                              In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

Nos. 01-2302 and 01-3414
UNITED STATES OF AMERICA,
                                                 Plaintiff-Appellee,
                                  v.

LEONARD CHAVIN and MARTIN LITWIN,
                                     Defendants-Appellants.
                          ____________
            Appeals from the United States District Court
       for the Northern District of Illinois, Eastern Division.
          No. 99 CR 282—Rebecca R. Pallmeyer, Judge.
                          ____________
ARGUED SEPTEMBER 9, 2002—DECIDED DECEMBER 13, 2002
                   ____________


  Before EASTERBROOK, KANNE, and EVANS, Circuit Judges.
  KANNE, Circuit Judge. On July 22, 1998, this court
affirmed the district court’s decision to deny Leonard
Chavin a discharge in bankruptcy. In re Chavin, 150 F.3d
726, 729 (7th Cir. 1998). In our opinion, we noted an ap-
pearance of deliberate fraud in Chavin’s bankruptcy filings.
Accordingly, we referred the case to the Department of
Justice for further investigation. Id. Eventually, a grand
jury returned a fifteen-count superseding indictment charg-
ing Chavin and his attorney, Martin Litwin, with tax and
bankruptcy fraud. Following a lengthy trial, a jury found
them guilty on eleven of the fifteen counts, and the district
2                                      Nos. 01-2302 & 01-3414

court sentenced Chavin to 37 months in prison and Litwin
to 33 months in prison. On appeal, they raise multiple is-
sues, including various claims related to the district court’s
application of the federal sentencing guidelines. We reject
all of Chavin’s and Litwin’s arguments and affirm the dis-
trict court’s disposition.


                          I. History
A. Tax Fraud
  Leonard Chavin, a businessman and investor, owned a
block of commercial real estate on South Halsted in Chicago
(“the Halsted property”). He also controlled a corporation
known as SCV Corporation (“SCV”), which held as its only
asset a clothing store that did business under the name of
Howard’s Style Shop (“HSS”).1 The business struggled, and
over a period of years Chavin personally lent SCV in excess
of $900,000. In 1992, Chavin sold part of the Halsted
property for $975,000, generating a substantial capital gain
and greatly increasing his tax burden.2 Chavin and his
attorney, Litwin, devised a plan to offset the Halsted-prop-
erty gain with the SCV-debt loss.



1
  Chavin’s daughter, Shari Chavin Vass, was actually listed as
the owner of SCV in the Illinois Department of Revenue filings,
but the record clearly shows that Chavin ran and controlled the
company and his daughter had virtually no connection to it.
2
  Chavin, with the help of Litwin, structured the sale of the Hal-
sted property to make it appear that the purchase price was only
$675,000, rather than $975,000; thus, in calculating his capital
gain on his 1992 tax return Chavin used $675,000 as the sale
price. At trial, the jury found that Chavin had underreported the
sale price by $300,000 and thus that he had underreported his
capital gain by that same amount. This finding is not challenged
on appeal.
Nos. 01-2302 & 01-3414                                      3

  They discovered that the tax code allows an individual to
take a deduction for worthless, unrecoverable debts, known
as a “bad debt loss.” 26 U.S.C. § 166(d) (2002). The only
problem was that they had to somehow make the SCV debt
worthless to Chavin. They did so by manufacturing a sham
sale of SCV’s only asset, the HSS clothing store, to Litwin’s
cousin, Michael Glickman. Glickman paid nothing out of
his own pocket for HSS. He was told that the sale was
nothing more than a “paper transaction”—meaning he
would have no connection with the clothing store except
that on paper he would be listed as the owner. Following
the “sale,” Chavin continued to control HSS and nothing
about the business changed. And because SCV no longer
had any assets of record, Chavin could claim that the debt
SCV owed him was entirely worthless and thereby claim it
as a bad debt loss. On his 1992 tax return, Chavin reported
a capital gain from the sale of the Halsted property of
$328,000. Against this, Chavin deducted $900,000 as a bad
debt loss based on the SCV debt. In 1992, Chavin could only
take the loss to the extent that it offset the capital gain
from the Halsted-property sale plus $3000—in total
$331,000; thus, he carried over the remaining portions of
the loss on his returns for subsequent years.
   After being alerted to possible fraud in Chavin’s financial
dealings, the government investigated and a federal grand
jury returned a fifteen-count superseding indictment. The
first six counts of the indictment related to the tax dealings
just described. Count 1 charged Chavin and Litwin with
conspiring to defraud the Internal Revenue Service (“IRS”)
through the creation of a fraudulent $900,000 bad debt
loss in violation of 18 U.S.C. § 371. Count 2 charged Chavin
with violating 26 U.S.C. § 7206(1) by making false state-
ments on his 1992 tax return, in that he understated the
sale price of the Halsted property and in that he claimed a
$900,000 bad debt loss to which he knew he was not
entitled. Counts 3 and 5 charged Chavin with making false
4                                   Nos. 01-2302 & 01-3414

statements on his 1993 and 1994 tax returns, respectively,
in that he reported a false carryover loss from his 1992
return in violation of 26 U.S.C. § 7206(1). Similarly, Counts
4 and 6 charged Litwin with violating 26 U.S.C. § 7206(2)
for aiding and assisting Chavin in the preparation and
presentation of his 1993 and 1994 fraudulent tax returns.
Following a trial, the jury convicted Chavin and Litwin on
all of these tax counts.


B. Bankruptcy Fraud
   The remaining charges in the superseding indictment,
Counts 7 through 15, related to a bankruptcy fraud that
developed when Chavin’s creditors forced him into bank-
ruptcy on December 30, 1994. As part of the bankruptcy
proceeding, Chavin was required to file schedules disclosing
all of his assets, income, and expenses. On the schedules he
filed, he failed to disclose certain assets and income, in-
cluding the interest he had in HSS. Also, as part of the
bankruptcy proceeding, Glickman was deposed about his
purported ownership of HSS. Litwin counseled Glickman on
his responses so as to make it appear that Glickman owned
HSS and that Chavin had no interest in the company.
  The relevant portion of Count 7 charged Litwin with
violating 18 U.S.C. § 1623 for aiding Glickman to commit
perjury in the bankruptcy proceedings.3 Litwin was found
guilty on this count. Counts 8 through 13 charged Chavin
with concealing various assets from the bankruptcy trustee
and his creditors in violation of 18 U.S.C. § 152(1). Of these
counts, the jury convicted Chavin on Counts 10 and 11,
which both related to life insurance polices. Chavin was



3
  Count 7 also charged Glickman with committing perjury during
the bankruptcy proceedings, but Glickman pled guilty to the
charge prior to trial.
Nos. 01-2302 & 01-3414                                    5

convicted on Count 14, which charged him with failing to
disclose assets on his bankruptcy filings in violation of 18
U.S.C. § 152(3). Finally, the jury convicted Chavin on Count
15, which charged him with converting an asset in bank-
ruptcy in violation of 18 U.S.C. § 152(7).


C. The Sentencing and Appeal
  Following a sentencing hearing, the district court deter-
mined that the appropriate sentencing level under the U.S.
Sentencing Guidelines was 19 for both defendants, which
corresponds to a sentencing range between 30 and 37
months. The district court sentenced Chavin to 37 months
imprisonment and fined him $10,000 and sentenced Litwin
to 33 months imprisonment and fined him $50,000.


                       II. Analysis
A. Trial Issues
  1. Theory-of-Defense Jury Instruction
  Chavin and Litwin argued as part of their defense to the
tax-fraud charges that they relied in good faith on the ad-
vice of Chavin’s accountant Kessler and therefore did not
“willfully” perpetrate the tax fraud. Defendants tendered a
theory-of-defense jury instruction that covered this point.
The district court, however, refused to give the instruction
to the jury, stating that the theory of defense was suffi-
ciently covered by other instructions; specifically, by the
pattern instruction on good faith and a further instruction
that made clear that defendants must have acted “willfully”
within the precise definition of that term.
  We review a district court’s refusal to give a theory-of-
defense instruction de novo. United States v. Meyer, 157
F.3d 1067, 1074 (7th Cir. 1998). To be entitled to a theory
6                                   Nos. 01-2302 & 01-3414

of defense instruction, a defendant must satisfy a four-part
test by showing (1) that the proposed instruction is a cor-
rect statement of law; (2) that the evidence in the case
supports the theory of defense; (3) that the theory of de-
fense is not already part of the charge; and (4) that failure
to include the proposed instruction would deny the defen-
dant a fair trial. Id.
  Here, defendants have, at the very least, failed to satisfy
the third element. We have recognized in prior tax-evasion
cases that a “ ‘good faith reliance’ defense is essentially a
claim that the [defendant] did not act ‘willfully.’ ” United
States v. Brimberry, 961 F.2d 1286, 1291 (7th Cir. 1992).
Consequently, when, as here, instructions are given that
require the jury to find that a defendant acted “willfully”
and those instructions define “willfulness” and “good faith”
as mutually exclusive, then a further “good faith reliance”
theory-of-defense instruction would be unnecessarily re-
dundant. Id.; United States v. Kelley, 864 F.2d 569, 573 (7th
Cir. 1989). Therefore, we find that the instructions given by
the district court adequately covered the defendants’ theory
of defense.


    2. Jury Instruction on Chavin’s Signing of His Tax
       Return
  Chavin further argues on appeal that the instruction the
district court gave about the effect of his signature on his
1992 tax return could likely have led the jury to believe
that his signature alone overrode his “reliance on a tax
professional” defense. Chavin offered an alternative in-
struction based on language from United States v. White,
879 F.2d 1509, 1511 (7th Cir. 1989). Ultimately, the district
court rejected this instruction and instead used an instruc-
tion based on other language from the White opinion—lan-
guage that was later cited with approval in United States
v. Ellis, 50 F.3d 419, 425 (7th Cir. 1995). Both instructions
Nos. 01-2302 & 01-3414                                      7

were accurate statements of the law and did not substan-
tially differ from one another. In this situation, we review
a district court’s decision on the precise wording of the
instruction for abuse of discretion. Riemer v. Ill. Dep’t of
Transp., 148 F.3d 800, 804 (7th Cir. 1998). The instruction
given plainly stated that the determination of whether
Chavin acted knowingly should be based on the “totality of
the circumstances, including but not limited to the bare fact
of the defendant’s signature on various documents.” (Tr.
2787) (emphasis added). We find that it was not an abuse
of discretion for the district court to conclude that this
language would not mislead the jury into thinking that
Chavin’s signature alone defeated his “reliance on a tax
professional” defense.


  3. Restriction of Direct Examination of Defense
     Expert Sharps
   At trial, Chavin sought to have defense expert Jason
Sharps testify during direct examination that Chavin’s ac-
countant, Kessler, had made various “mistakes” on Cha-
vin’s tax return. The district court permitted inquiry into
the ways that Sharps would have prepared the return
differently; however, the court did not allow Sharps to tes-
tify that where he and Kessler differed, Kessler had made
a “mistake.” We review a district court’s evidentiary rulings
for abuse of discretion. United States v. Smith, 230 F.3d
300, 307 (7th Cir. 2000). Chavin argues that the testimony
that Kessler had made mistakes was relevant to the issue
of whether Chavin relied on his accountant to prepare
correct income tax returns and to the calculation of tax loss.
We do not perceive how this evidence could be relevant to
either of these issues, and Chavin provides no explanation
as to why it is relevant. Therefore, we find that the district
court did not abuse its discretion in refusing to allow this
evidence.
8                                   Nos. 01-2302 & 01-3414

    4. Litwin’s Motion to Serve as Co-Counsel
  Before trial, defendant Litwin, an attorney specializing in
tax, real estate, and bankruptcy law, filed a motion to serve
as co-counsel in his defense. The district court denied the
motion, and Litwin raises the issue again on appeal.
  There is no question that a defendant has a constitutional
right to conduct his own defense. But seeking to serve as co-
counsel in a “hybrid representation” is a separate question.
United States v. Oakey, 853 F.2d 551, 553 (7th Cir. 1988).
We recognize, along with all other circuits that have con-
sidered the question, that there is no Sixth Amendment
right to hybrid representation; rather, whether a defendant
may act as co-counsel along with his own attorney, is a
matter within the discretion of the district court. United
States v. Tutino, 883 F.2d 1125, 1141 (2d Cir. 1989) (“The
decision to grant or deny ‘hybrid representation’ lies solely
within the discretion of the trial court.”); United States v.
Norris, 780 F.2d 1207, 1211 (5th Cir. 1986) (“[A] defendant
does not have the right to a hybrid representation, in which
he conducts a portion of the trial and counsel conducts the
balance.”); United States v. Halbert, 640 F.2d 1000, 1009
(9th Cir. 1981) (“A criminal defendant does not have an
absolute right to both self-representation and the assis-
tance of counsel.”); see also United States v. Singleton, 107
F.3d 1091, 1101 n.7 (4th Cir. 1997) (“The cases reiterating
the principle that courts are not required to allow defen-
dants to split the responsibilities of the representation with
an attorney are myriad.”).
  This court has held that hybrid representation is “dis-
favored.” United States v. Kosmel, 272 F.3d 501, 506 (7th
Cir. 2001); Cain v. Peters, 972 F.2d 748, 750 (7th Cir. 1992);
United States v. Oakey, 853 F.2d 551, 553 (7th Cir. 1988).
The primary reason we have expressed concern about
hybrid representation is because “it allows a defendant to
address the jury, in his capacity as counsel, without being
Nos. 01-2302 & 01-3414                                      9

cross-examined, in his capacity as a defendant.” Oakey, 853
F.2d at 553. Litwin contends that his assurances, given
before trial, that he would testify if permitted to serve as
co-counsel neutralized the potential problems with hybrid
representation. This sort of pre-trial promise, however, does
not fully allay the concerns. If, after the trial began, he
were to go back on his promise and decide not to testify,
there would be no effective way for the trial court then to
compel him to take the stand. Consequently, his promise is
without effect. Further, the fact that Litwin is an attorney
with experience in the matters involved in this case does
not in any way ease concerns that he could make unsworn
statements to the jury without being subject to cross-
examination. Therefore, we find that the district court
properly refused to allow Litwin to serve as co-counsel in
his defense.


  5. Sufficiency of Evidence: Glickman’s Testimony
  Litwin challenges two aspects of the verdict against him
on grounds of insufficient evidence; the first is whether the
testimony of his cousin was sufficient to convict him. We
will reverse based on insufficiency of evidence only if, view-
ing the evidence in the light most favorable to the govern-
ment, the record contains no evidence from which the jury
could find guilt beyond a reasonable doubt. United States v.
Combs, 222 F.3d 353, 362 (7th Cir. 2000).
  Litwin argued in a motion for a judgment of acquittal
that the testimony of his cousin, Michael Glickman, was
inherently incredible. The district court denied the motion
and we affirm. As we have stated in previous cases, “it is
not the role of the appellate court to question the jury’s
credibility determinations.” United States v. Stott, 245 F.3d
890, 898 (7th Cir. 2001); see also United States v. Durham,
211 F.3d 437, 445 (7th Cir. 2000); United States v. Alcantar,
83 F.3d 185, 189 (7th Cir. 1996). Therefore, we will reverse
10                                  Nos. 01-2302 & 01-3414

a jury verdict only if the testimony was incredible as a
matter of law. Stott, 245 F.3d at 898. Litwin points primar-
ily to evidence that Glickman had previously lied to or
cheated various people, including his own family members.
We do not find that this evidence, or any of the other evi-
dence that Litwin has put before us, meets his substantial
burden of showing that Glickman’s testimony was incredi-
ble as a matter of law.


  6. Sufficiency of Evidence: Conviction on Counts
     4 and 6
  Counts 4 and 6 of the indictment charged Litwin with
assisting Chavin in the presentation of fraudulent tax re-
turns for 1993 and 1994—the years in which Chavin carried
over the fraudulent bad debt loss. Litwin contends that the
guilty verdict on these counts must be reversed because he
did not aid Chavin in the preparation of these returns, nor,
he claims, was it foreseeable to him that Chavin would
make false statements on these returns. We disagree. Lit-
win knew that Chavin would have a large bad-debt loss in
1992 because he had helped Chavin create the loss. And
based on Litwin’s experience in tax matters, it was reason-
able for the jury to conclude that he would have known that
the entire loss could not have been deducted in 1992—that
some of it would have to be carried over to subsequent
years. Therefore, we find that there was sufficient evidence
to support his conviction on Counts 4 and 6.


B. Sentencing Issues
  Chavin and Litwin also challenge various aspects of their
sentences. We review a sentencing court’s factual determi-
nations for clear error and interpretations of the guidelines
de novo. United States v. Owolabi, 69 F.3d 156, 162 (7th
Cir. 1995).
Nos. 01-2302 & 01-3414                                    11

  1. Grouping as to Chavin
  Chavin challenges the district court’s refusal to group the
tax and bankruptcy counts together as closely related under
§ 3D1.2(d) of the sentencing guidelines. Had the district
court grouped these counts, Chavin would have received a
lower sentence. Guideline § 3D1.2 provides:
    All counts involving substantially the same harm shall
    be grouped together into a single Group. Counts involve
    substantially the same harm within the meaning of this
    rule:
    ...
    (d) When the offense level is determined largely on the
    basis of the total amount of harm or loss, the quantity
    of a substance involved, or some other measure of ag-
    gregate harm, or if the offense behavior is ongoing or
    continuous in nature and the offense guideline is writ-
    ten to cover such behavior.
    Offenses covered by the following guidelines are to be
    grouped under this subsection:
    [Several guideline provisions then are listed, including
    § 2F1.1 and § 2T1.1, the offenses for which Chavin was
    convicted.]
U.S. Sentencing Guidelines Manual (“U.S.S.G.”) § 3D1.2
(2000).
   Chavin first contends that since he was convicted of
offenses listed in the “to be grouped” category the district
court had no choice but to group the offenses because
listed offenses must be grouped automatically. Because
such a conclusion flies in the face of the overriding purpose
of § 3D1.2, we disagree, and as we note below, we are not
alone in this determination. See, e.g., United States v.
Williams, 154 F.3d 655, 657 (6th Cir. 1998) (“The bulk of
the courts to have considered the proper construction of
12                                  Nos. 01-2302 & 01-3414

subsection (d) have concluded that there is no automatic
grouping of counts simply because those counts are on the
‘are to be grouped’ list.”).
  In United States v. Wilson, we noted that the primary goal
of § 3D1.2 “is to combine offenses involving closely related
counts.” 98 F.3d 281, 282 (7th Cir. 1996) (quotations
omitted). In cases, like this one, where two different offense
guidelines are at issue, automatic grouping would often
lead to the grouping of entirely unrelated counts. See
United States v. Harper, 972 F.2d 321, 322 (11th Cir. 1992)
(“In some circumstances, automatic grouping detracts from
the main purpose of section 3D1.2: to combine offenses
involving closely related counts.”). In light of the purpose
of § 3D1.2, we seriously doubt that its drafters would
have desired such an outcome. In fact, the commentary to
§ 3D1.2 makes it clear that they did not: “[c]ounts involv-
ing offenses to which different offense guidelines apply are
grouped together under subsection (d) if the offenses are
of the same general type and otherwise meet the criteria
for grouping under this subsection.” U.S.S.G. § 3D1.2 cmt.
n.6 (emphasis added). Consequently, at least in cases
where different offense guidelines apply—as is the case
here, where the offenses are under § 2F1.1 and § 2T1.1—
grouping is not automatic; rather the sentencing court
is required to make an additional inquiry into whether
the offenses are “of the same general type.”
  In support of his argument for automatic grouping,
Chavin points to cases in the Second and Ninth Circuits
that hold that grouping is required when offenses are listed
on subsection (d)’s “to be grouped” list. We see an important
distinction, however, between those cases and the case
before us. In both of those cases, the defendants sought to
have charges grouped that were covered by the same
offense guideline. United States v. Gelzer, 50 F.3d 1133,
1144-45 (2d Cir. 1995) (counts that the court held were re-
Nos. 01-2302 & 01-3414                                       13

quired to be grouped were possession of a firearm with an
obliterated serial number and possession of a firearm by
a felon, both offenses to which § 2K2.1 applied); United
States v. Buenrostro-Torres, 24 F.3d 1173, 1176 (9th Cir.
1994) (“If the offenses at issue are covered by one of the
listed guidelines we do not analyze the facts of the particu-
lar case. Here, the offenses . . . are covered by § 2F1.1.”)
(emphasis added). Consequently, the courts in those cases
did not need to consider the commentary language about
situations where the offenses at issue are covered by dif-
ferent offense guidelines.4
   In fact, when the Second Circuit was faced with the issue
of whether to group counts that were covered by different
guidelines—§ 2F1.1 (fraud) and § 2S1.1 (money launder-
ing), both of which were on the “to be grouped” list—they
did not find that automatic grouping was appropriate,
stating instead that the two counts “should only be grouped
if the counts are also of the same general type.” United
States v. Napoli, 179 F.3d 1, 10 (2d Cir. 1999). Ultimately,
the court found that the two offenses involved there should
not be grouped. Id. at 10-11. Therefore, the Second Circuit
clearly does not view that grouping is always automatic
simply because the offenses are listed. The Second Circuit
is not alone in this finding. At least four other circuits have
reached the same conclusion. See Williams, 154 F.3d at 657
(noting that the courts that have considered the proper
construction of subsection (d) have held that there is no
automatic grouping); United States v. Walker, 112 F.3d 163,
166-67 (4th Cir. 1997) (stating that when considering
whether to group mail fraud (§ 2F1.1) and money launder-


4
  We should note that we do not today adopt in this circuit the
interpretations put forth in the Second and Ninth Circuits that
grouping is automatic when the counts involved are covered by
the same offense guideline. We simply note that Chavin’s case is
distinguishable from those decisions on that basis.
14                                  Nos. 01-2302 & 01-3414

ing (§ 2S1.1) “[s]ubsection (d) expressly permits the group-
ing of offenses under the fraud and money laundering
guidelines, but any grouped offenses must be ‘closely
related’ ”); United States v. Seligsohn, 981 F.2d 1418, 1425
(3d Cir. 1992) (“[A]lthough all of the counts are listed in
subsection (d) as appropriate for grouping, that inclusion
does not mean that the counts must be grouped. Counts
must be of the ‘same general type’ before grouping is appro-
priate.”) (citations omitted); United States v. Harper, 972
F.2d 321, 322 (11th Cir. 1992) (“[G]rouping is not auto-
matic, even if all offenses in question are encompassed
within this [‘to be grouped’] category.”). We join these cir-
cuits in finding that grouping under subsection (d) is not
automatic simply because the offenses at issue are listed on
the “to be grouped” list.
  Although we reject automatic grouping, the counts in
Chavin’s case could still be grouped if the offenses are “of
the same general type and otherwise meet the criteria for
grouping under . . . subsection [(d)].” U.S.S.G. § 3D1.2 cmt.
n.6. Chavin’s offenses, however, are not “of the same gen-
eral type.” We agree with the district court’s reasoning as
to why the tax and bankruptcy counts are not of the same
general type:
     [T]he victims are different, and the time frame and
     context do not completely overlap. Mr. Chavin’s effort
     to cheat his creditors simply does not involve “substan-
     tially the same harm” as does his effort to cheat the
     government.
(R.173.)
  Defendants argue at some length that the district court
erred because it based its finding that the offenses were not
of the same type partially on the fact that the victim of
the bankruptcy fraud was different from the victim of the
tax evasion. According to Chavin, while identity of victims
is required for application of subsections (a) and (b) of
Nos. 01-2302 & 01-3414                                      15

§ 3D1.2, it is irrelevant to subsections (c) and (d). While we
agree that identity of victims is not required for grouping
under subsection (c) or (d), the notion that identity of vic-
tims is irrelevant is in conflict with precedent in this circuit
and with the guideline commentary. In United States v.
Wilson, in considering whether to group two counts under
subsection (d), we stated “[w]hether the offenses involve
different victims is, as the background commentary notes,
‘a primary consideration’ in the grouping decision.” 98 F.3d
at 283 (citing U.S.S.G. § 3D1.2 cmt. background). In fact,
our decision to group the two offenses involved in Wilson
was based largely on the fact that the victim was essentially
the same. Id. at 283 (rejecting an argument that mail fraud
and money laundering involve different victims in favor of
a more intuitive argument that the victims are in reality
the same). Consequently, the district court properly con-
sidered the fact that the victim of the tax fraud was the
United States government and the victims of the bank-
ruptcy fraud were Chavin’s creditors as a factor in deter-
mining whether these offenses were of the same general
type.
  Even aside from there being different victims involved,
there are other considerations that lead us to the conclusion
that Chavin’s crimes are not of the same general type. The
tax and bankruptcy frauds were not “part of a single
continuous course of criminal activity.” United States v.
Petrillo, 237 F.3d 119, 125 (2d Cir. 2000). Indeed, the two
offenses are quite separate. The core of Chavin’s tax fraud
was committed in 1992 when he made the sham sale to
Glickman and filed his fraudulent tax return for that year.5
The core of the bankruptcy fraud did not occur until De-


5
   We recognize that Chavin was convicted of tax fraud for his
later tax returns as well but clearly these were only spin-offs
of the original fraud that occurred in 1992.
16                                   Nos. 01-2302 & 01-3414

cember 1994. Further, the bankruptcy was not even ini-
tiated by Chavin, but rather by his creditors, so the idea
that it was part of his criminal plan seems implausible.
Also, as the government notes in its brief, the harms
involved in these offenses were quite different: “the finan-
cial loss to bankruptcy creditors is not ‘of the same general
type’ as the harm implicated by a tax offense, which is a
crime against the polity and which has indirect effects on
all taxpayers and on the government’s ability to protect and
serve the public at large.” (Gov. Brief at 37.) Finally, as the
district court correctly noted at the sentencing hearing, the
only real connection between the bankruptcy fraud and tax
fraud appears to be the testimony offered by Glickman in
the bankruptcy proceedings. Even construing “of the same
general type” broadly, as the application notes suggest we
should, we do not find that this minimal connection be-
tween the offenses requires grouping in this case. U.S.S.G.
§ 3D1.2 cmt. n.6.


  2. Grouping as to Litwin
  Litwin argues that the district court erred by not group-
ing the aiding and abetting perjury count with the tax
evasion charges against him. We agree with the district
court and reject Litwin’s claim. Litwin bases his argument
on § 3D1.2(c), which provides that counts involve substan-
tially the same harm “[w]hen one of the counts embodies
conduct that is treated as a specific offense characteristic
in, or other adjustment to, the guidelines applicable to
another of the counts.” U.S.S.G. § 3D1.2(c). Litwin’s sen-
tence on the tax offense was enhanced two levels for so-
phisticated concealment. Litwin argues that the perjury
charge was used as part of the basis for the sophisticated-
concealment enhancement of the tax sentence; thus, the
perjury count should have been grouped with the tax
offense under subsection (c) because it was used as “an
adjustment to” the tax sentence.
Nos. 01-2302 & 01-3414                                          17

  We begin by noting that the commentary specifically
states that subsection (c) was intended to apply only
to counts that are “closely related.” Id. § 3D1.2 cmt. n.5.
While we recognize that Glickman’s perjury did to some
extent aid in the perpetuation of the tax conspiracy: the
ostensible purpose of the perjury was to keep Chavin’s
assets hidden from his creditors. Consequently, we doubt
that these counts are closely related.6
  However, the reason we reject Litwin’s argument for
grouping is that his situation simply does not fit within the
primary purpose of subsection (c), which is to “prevent
‘double counting’ of offense behavior.” Id. § 3D1.2 cmt. n.5.
Refusal to group the perjury offense and the tax conspir-
acy offense did not result in double counting here because,
as was brought out at oral argument, Litwin would have
received the same enhancement for sophisticated con-
cealment even if the perjury charge was not considered
at all. In other words, other evidence besides the perjury
offense provided ample support for the sophisticated-
concealment enhancement. Indeed, the district court ap-
pears to have concluded that the perjury actually did not
provide any support to the sophisticated-concealment en-
hancement because the purpose of the perjury was not to
cover up the tax crimes.7 Consequently, it cannot be said


6
  As did Chavin, Litwin asserts that the fact that there are differ-
ent victims is irrelevant to the grouping determination under sub-
section (c). We reject Litwin’s argument just as we did Chavin’s.
Identity of victims is not a determinative factor under section (c),
but it is a “primary consideration.” U.S.S.G. § 3D1.2, cmt. n.7.
7
  At the sentencing hearing the district court stated: “[w]hat we
are talking about here, as I understand it, is in one context lying
to the United States, in another context lying in effect to the
bankruptcy court and Mr. Chavin’s creditors. I think that means
there are different victims. I think it means that the criminal
                                                     (continued...)
18                                        Nos. 01-2302 & 01-3414

that the perjury charge was double counted because it was
not counted at all under the sophisticated-concealment
enhancement.


    3. Tax-Loss Calculation: Unclaimed Deductions
  Chavin and Litwin argue that they were improperly sen-
tenced because the tax-loss figure upon which the district
court based its sentence was inflated for two reasons: First,
they contend that the district court should have reduced the
tax-loss figure by the amount of legitimate but unclaimed
deductions on Chavin’s tax return. Second, they maintain
that part of the bad debt loss Chavin took was legitimate
and should not have been considered in determining tax
loss.
  We start with the unclaimed-deductions issue. Chavin
and Litwin were sentenced on the tax counts under § 2T1.1
of the guidelines. Assessing the proper sentence under
§ 2T1.1 requires a determination of the “tax loss” resulting
from the offense. Section 2T1.1(c)(1) provides the definition
of tax loss applicable to this case: “If the offense involved
tax evasion or a fraudulent or false return, statement, or
other document, the tax loss is the total amount of loss that
was the object of the offense (i.e., the loss that would have
resulted had the offense been successfully completed).”
U.S.S.G. § 2T1.1(c)(1). Also, notes (A) and (C) under this
subsection provide a further explanation of how to calculate
tax loss in certain circumstances:



7
   (...continued)
objective is a different one. I don’t think it’s fair to say the conduct
is treated as a specific offense characteristic if we say they con-
cealed it in one context. In another they lied about it in bank-
ruptcy.” (Tr. 45-46) (emphasis added).
Nos. 01-2302 & 01-3414                                      19

    (A) If the offense involved filing a tax return in which
    gross income was underreported, the tax loss shall be
    treated as equal to 28% of the unreported gross in-
    come . . . unless a more accurate determination of the
    tax loss can be made.
    ...
    (C) If the offense involved improperly claiming a de-
    duction to provide a basis for tax evasion in the future,
    the tax loss shall be treated as equal to 28% of the
    amount of the improperly claimed deduction . . . unless
    a more accurate determination of the tax loss can be
    made.
U.S.S.G. § 2T1.1(c)(1)(A) & (C). Chavin and Litwin assert
that if the district court had considered all of the legitimate
deductions that Chavin mistakenly failed to claim on his
1992 return then the tax-loss figure would have been re-
duced from $199,000 to $57,352, which would have corre-
sponded to a lower sentencing level.
  The issue of whether to allow consideration of legitimate
but unclaimed deductions in the determination of tax loss
hinges on the definition of “tax loss.” On the one hand,
Chavin and Litwin argue, in essence, that “tax loss” refers
to the actual amount of loss suffered by the government as
a result of the tax scheme. If we accept this interpretation,
then unclaimed deductions should be considered because
the government did not actually lose as much money as the
scheme intended since the unclaimed deductions serve to
offset the amount that the defendants attempted to evade.
On the other hand, the government contends that “tax loss”
refers to the amount of loss that the defendant attempted or
intended to create through his tax offense. If we accept this
interpretation, then unclaimed deductions should not be
taken into account because they have no relevance to the
amount of loss that the scheme attempted to produce.
20                                   Nos. 01-2302 & 01-3414

  It is apparent from the definition of “tax loss” provided in
the guidelines that the government has the correct position.
The guidelines state that “tax loss is the total amount of
loss that was the object of the offense.” Id. § 2T1.1(c)(1). We
take the phrase “the object of the offense” to mean that the
attempted or intended loss, rather than the actual loss to
the government, is the proper basis of the tax-loss figure.
Here, the object of Chavin’s offense was the amount by
which he underreported and fraudulently stated his tax
liability on his return; reference to other unrelated mis-
takes on the return such as unclaimed deductions tells us
nothing about the amount of loss to the government that
his scheme intended to create.
  Chavin and Litwin argue that we should accept their
interpretation because it is less subjective than the govern-
ment’s interpretation. They contend that trying to deter-
mine the loss that the defendant intended to create is
simply too speculative. While in principle it is true that
trying to assess intentions is often a subjective endeavor,
we strongly disagree that the government’s view leads to
more subjective results. Here, the defendants’ intention is
embodied in the tax return that was filed with the IRS. We
need to look no further than that return to find the tax-loss
figure under the government’s view. In fact, it is the defen-
dants’ position that would insert subjectivity into the
calculation because it would require us to recreate a “per-
fect” tax return, taking into account all the legitimate un-
claimed deductions, which would undoubtedly engender a
great deal of dispute between the parties over which de-
ductions were legitimate and which were not.
  Defendants further argue that the 1993 changes in the
commentary to the tax-fraud sections of the guidelines
mandate courts to consider unclaimed deductions. Before
1993, § 2T1.1(a) defined “tax loss” as the greater of (1) the
total amount of tax that the taxpayer evaded or attempted
to evade; and (2) 28% of the amount by which the greater of
Nos. 01-2302 & 01-3414                                           21

gross income and taxable income was understated.8
U.S.S.G. §§ 2T1.1(a) & 2T1.3(a)(2) (1992). The commentary
to this section provided that the “alternative standard [the
28% rate] may be easier to determine, and should make
irrelevant the issue of whether the taxpayer was entitled to
offsetting adjustments that he failed to claim.” Id. § 2T1.1
cmt. n.4. When the Guidelines were amended in 1993, this
note was deleted. Defendants contend that this deletion
means that now courts must consider offsetting adjust-
ments.
  Defendants, however, do not acknowledge that the entire
definition of tax loss was changed by the 1993 amendments.
The government offers an equally plausible reason as to
why the commentary about offsetting adjustments was
deleted, that takes account of the new “tax loss” definition.
The government contends that the language was deleted
because the new tax-loss definition specifically excludes
consideration of unclaimed deductions on its face by
defining tax loss as the “object of the offense.” Conse-
quently, the explanatory note was no longer required. We
agree with the government that the current definition of tax
loss appears to exclude consideration of unclaimed deduc-
tions, and we refuse to ignore this definition based on
the fact that certain language was deleted from the com-
mentary notes in 1993.
  Finally, defendants base their argument in favor of the
consideration of unclaimed deductions on the language in


8
   The actual language of pre-1993 § 2T1.1(a) states: “the ‘tax loss’
is the greater of: (A) the total amount of tax that the taxpay-
er evaded or attempted to evade; and (B) the ‘tax loss’ defined in
§ 2T1.3.” U.S.S.G. § 2T1.1(a) (1992). Section 2T1.3(a)(2) provided
that “the ‘tax loss’ is 28 percent of the amount by which the great-
er of gross income and taxable income was understated.” Id.
§ 2T1.3(a)(2).
22                                      Nos. 01-2302 & 01-3414

§ 2T1.1(c)(1)(A) and (C), which states “the tax loss shall be
treated as equal to 28% of the amount of the unreported
gross income . . . unless a more accurate determination of
the tax loss can be made.” U.S.S.G. § 2T1.1(c)(1)(A) & (C)
(2000) (emphasis added). Chavin and Litwin contend that
this provision plainly requires the sentencing court to
recalculate the defendant’s tax return considering the
unclaimed deductions if such consideration would result in
a “more accurate determination” of tax loss. Defendants
point out that in dicta the Second Circuit in United States
v. Martinez-Rios stated that the phrase “a more accurate
determination” allows a defendant to have legitimate but
unclaimed deductions considered. 143 F.3d 662, 671 (2d
Cir. 1998).9 We note that the Tenth Circuit has questioned
the Second Circuit’s interpretation, stating “[w]e do not
interpret this provision as giving taxpayers a second op-
portunity to claim deductions after having been convicted
of tax fraud.” United States v. Spencer, 178 F.3d 1365, 1368
(10th Cir. 1999). The Tenth Circuit further explained that
the phrase “a more accurate determination” simply allows
the defendant or the government to argue for a rate that is
“more accurate” than the 28% presumptive rate. Id. at 1368.
It is our view that the Tenth Circuit interpreted the
guideline correctly.10


9
  The Second Circuit recently affirmed this position in United
States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002).
10
  The government notes in its brief how its expert, Ellis, correctly
argued for a “more accurate determination” of the rate:
     Ellis determined that the total amount of unreported income
     was $674,625. He could have multiplied this figure by the
     28% presumptive rate . . . and been done with it. However, he
     made ‘a more accurate determination,’ because some of that
     unreported income was ordinary income and some was capital
                                                     (continued...)
Nos. 01-2302 & 01-3414                                          23

  Given the definition of tax loss discussed above, we sim-
ply cannot read the phrase “a more accurate determination”
to allow for consideration of unclaimed deductions. Con-
sidering unclaimed deductions is outside the purview
of what we are trying to accomplish in tax-loss calculations,
which as the Tenth Circuit stated, is to “merely assess[ ]
the tax loss resulting from the manner in which the de-
fendant chose to complete his income tax returns.” Id. at
1368. It is simply not the role of this court to consider
other hypothetical ways that the defendant could have
completed his return. United States v. Wu, 81 F.3d 72, 75
(7th Cir. 1996).11


4. Tax-Loss Calculation: the $339,000 Loan Payment
  Finally, Chavin and Litwin argue that $339,000 of the
claimed $900,000 bad debt loss was in fact a legitimate
deduction, and should not have been included in the tax-
loss figure upon which their sentence was based. In 1992,
Chavin made a $339,000 payment to Cole Taylor Bank as
a guarantor of a loan the bank had made to SCV. This
payment, as reflected in SCV’s financial statements, created
a $339,000 debt on the part of the company to Chavin,
adding to SCV’s already substantial indebtedness to him.
This $339,000 debt was part of the $900,000 bad debt loss
that Chavin claimed on his 1992 tax return. The defendants
argued at trial that the $339,000 debt was legitimately
deducted. The jury returned a general verdict finding de-



10
     (...continued)
        gain, and the two are taxed at different rates depending on
        the income of the taxpayer.
(Gov. Br. at 29).
11
   We recognize that Wu was decided under the pre-1993 guide-
lines, but the principle expressed there is still applicable.
24                                  Nos. 01-2302 & 01-3414

fendants guilty on all tax counts. At sentencing, the de-
fendants argued that while the jury convicted them of
having created a fraudulent bad debt loss, the jury did not
specify the amount of the loss that was illegitimate. Thus,
they maintained that it was still an open question as to
whether Chavin was entitled to the $339,000 deduction.
The district court rejected the argument, finding that the
jury had determined that Chavin improperly took a bad
debt loss of $900,000 and was not entitled to any portion of
it. Consequently, the district court sentenced defendants
based on a $900,000 tax loss figure, noting that to make a
finding that the tax-loss figure was lower than $900,000
would contradict the jury’s verdict.
  On appeal, Chavin again argues that the jury did not
decide the issue of whether the $339,000 deduction was
legitimate, and that because the verdict did not necessarily
resolve the issue, the district court erred by not making its
own finding on the issue. We agree with the district
court’s conclusion that the jury had already preclusively
decided the issue and that the sentencing court could not
sentence defendants based on an amount different from
what the jury decided. Defendants were convicted on all the
tax offenses charged—Counts 1 through 6. All of these
counts reference $900,000 as the bad-debt-loss figure, and
make no mention of or distinction between the various ele-
ments that comprised the total debt. Defendants’ attempt
to cut the total debt into pieces and argue about the in-
dividual parts at sentencing was, as the district court
found, unavailing.
  In any event, the record reveals that Chavin was not
entitled to the deduction for which he argued. Chavin ar-
gues that the $339,000 was deductible because SCV was
insolvent prior to and independent of the sham sale to
Glickman and because he had personally guaranteed the
loan he had paid on SCV’s behalf. These factors alone, how-
ever, do not trigger the ability to take a deduction. Section
Nos. 01-2302 & 01-3414                                     25

166(d) of the tax code, the section under which Chavin
attempted to take the deduction on his 1992 return, permits
individuals to take deductions for nonbusiness debts
only when those debts become “worthless.” 26 U.S.C. §
166(d)(1)(B) (2000). As this court has noted, “[t]he criterion
of worthlessness is interpreted strictly: the deduction is
unavailable if even a modest fraction of the debt can
be recovered.” Buchanan v. United States, 87 F.3d 197,
198 (7th Cir. 1996). At the end of 1992, SCV, though in-
solvent, still had assets worth $839,000—against liabilities
of $1,240,000. Given this amount of assets, it was reason-
able for the jury to have found that Chavin had at least
a “reasonable prospect of recovering” a “nontrivial” amount
of the money SCV owed him. Id. at 200.
   As the government points out, the real triggering event
that made the debt worthless and thereby “entitled” Chavin
to the bad-debt-loss deduction was the sham sale to
Glickman, which drained SCV of all its assets and ensured
its inability to repay him. Indeed, as even the defense’s
tax expert noted at trial, Chavin’s tax return itself showed
that the sale to Glickman, and nothing else, was the trig-
gering event. Because the event that triggered the availabil-
ity of the deduction was fraudulent, the deduction itself was
illegitimate. Therefore, Chavin was not entitled to any
portion of the $900,000 bad debt loss, not even the $339,000
portion related to the loan payment.
26                                Nos. 01-2302 & 01-3414

                   III. Conclusion
  For the foregoing reasons, we AFFIRM the sentences im-
posed by the district court on Litwin and Chavin.

A true Copy:
      Teste:

                      ________________________________
                      Clerk of the United States Court of
                        Appeals for the Seventh Circuit




                 USCA-02-C-0072—12-13-02
