does  not                      automatically  preclude a  defendant from                      consideration for  such a reduction.   In                      rare situations a  defendant may  clearly                      _________________________________________                      demonstrate     an     acceptance      of                      _________________________________________                      responsibility  for his  criminal conduct                      _________________________________________                      even    though     he    exercises    his                      constitutional  right to  a trial.   This                      may occur, for example, where a defendant                                         -28-                      goes  to trial  to  assert  and  preserve                      issues  that  do  not relate  to  factual                      guilt  (e.g.,  to  make a  constitutional                              ____                      challenge to a statute  or a challenge to                      the  applicability of  a  statute to  his                      conduct).      In  each   such  instance,                      however, a determination that a defendant                      has accepted responsibility will be based                      primarily  upon pre-trial  statements and                      conduct.             U.S.S.G.     3E1.1, comment.  (n.2)  (emphasis  added).   The            downward  adjustment this  commentary allows is  reserved for            "rare situations"  where a defendant who  exercises his right            to  trial   may  "clearly   demonstrate"  an   acceptance  of            responsibility for his criminal conduct.  An example  of such            a situation, described in Application Note 2, occurs "where a            defendant goes to trial to assert and preserve issues that do            not relate to factual  guilt."  This case does not fit within            that  example.    Bennett,  it  is true,  made  the  somewhat            unattractive legal  argument that  18 U.S.C.    1344 did  not            apply  to his conduct as any fraud allegedly committed by him            was a  fraud upon the Daniel Webster  Mortgage Company, which            was  not a financial institution  under the statute.   But he            denied his factual guilt also.  At closing, Bennett's counsel            argued:                           Now the key position of  the defense                      in this case is that the vital element of                      these charges, that the defendant must be                      proved   to   have  intentionally,   with                      criminal  specific  intent, attempted  or                      intended  to defraud  the banks.   That's                      the key that I'm  going to suggest to you                      by  a  review  of  the  evidence  and  in                      particular   several  of   the  exhibits,                                         -29-                      that's the key  where the government  has                      failed   and    that   consequently   the                      defendant is entitled to an acquittal.                      There are other "rare situations," not described in            Note 2, in  which courts have  allowed a downward  adjustment            even  though a defendant puts the Government to its burden of            proof  at trial by denying the  essential factual elements of            his guilt.   E.g., United  States v. McKinney,  15 F.3d  849,                         ____  ______________    ________            852-855  (9th  Cir.  1994)  (holding  "that,  in  appropriate            circumstances[,] the reduction is  also available in cases in            which the defendant manifests genuine contrition for his acts            but  nonetheless  contests his  factual  guilt at  trial[]").            Where a  defendant exercises his  right to trial,  however, a            determination that he has  clearly demonstrated acceptance of            responsibility  for  his  criminal  conduct  "will  be  based            primarily upon pre-trial statements and  conduct." U.S.S.G.              3E1.1, comment. (n.2).  The issue then is whether Bennett, by            settling the  lawsuit brought by Plymouth  Federal and Daniel            Webster  before trial,  clearly showed  that he  had accepted            responsibility for his illegal activities.  We think not.                      Settling  a  pending lawsuit  scarcely demonstrates            contrition.  Nor does it indicate a "willingness to adhere to            political society's laws."   United States  v. Bean, 18  F.3d                                         _____________     ____            1367, 1369 (7th  Cir. 1994).   In Bean,  the defendant,  Bill                                              ____            Gene Bean, kited checks, totaling $75,000, "to cover  a cash-            flow shortage in his recycling business."  Id. at 1368.  Bean                                                       ___                                         -30-            was charged with  committing bank  fraud in  violation of  18            U.S.C.   1344.  Over a period of two years before trial, Bean            repaid the $75,000.   He then went to trial,  denying that he            had intended  to defraud a bank, and  was convicted by a jury            as  charged.   In  these circumstances,  the Seventh  Circuit            observed:                      The Sentencing Guidelines permit  a judge                      to  reduce  the  sentence  for  repayment                      whether  or  not  the   defendant  pleads                      guilty to the  charge.  Application  Note                      1(c) to    3E1.1 lists "voluntary payment                      of restitution prior  to adjudication  of                      guilt"  as  an independent  reason  for a                      two-level    acceptance-of-responsibility                      reduction.   Bean repaid  the bank before                      the  adjudication  of   guilt,  and   the                      district court therefore was  entitled to                      award  a  reduction  for   acceptance  of                      responsibility  even  though Bean  denied                      guilt.            Bean,  18 F.2d at 1368.            ____                      Unlike Bean,  Bennett paid restitution here as part            of the  settlement of a civil  lawsuit.15  We agree  with the            Government that  Bennett's payment  by way of  settlement was            not a "voluntary payment of restitution prior to adjudication                   _________            of   guilt,"  U.S.S.G.      3E1.1,  comment.  (n.1(c)),  that                                            ____________________            15.  Bennett  indicates that  a settlement  offer he  made to            Daniel Webster and Plymouth Federal in May  1990, before they            filed their civil suit, was rejected.  Even if we accept this            assertion  at  face  value,  for purposes  of  acceptance  of            responsibility under the Sentencing  Guidelines, an offer  to            pay restitution is not the  same as actually paying it.   See                                                                      ___            U.S.S.G.      3E1.1,   comment.  (n.1(c))   (Nov.  1,   1993)            ("voluntary payment  of restitution prior  to adjudication of                        _______            guilt").                                         -31-            justifies  a  reduction  for  acceptance  of  responsibility.            Under  U.S.S.G.    3E1.1,  the downward  adjustment "must  be            consistent  with  the  attitude  the  Commission  took toward            restitution,  which is  that restitution  is relevant  to the            extent it shows acceptance of responsibility."  United States                                                            _____________            v. Miller, 991 F.2d  552, 553 (9th Cir. 1993).   Accordingly,               ______            "the  payment [must]  have been  genuinely voluntary,  rather             ____________________________________________________________            than motivated primarily  by a collateral consideration  such            _____________________________________________________________            as  a desire  to settle  the civil  lawsuit [brought]  by the            _____________________________________________________________            bank[s]."  Id. (emphasis added).            _______    ___                      We hold that the district court's decision to grant            Bennett   a    two-level   reduction   for    acceptance   of            responsibility was clearly erroneous16.            C.   Use of the November 1, 1988, Guidelines Manual                   ______________________________________________                                            ____________________            16.  Having   stressed   that   post-trial    acceptance   of            responsibility is  the exception  and must normally  be borne            out by  pre-trial actions, we  nevertheless do not  intend to            establish any  blanket rule; the guideline's  own application            note  leaves open the possibility  of exceptions.   But we do            think  that unless  some obvious  basis is apparent  from the            record,  it may be difficult  to uphold a  reduction in cases            where  the  defendant  went to  trial,  asserted  his or  her            innocence, and  has nothing substantial  in the  way of  pre-            trial conduct to show earlier acceptance of responsibility --            unless the district court is able to point to some persuasive            ______            reason for  this determination.   Thus, even where  there may            ordinarily  be  no special  requirement  for  a statement  of            reasons  in making  sentence determinations, cases  like this            one  may present  situations in  which an explanation  by the            district  court  is  as   a  practical  matter  essential  to            establish that the guideline's rather stringent standards for            post-trial conversions have been satisfied.                                         -32-                      Effective  November  1,  1989,  the loss  table  in            U.S.S.G.    2F1.1(b)(1) was amended.  Among other things, the            amendment "increase[d]  the offense levels  for offenses with            larger losses  to provide  additional  deterrence and  better            reflect the  seriousness of the  conduct."  U.S.S.G.  App. C,            amend.  154.    All   of  the  line-of-credit  advances  that            corresponded with the nine counts of conviction were obtained            prior to the November  1, 1989, amendment to the  loss table.            Consequently, when  Bennett was sentenced in  May 1993, there            was  an  issue  as  to  whether  using  the  version  of  the            Guidelines Manual then in effect (i.e., the November 1, 1992,                                              ____            edition)    which included  the amended loss table      would            violate  the  Ex  Post  Facto  Clause  of  the  United States            Constitution.   U.S. Const. art.  I,    9, cl. 3;  see United                                                               ___ ______            States  v. Havener,  905 F.2d  3, 5  (1st Cir.  1990) ("[T]he            ______     _______            Constitution's  [E]x  [P]ost  [F]acto  [C]lause  forbids  the            application of any law or  rule that increases punishment  to                                                 _________            preexisting criminal conduct." (emphasis in original)).  With            this  concern  in  mind,  the  district  court,  pursuant  to            U.S.S.G.       1B1.1117   and   the    presentence   report's                                            ____________________            17.  U.S.S.G.    1B1.11  (Nov.  1, 1993)  states in  relevant            part:                      (a)  The court shall  use the  Guidelines                           Manual  in effect  on the  date that                           the defendant is sentenced.                      (b)  (1)  If  the  court determines  that                                use of the Guidelines Manual in                                         -33-            recommendation, employed the November 1, 1988, version of the            Guidelines Manual.                      The  Government complains  of  this decision.    It            contends that  using the November 1,  1992, Guidelines Manual            would not violate the Ex Post Facto Clause.  According to the            Government, where a defendant engages in a series of offenses            comprising separate  executions of  a single scheme  or plan,            and  that scheme  "straddles" the  old law  and the  new law,            applying  the new law does not violate the Constitution.  The            Government  maintains that  each of  the nine  counts against            Bennett  was  a separate  execution  of  a  common scheme  to            defraud the  banks.   It points  out that  certain activities            ancillary to  one of the fraudulently  induced loans, namely,            the  loan of  May  12, 1989,  charged  in Count  7,  actually            occurred as late as April 1990.   At this time, in an attempt            to  conceal his borrowing  activities, Bennett  provided FDIC            examiners  and Plymouth  Federal  employees with  a  doctored            mortgage  and assignment  that bore forged  recording stamps.            Because of that  conduct, the Government  would have us  view            the  entire  scheme to  defraud,  as  reflected  in all  nine                                            ____________________                                effect  on  the  date that  the                                defendant  is  sentenced  would                                violate   the  ex   post  facto                                               __   ____  _____                                clause  of  the  United  States                                Constitution,  the court  shall                                use  the  Guidelines Manual  in                                effect  on  the  date that  the                                offense   of   conviction   was                                committed.                                         -34-            counts,  as continuing  until  at least  April 1990,  several            months  after the  November 1,  1989,  amendment to  the loss            table.  We are not persuaded.                        In  rejecting the  Government's  argument,  we  are            guided by U.S.S.G.    1B1.11, comment. (n.2)  (Nov. 1, 1993),            which states:                      Under subsection (b)(1), the last date of                      the   offense   of   conviction  is   the                      controlling  date  for   ex  post   facto                                               __  ____   _____                      purposes.  For example, if the offense of                      conviction (i.e., the conduct  charged in                                  ____                      the   count   of   the    indictment   or                      information  of  which the  defendant was                      convicted) was determined by the court to                      have been committed  between October  15,                      1991[,] and October 28, 1991, the date of                      October  28,  1991[,] is  the controlling                      date for ex post facto purposes.  This is                               __ ____ _____            _______                      true  even  if  the  defendant's  conduct                      _________________________________________                      relevant  to  the  determination  of  the                      _________________________________________                      guideline range under    1B1.3  (Relevant                      _________________________________________                      Conduct) included an act that occurred on                      _________________________________________                      November   2,   1991  (after   a  revised                      _________________________________________                      Guideline[s] Manual took effect).                      ________________________________            (emphasis added).   This  Application Note  requires district            courts  to  determine  the  last  date  of  the  offense   of            conviction.   In so doing, they  must necessarily distinguish            "the conduct charged in the count  of the indictment . . . of            which  the defendant  was  convicted" from  relevant conduct,            which is immaterial for ex post facto  purposes, see U.S.S.G.                                    __ ____ _____            ___              1B1.11, comment. (n.2).                        The  probation officer who prepared the presentence            report  found that  "the counts  of conviction  terminated on            10/2/89."   She further  concluded that Bennett's  April 1990                                         -35-            acts  of concealment,  while relevant  conduct, were  not the            conduct  charged in Count  7 of which  Bennett was convicted.            The district court adopted these findings, which we think are            sound.                      The indictment  charged Bennett with nine counts of            bank fraud in  violation of  18 U.S.C.    1344.   Each  count            corresponded with  a different line-of-credit advance     the            first on August 11,  1988, and the last  on October 2,  1989.            The allegations in Count  7, which corresponded with the  May            12,  1989,  loan, were  virtually identical  to those  of the            other counts.   The only difference was that Count  7 did not            allege  that  Bennett had  made  false  statements about  the            identity  of the  borrower,18  and it  included a  paragraph,            not found in the other counts, which stated:                      Created and caused to be created forms of                      mortgage and assignment  of mortgage  for                      Loan  G,  which documents  indicated that                      they  had  been   duly  recorded  in  the                      Registry  of  Deeds  for  the  County  of                      Plymouth,  when in fact, as the defendant                      then  well knew,  such documents  had not                      been recorded; and  the defendant  placed                      and caused  to be  placed such false  and                      fraudulent documents in  the lender  loan                      file for Loan G, where such documents had                      the   capacity   to  influence   Plymouth                      [Federal].            The Government  argues that  the above conduct,  occurring in            April  1990,  lengthens  the  last date  of  the  offense  of                                            ____________________            18.  The loan  that corresponded  with Count 7  differed from            the other  charged loans in that it was the only one in which            Bennett used his real name.  See chart, supra.                                         ___        _____                                         -36-            conviction until then.   Our  problem with  this argument  is            that the Government  itself, in the prefatory section  of the            indictment,  alleged  merely  that defendant's  obtaining  of            illegal loans  extended from August 1988  until October 1989.            In determining "the  last date of the  offense of conviction"            for  ex post facto purposes  and the Application  Note, it is                 _____________            only reasonable  to hold  the Government  to its own  alleged            dates.  Count 7 alleged that Bennett  knowingly executed, and            knowingly  attempted to  execute,  a scheme  and artifice  to            defraud Plymouth  Federal "in connection with  a loan granted            on or about May 12, 1989."  This was the focus of the illegal                        ____________            activity charged in Count 7.   While the deceptive activities            in  April 1990  were  unquestionably related  to the  charged            fraud, and fit well into the definition of "relevant conduct"            set out in U.S.S.G.   1B1.3, the date of relevant  conduct is            not  controlling for ex post  facto purposes.   We accept the                                 ______________            probation officer's  view, impliedly adopted as  a finding by            the district  court, that Bennett's April  1990 chicanery was            relevant conduct, rather than an integral part of the offense            of conviction itself, the last date of the latter having been            October  2, 1989.  We  find no error  in the district court's            decision to use the November 1, 1988, Guidelines Manual.                      In this regard, the Government's reliance on United                                                                   ______            States v. Regan, 989  F.2d 44 (1st Cir. 1993),  is misplaced.            ______    _____            There,  the defendant  was charged  with having  committed 55                                         -37-            counts  of  embezzlement  in violation  of  18  U.S.C.    656            (1988).  The conduct in the indictment of which the defendant            was convicted was expressly alleged to have run from November            1987  to  July  16,  1991.    Thus,  some  of  the   acts  of            embezzlement  charged in  the indictment  occurred  after the            November 1,  1989, amendment to  the relevant  loss table  in            U.S.S.G.   2B1.1(b)(1).   Here, by contrast, the last alleged            date  of the  offense of  conviction was  October 2,  1989               prior to the November 1, 1989, amendment to the loss table in            U.S.S.G.   2F1.1(b)(1).                                           III.                      Because  the  district court  improperly calculated            the loss  to the  banks,  and erroneously  granted Bennett  a            downward adjustment  in his  offense level for  acceptance of            responsibility,  we vacate  the  district court's  sentencing            decision and  remand  for resentencing  consistent with  this            opinion.  The district court's  decision to use the  November            1, 1988, Guidelines Manual is affirmed.                      So ordered.                      __________                                         -38-
