
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 96-1969                              UNITED STATES OF AMERICA,                                      Appellant,                                          v.                                  JOHN A. BRENNICK,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. Nancy J. Gertner, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                                Boudin, Circuit Judge,                                        _____________                       Godbold and Cyr, Senior Circuit Judges.                                        _____________________                                 ____________________            Stephen  G.  Huggard, Special  Assistant  United States  Attorney,            ____________________        with whom  Donald K. Stern, United  States Attorney, was on  brief for                   _______________        the United States.            Scott  P. Lopez,  by appointment  of the  court, with  whom  Terry            _______________                                              _____        Philip Segal and Burns & Levinson LLP were on brief for appellee.        ____________     ____________________                                 ____________________                                   January 20, 1998                                 ____________________                 BOUDIN, Circuit Judge.   John Brennick was  convicted of                         _____________            various offenses centered  around his failure to  pay over to            the Treasury income  and social security taxes  withheld from            his  employees' paychecks.  The district court calculated the            range of imprisonment  fixed by the sentencing  guidelines at            41  to 51  months but  then departed  downward and  imposed a            sentence  of 13  months' imprisonment.    The government  now            appeals, arguing that the downward departure was error.                                          I.                 John Brennick was the president and sole proprietor of a            number  of head  injury  treatment centers  in Massachusetts,            Pennsylvania,  Delaware and Maryland.   He also  operated one            head trauma  center in New  Jersey as a  limited partnership,            Brennick  being the  general  partner.   Some of  the centers            provided sophisticated  medical treatment;  others appear  to            have been supported living centers for head injured patients.            Taken as a  whole, the companies were a  large and successful            business venture.                 Employers  like Brennick are required to withhold income            taxes and social security taxes  from employee paychecks on a            periodic basis and to pay those amounts over to the Treasury.            The  Internal Revenue Service specifies the periods for which            such withholding is required.  Employers are required  by law            to deposit the  withheld taxes into the Treasury within three            days after  the end  of each such  period.   Regular returns,                                         -2-                                         -2-            specifying  the  amounts  withheld and  paid  over,  are also            required on a quarterly basis.                 From 1986 to  1992, Brennick followed a  regular pattern            of withholding the taxes from his employees' pay but delaying            payment of  the monies into  the Treasury  for a  substantial            period beyond  the time  due.  Normally  his payments  to the            government were  between  two and  six months  after the  due            dates.     Brennick   routinely   filed  returns   accurately            describing  the amounts withheld, and when he ultimately made            the  delayed  payments to  the  Treasury,  he  also paid  the            interest and penalties prescribed by law for late payments.                 During this period,  Brennick frequently withdrew  money            from his businesses by means that avoided bank reports to the            IRS  that are  required  when a  person  withdraws more  than            $10,000  from an  individual bank  on a  single  banking day.            Brennick told various of his employees and  family members to            cash checks drawn on Brennick's various business accounts and            to turn  the money over to  him.  The  individual checks were            for less than $10,000 each;  but the total withdrawn from his            company accounts was often well over $10,000 a day.                 There  is  no  claim  that  Brennick  was  forbidden  to            withdraw  the monies from  the companies' accounts;  in fact,            for most  of them  he was the  sole proprietor,  and for  the            remaining one he  was the general partner.   The charge later            brought  against him was that the withdrawals were structured                                         -3-                                         -3-            to  avoid the filing  of currency transaction  reports and to            deflect the  attention of  the tax authorities.   It  is said            that Brennick took much or all the money he withdrew and lost            it in gambling:  he claims to have lost more than  $1 million            a year.                 During the  second half  of 1992, Brennick's  businesses            began to suffer  financial problems.  Changes  were occurring            in  the health  care industry  adversely affecting  providers            like Brennick.  Insurance reimbursements came more slowly and            for  lower  amounts,  while the  costs  of  providing service            increased.  In December 1992, one of  the banks that had been            lending money to Brennick failed and Brennick could not  find            another lender to replace it.                 At  the  same   time,  the  IRS  began   to  investigate            Brennick's  pattern of  chronically  late  payments.    In  a            meeting with  an  IRS agent  on  October 30,  1992,  Brennick            agreed to  a payment  plan, including  a  commitment to  keep            current on future payments.  He  promised that his businesses            would seek to expedite payments to  the IRS and would cut his            own pay and  the pay of other executives in order to pay back            taxes.  Instead,  Brennick removed another $80,000  cash from            the businesses in November 1992  and almost twice that amount            in December.                 In  addition, Brennick now began to file false quarterly            withholding tax returns for many  of the companies.   Returns                                         -4-                                         -4-            filed in  the third  and fourth quarter  of 1992  incorrectly            stated   that  Brennick  had  paid  over  to  the  government            virtually all of the withheld taxes; in truth, the  companies            in question had paid  none of the taxes over to the  IRS.  In            two cases Brennick signed the false returns himself; in other            cases they  were signed  by employees,  but Brennick was  the            person responsible for the withholding of the taxes.                 In February  1993, Brennick filed for  reorganization of            his businesses under chapter  11 of the Bankruptcy  Code, and            later  the case was transformed into a chapter 7 liquidation.            At the initial  filing, Brennick owed the  Treasury over $1.4            million in withheld taxes that  should have been, but had not            been,  paid over to  the government.   During reorganization,            Brennick  took additional  funds out  of  the businesses  for            himself while  failing to pay  over the full amount  of taxes            withheld during the same period.                 In  1995,   a  grand  jury  indicted  Brennick.    In  a            superseding indictment,  Brennick was charged  with 22 counts            of  willful failure to  account for, and  pay over quarterly,            specified withholding taxes, 26 U.S.C.   7202; nine counts of            structuring currency  transactions, 31  U.S.C.     5313, 5322            and 5324; and one count  of corruptly endeavoring to obstruct            and impede  the  IRS, 26  U.S.C.    7212(a).    There was  an            additional single  charge of  bankruptcy fraud,  18 U.S.C.               152, but the jury later deadlocked on that issue.                                         -5-                                         -5-                 In  December  1995,   Brennick  went  on  trial.     The            government,  in addition to  offering evidence of  the events            already  described,  called  several   of  Brennick's  former            employees who testified that Brennick had known the deadlines            for  paying  over  the withheld  taxes  but  had deliberately            chosen to ignore them even though his employees had sought to            get him  to  pay over  the  taxes on  a  timely basis.    The            bankruptcy  fraud count aside, the jury convicted Brennick on            all remaining counts.                 The   district  court  held   a  two-day  proceeding  to            determine Brennick's sentence and after sentencing, issued  a            memorandum and order explaining the court's analysis.  United                                                                   ______            States v.   Brennick, 949 F. Supp. 32  (D. Mass 1996).  After            ______     _________            briefly  setting out  the  background  facts, the  memorandum            calculated the normal  guideline range, referring (as  we do)            to the 1992  version of the guidelines.  Then,  at length, it            set out  the framework for departures and the court's reasons            for departing in this case.                 Brennick  was  convicted  of violating  three  different            statutes--failure to  pay over  withheld taxes,  structuring,            and  obstructing  the  IRS--but   the  conduct  was  arguably            related.  In any event, the district court chose to treat the            offenses  as closely  related  counts  to  be  grouped  under                                         -6-                                         -6-            U.S.S.G.    3D1.2,  and its  choice is  not disputed  on this            appeal.1  Where counts are  so grouped, the court selects the            offense level for the violation  among the group that had the            highest offense level.  U.S.S.G.   3D1.3(b).                 The  district court ruled that the highest offense level            was  generated by  the  offense  of  corruptly  impeding  tax            officials  under 26 U.S.C.    7212(a).   Although no specific            guideline exists for this offense (unless force is used), see                                                                      ___            U.S.S.G.,  appendix  A,  the court  is  directed  to use  the            guideline  for the  offense most  analogous  to the  criminal            conduct of  which the  defendant was  convicted.   U.S.S.G.              1B1.2.   Here, the district court concluded  that the closest            analogy for  the obstructive conduct  was the offense  of tax            evasion,  a  violation of  26  U.S.C.     7201, for  which  a            specific  tax  evasion  guideline is  set  forth,  U.S.S.G.              2T1.1.                 Although Brennick was not charged with tax evasion, this            choice of  analogy is not  challenged by either side,  and we            accept it  as reasonable  for purposes of  this appeal.   The            government's obstruction  charge embraced  all of  Brennick's            behavior  (deliberate underpayments,  structuring, and  other            acts of  falsity or  concealment) and  that conduct  includes                                            ____________________                 1The government says for the record that the structuring            counts  should  have  been grouped  separately  from  the tax            counts,  which would have  resulted in a  one-level increase.            U.S.S.G.    3D1.4.   But this  caveat was  not raised  in the            district court and is not pursued here.                                         -7-                                         -7-            withholding  revenues  from   the  government  combined  with            elements of conscious wrongdoing and personal gain.                 The base offense level for the tax evasion guideline  is            driven by  the tax loss  inflicted on the government,  and in            this case  the undisputed  level of  the government's  loss--            "more  than  $1,500,000"--corresponds  to  offense level  18.            U.S.S.G.    2T1.1(a), 2T4.1(M).  The district court added two            levels  on the ground  that Brennick had  used "sophisticated            means" to impede  discovery of  the offense,  see U.S.S.G.                                                             ___            2T1.1(b)(2), and two  more levels for obstruction  of justice            because of  untruthful testimony  by Brennick  at trial,  see                                                                      ___            U.S.S.G.   3C1.1.                   Given  a  total offense  level  of  22 (and  a  criminal            history  category I), the guideline range  for Brennick was a            term  of imprisonment of 41  to 51 months.   From this range,            the district court departed downward  to level 13, for  which            the  prescribed range  for a  defendant  in criminal  history            category  I is  12 to  18  months' imprisonment.   The  court            imposed a sentence of 13 months, as well as a fine  of $6,000            and the  statutory special  assessment, noting that  Brennick            remained personally liable  to the government for  tax losses            he had caused, 26 U.S.C.   6672.                 The court's reasons for the departure were set  forth in            some  detail but  reflect two  central themes:    first, that            Brennick's intent  was not as  wicked as that of  the typical                                         -8-                                         -8-            tax evader because, despite some conscious wrongdoing, he did            not intend permanently to deprive the government of the funds            he failed to pay over; and second, the ultimate losses to the            government were due  not merely to Brennick's  conduct but to            contributing   causes  as  well,  including  failure  of  his            business's main bank  and adverse developments in  the health            care market.                   The  government  has  now   appealed  to  challenge  the            sentence.   It  argues  that  the departure  was  based on  a            misconstruction of the  guidelines and that even if  a ground            for departure exists in theory (which the government denies),            the  district  court's  decision  to  depart  and  degree  of            departure were  unreasonable on the  present facts.   We take            the issues in that order.                                           II.                 Departures from the  guideline range  are allowed  where            "the   court  finds  that  there  exists  an  aggravating  or            mitigating  circumstance  of  a kind,  or  to  a degree,  not            adequately  taken   into  consideration  by   the  Sentencing            Commission in formulating the  guidelines that should  result            in a  sentence different from  that described."  18  U.S.C.              3553(b).  Sometimes, the guidelines identify a "circumstance"            that  is  a  permissible or  forbidden  basis  for departure,            sometimes further indicating that departure is  encouraged or            discouraged.                                         -9-                                         -9-                 Absent such explicit guidance, the Commission itself has            told courts that they should  treat each guideline as carving            out  a "heartland"  representing  "a  set  of  typical  cases            embodying  the   conduct  that  each   guideline  describes."            U.S.S.G. ch.  1, pt. A  intro. comment  4(b).  "When  a court            finds  an atypical case, one  to which a particular guideline            linguistically  applies   but  where   conduct  significantly            differs  from the  norm,  the court  may  consider whether  a            departure  is  warranted."   Id.   If  the  characteristic is                                         ___            "atypical"  and aggravates or  mitigates the typical conduct,            it may provide a basis for departure.                 Where a district  court does depart, an  aggrieved party            may appeal from both the decision to depart and the extent of            the  departure.  18  U.S.C.   3742.   The  standard of review            varies with the nature of the issue involved, deference being            limited or absent on abstract issues of law but more generous            as to questions of  law application and factfinding.   United                                                                   ______            States v. Black, 78 F.3d  1, 8 (1st Cir.), cert.  denied, 117            ______    _____                            _____________            S. Ct. 254  (1996).  The present case presents  issues of all            three kinds.                 We start  with the  district court's  determination that            Brennick,  although he  had deliberately  failed  to pay  the            government  the withheld wages  and social security  taxes at            the time they were due, genuinely intended to pay them in due            course.   In the  district court's view,  Brennick's main aim                                         -10-                                         -10-            was to  use the  IRS as  a bank.   It is  not clear  that the            government  directly challenges this finding, but in any case            we think  the finding is not clearly  erroneous, the standard            ordinarily  applied   to  determinations  of   fact  made  at            sentencing.  United States v.  Pineda, 981 F.2d 569, 572 (1st                         _____________     ______            Cir. 1992).                 Brennick's   pattern   before   financial   difficulties            engulfed him was  to retain the use of the  funds in question            for periods of  four to six months  and then to pay  over the            funds, adding penalties  and interests.  The  likelihood that            he would be able to make this repayment obviously declined as            troubles loomed in  late 1992, but  he continued to  scramble            for  resources to  continue payment.   Whether  an intent  to            repay can be  ascribed to all of  the delays in payment  is a            more difficult issue.  See part III below.                                   ___                 In the district judge's sentencing memorandum and order,            she relied heavily upon this  intention to repay to carve the            present case out  of the "heartland"  of typical tax  evasion            cases.   The  government says  this  rationale was  a belated            attempt   to  bolster  a  departure  earlier  premised  on  a            different ground, namely, that there were multiple causes for            the  loss  to  the  government.    Our  own  reading  of  the            sentencing  transcript  suggests  that  the  benign  view  of            Brennick's  intent  was  always an  element  in  the district            court's reasoning.                                         -11-                                         -11-                 The nature of the scienter element in a tax evasion case            is complicated to summarize given that different requirements            may apply  on different issues.  Still,  the taxpayer usually            is  attempting to deprive the government permanently of taxes            owed   to  it.    Typically,  the  instruction  requires  the            government  to prove that the defendant "willfully evaded, or            attempted  to evade,  income  taxes  with  the  intention  of            defrauding the government of  taxes owed."  Leonard B.  Sand,            __________            et al., Modern  Federal Jury Instructions: Criminal    59.01,                    __________________________________ ________            Instruction  59-8 (1992) (emphasis added).  See, e.g., United                                                        ___  ____  ______            States v. Aitken, 755 F.2d 188 (1st Cir. 1985).            ______    ______                 Admittedly, it would do a  defendant no good to say that            he deliberately understated his income but sincerely intended            to pay the money back to the government  in five years' time.            But  neither is it easy to imagine a fraud conviction where a            defendant files an accurate return, intends shortly to pay in            full, but  remits the funds  with interest shortly  after the                                                                _____            April  15 deadline.    Indeed,  the  guideline  covering  the            failure to  pay over  payroll taxes notes  in the  commentary            that   "[t]he  offense  is  a  felony  that  is  infrequently            prosecuted."  U.S.S.G.   2T1.6, commentary.                 In  all events,  we are  inclined  on the  basis of  the            information we have and our common sense to think that such a            temporary  delay in payment--where  the defendant expected to            pay--is not a "typical" or  "heartland" case of tax  evasion.                                         -12-                                         -12-            Thus,  even  if  the  evasion  statute  and  guideline  might            "linguistically" be extended to embrace  such temporary delay            cases, the intent  to delay payment  only briefly could  take            the  case out of the  heartland.  And,  as already noted, the            district court made such a finding in this  case, sustainable            at  least as  to much  of  the losses  driving the  guideline            sentence.                 The  district court had  another theme in  its departure            analysis.  It said that the $1.5 million loss suffered by the            government overstated the  seriousness of Brennick's offense,            partly because the  losses were due to  multiple causes, some            of which  were not  Brennick's  fault or  within his  control            (failure   of  his   bank,  the   changes   in  health   care            reimbursement).   The government says that these concepts are            part of  the fraud  guidelines and applying  them to  the tax            crime guidelines is an error of law.                 The  fraud  guidelines,  like  the  tax guidelines,  set            offense  levels  primarily based  upon loss.   But  the fraud            guidelines alone  refer in  comment to the  possibility of  a            departure  where computed  losses  under-  or  overstate  the            seriousness of  the offense;  likewise, the  fraud guidelines            alone at one  time referred to multiple causes  as a possible            example of an overstatement and while that language  has been            deleted, they  retain that  concept in  one of the  examples.            Compare U.S.S.G.    2F1.1,  application note  11 (1990)  with            _______                                                  ____                                         -13-                                         -13-            application note 10 (1991).   See generally  United States v.                                          _____________  _____________            Rostoff, 53 F.3d 398, 406 (1st Cir. 1995).            _______                 We agree with the government that provisions in one  set            of  guidelines  cannot  normally  be  transferred  to another            separate set of guidelines.  See United States  v. Smallwood,                                         ___ _____________     _________            920 F.2d 1231, 1238 (5th Cir. 1991); United States v. Anders,                                                 _____________    ______            899 F.2d 570, 580 (6th  Cir. 1990).  The guidelines  for each            offense or set of offenses  tend to function as an integrated            unit,  containing  their  own  tradeoffs and  specifications.            Thus, without laying  down an iron rule, we  view skeptically            any importation  of language from  another offense guideline,            absent an explicit cross-reference.                 Yet this  does not  take the government  very far.   The            notion in the fraud guideline  that the loss table may under-            or overstate the  seriousness of the  offense is little  more            than another  way  of saying  that departures  from the  loss            table may be  warranted for good cause.  Even if we treat the                                    ______________            fraud guideline's  language as generously  inviting a  search            for  such causes,  the  fact  remains  that  the  all-purpose            departure provision  remains available for tax cases whenever            the  case falls  outside  the  heartland.   See  18 U.S.C.                                                           ___            3553(b); U.S.S.G.   5K2.0.                 The fraud guidelines' multiple-cause language  is a more            complicated  matter.    The government  says  that  the fraud            guidelines may need  such flexibility because of  the diverse                                         -14-                                         -14-            situations to which  they must apply.  By  contrast, it says,            "loss" for tax  purposes is based on  calculations, set forth            in the guidelines,  that (in words of the  brief) "focus upon            the amount due and  owing at the time of the offense."   If a            tax evader  repays what was  stolen, says the  government, he            merely   deserves  a  few   levels  off  for   acceptance  of            responsibility.                 Tax  loss seems  to be  a somewhat more  protean concept            than the government implies,2 but we  think that the argument            is  beside  the  point.    We are  here  concerned  not  with            computing the loss--the parties have agreed that it should be            treated as "more than 1.5 million"--but rather with whether a            departure  is proper.   And  we are  dealing not  with  a tax            evader  who stole  the  government's money  and  later had  a            change of heart  but with someone who (accepting the district            court's finding) never intended to steal the money at all (or            at least most of it).                 Further, regardless  of the fraud  guideline, the  facts            mentioned by the district court in its causation analysis are            obviously  relevant  even  if  the   analysis  is  not.    To            distinguish  Brennick from  the ordinary  tax  evader, it  is            essential to show  that he did  intend to  pay over what  was                                            ____________________                 2Tax  loss  is  defined  somewhat  differently  for  the            different   tax  offenses,   compare  U.S.S.G.      2T1.1(a),                                         _______            2T1.2(a), 2T1.3(a), and 2T1.6(a), and  the tax table at 2T4.1            has changed over time.                                         -15-                                         -15-            owed and was merely deferring payment.  This premise would be            hard to  sustain unless some  other cause had  contributed to            his later failure to pay over the funds.                 This said, we think that  it merely invites confusion to            treat  "multiple causation"  as an  independent  basis for  a            departure.  And we think that to do so  would be inconsistent            with  the normal presumption that provisions in one guideline            are  not  to be  read  into  the  guideline for  a  different            offense--absent  an  explicit cross  reference or  some other            reason to believe that the  Commission so intended.  We doubt            that  this emendation would alter the district court's desire            to depart, but as a remand is required for other reasons,  it            is free to decide the point for itself.                                         -16-                                         -16-                                         III.                 While a departure  could be justified in  theory in this            case, we do not think  that either the decision to depart  or            the  amount of the  departure has been  adequately explained.            Our reasons  are not the  usual ones--that  the departure  is            based on  an impermissible ground  or that there has  been no            effort to explain the degree  of departure.  Rather, we think            that factors  weighing against  any departure,  and certainly            one of this degree, received inadequate attention.                 In this case the guideline  range for Brennick was 41 to            51 months; and the 13-month  sentence imposed was less than a            third of the minimum and just over a quarter of the  maximum.            A 13-month sentence would  be the midpoint in the range for a            first time offender who evaded  or sought to evade $40,000 or            more  in taxes  but had  no other  adjustment.   Brennick, of            course, caused the government a tax loss of over $1,500,000.                 It would  be easy enough  to understand the  sentence if            Brennick  had merely  withheld  a large  payment,  reasonably            expecting  to pay  the  money  shortly but  using  it in  the            meantime  for  business  purposes  which  then   unexpectedly            collapsed.   Absent  loss  to  the  government,  there  would            probably  not even  be  a  prosecution in  such  a case;  and            certainly the intent would be less culpable than  in ordinary            tax evasion.  But Brennick's actions and intentions were more            serious than this abstraction allows.                                         -17-                                         -17-                 First,  Brennick   may  in  some  sense   have  intended            repayment,  but  the  reasonableness,  and perhaps  even  the            possibility, of  such a belief must have  lessened over time.            To  the eve  of bankruptcy  and  apparently beyond,  Brennick            appears  to have  deferred payment  to  the government  while            withdrawing  very substantial sums for  his own use.  Without            more findings, it would be  hard to give Brennick the benefit            of a  bona fide intention to  repay the entire loss,  even if                                                    ______            much of it may be encompassed.                   Second,   even  apart  from   an  intention   to  repay,            Brennick's good faith is marred by dishonesty in at least two            respects, (even apart from his falsehoods at trial which were            the subject of a  separate adjustment).  On  a number of  the            later returns, Brennick falsely stated or had others misstate            that  the amounts due to the government had been paid when he            knew that  they had  not.  And  his elaborate  structuring of            withdrawals was effectively an effort to mislead and conceal,            as   perhaps  also   was  his   use   of  multiple   employer            identification numbers.                 Third, Brennick committed the  crime of structuring  and            the government points out that the structure counts alone, if            no  other offense  had  been  committed,  could  easily  have            produced an  adjusted offense level  of 17,3 and  a guideline                                            ____________________                 3That level might  have been anywhere between 15 and 21.            Under the 1992 guidelines, the structuring counts generated a            base offense level  of 13. U.S.S.G.   2S1.3(a)(1),  and would                                         -18-                                         -18-            sentence of 24 to 30 months.  The minimum is almost twice the                                              _______            amount  of Brennick's actual  sentence after departure.   The            government  has  not  argued  that  this  makes  a  departure            impermissible as a  matter of law, but it  certainly bears on            the reasonableness and degree of departure.                 We  appreciate that where a ground for departure exists,            the district  court's discretion  is at  its zenith  deciding            both whether and  how far to depart.  United  States v. Diaz-                                                  ______________    _____            Villafane, 874 F.2d 43, 49-50 (1st cir. 1989).  But  the quid            _________                                                ____            pro quo for departures is reviewability, including review for            _______            abuse  of discretion,  18 U.S.C.    3742(b)(3);  and even  if            review is hedged by deference,  Koon v. United States, 116 S.                                            ____    _____________            Ct. 2035, 2046 (1996), it has to mean something.                 In this  case,  we fail  to see  how a  departure to  13            months can be justified as reasonable on this record in light                                                  ______________            of  the three considerations  set forth  above, all  of which            appear to  us relevant.   We have put to  one side Brennick's            gambling, the significance of which is a matter of reasonable            dispute,  and the  government's claim  that  he deprived  his            employees of health care, which was neither a charged offense            nor clearly relevant conduct.                                                ____________________            have been adjusted upward two  levels for the amount of money            involved.  U.S.S.G.    2S1.3(b)(2).     Brennick's  two-level            adjustment for obstruction  of justice would  presumably also            have applied, generating  a level of 17.   A further increase            of four levels  would have resulted  if the court  determined            that  "the defendant  knew or  believed that  the funds  were            criminally derived property."  U.S.S.G.   2S1.3(b)(1).                                         -19-                                         -19-                 Possibly, even  after these  factors are  considered and            weighed in  full, there  is still  warrant for  a substantial            departure,  but we  think that  some  further explanation  is            essential.   Indeed, while the  district court takes  note of            Brennick's  false  filings,  the  government  says  that  the            discussion  understates  them;4  and   the  district  court's            decision  does  not  squarely   address  our  concerns  about            Brennick's good  faith on the  later losses or the  import of            the structuring guideline.                 The sentence  was  not imposed  casually:  the  district            court conducted  a lengthy  sentencing and  wrote at  length,            addressing itself primarily to  the government's objections--            which  we think  are overstated.   The  area is  complicated;            there   is   little   helpful   precedent;   and   Brennick's            circumstances are  unusual.   If it takes  one more  round to            fine-tune the sentence, this is a price worth paying.                 On  remand, the  district  court  is  free  to  consider            whether   its  inclination  to  depart  is  affected  by  our            conclusion  that the  fraud guideline  should  be put  to one            side.   Assuming  not,  we expect  that  in resentencing  the            district court will  address the considerations that  we have            outlined.   While  expressing  doubt that  a  sentence of  13                                            ____________________                 4The district  court  mentioned  two  returns  filed  by            Brennick  falsely claiming that the amount indicated was paid            in full.    The  government notes  that  although  two  false            returns  were  actually  signed  by  Brennick, an  additional            fourteen false returns were signed by his employees.                                         -20-                                         -20-            months  is justified, we impose no mechanical downward limit.            What  procedure  to follow  on  remand  is entirely  for  the            district court to decide.                 The sentence imposed by the district court is vacated in                                                               _______            its entirety and  the case is remanded to  the district court                                          ________            for further proceedings consistent with this opinion.                 It is so ordered.                 _________________                                         -21-                                         -21-
