                                                                                                                           Opinions of the United
1996 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


4-18-1996

United States v. Sokolow
Precedential or Non-Precedential:

Docket 95-1292,95-1367




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                    UNITED STATES COURT OF APPEALS
                        FOR THE THIRD CIRCUIT

                              ___________

                            Nos. 95-1292/1367
                               ___________

            UNITED STATES OF AMERICA

                            vs.

            CRAIG B. SOKOLOW,

                                       Appellant

                              ___________

            Appeal from the United States District Court
              for the Eastern District of Pennsylvania
                    (D.C. Crim. No. 93-cr-00394)
                            ___________

                                                   Argued
                           January 22, 1996
            BEFORE: MANSMANN and SCIRICA, Circuit Judges,
                                                            0
          and RESTANI, Judge, Court of International Trade.

                        (Filed April 18, 1996)
                             ___________

John Rogers Carroll
Johanna E. Markind
Carroll & Carroll
400 Market Street, Suite 850
Philadelphia, PA 19106

Peter Goldberger (Argued)
Anna M. Durbin
Pamela A. Wilk
50 Rittenhouse Place
Ardmore, PA 19003-2276

    COUNSEL FOR APPELLANT

Michael R. Stiles
United States Attorney
Walter S. Batty, Jr.

0     *    Honorable Jane A. Restani, Judge, United States Court of
             International Trade, sitting by designation.

                                   1
Chief of Appeals
Joseph T. LaBrum, III (Argued)
Maryanne Donaghy
Sarah L. Grieb
Assistant United States Attorneys
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106-4476

   COUNSEL FOR APPELLEE

                                  ___________

                            OPINION OF THE COURT
                                ___________



RESTANI, Judge.
       Defendant    Craig   B.   Sokolow     ("Sokolow")        appeals   from    his

conviction in the United States District Court for the Eastern

District of Pennsylvania following a two month jury trial.                         On

March 18, 1994, Sokolow was convicted of 107 counts of mail fraud

in violation of 18 U.S.C. § 1341 (1988), 17 counts of money

laundering in violation of 18 U.S.C. § 1957 (1988), and one count

of criminal forfeiture in violation of 18 U.S.C. § 982 (1988).

Following     several     sentencing        hearings,     the     district      judge

sentenced Sokolow to 92 months in prison, to be followed by three

years supervised release, and ordered a $50,000 fine, $6200 in

special     assessments,     $690,246.34        in      restitution,      and     the

forfeiture of $2.1 million.           On appeal, defendant challenges both

his conviction and sentencing.          For the reasons stated herein, we

will     affirm    the   conviction,     sentencing,       and     the    order    of

forfeiture, but remand for reconsideration of the restitution

order.


                                 I.   BACKGROUND


                                        2
     The events leading to Sokolow's indictment and subsequent

conviction    occurred     between   May    1,   1987   and   July     23,   1990.

Sokolow, an attorney and licensed insurance agent, offered health

benefits plans to the public in Pennsylvania and several other

states through a series of corporations that he established and

controlled,    but   primarily       through     the    National      Independent

Business Association, Inc. ("NIBA").0            The plans were marketed to

small business employers, their employees, and their families.

Association    Insurance     Marketing,     Inc.   ("AIM"),      a    corporation

established and controlled by Sokolow, served as the primary

marketing arm of NIBA.       Through AIM, Sokolow received commissions

on all premiums received for the sale of NIBA policies.

     Prior to May 1987, NIBA members were fully insured by NIBA's

group insurance contract with World Life and Health Insurance

Company ("World Company").           On May 1, 1987, Sokolow replaced

World Life with Independence Blue Cross and Pennsylvania Blue

Shield   to   administer    and   process      NIBA's   health       care   claims.

Sokolow purchased stop-loss coverage from Blue Cross, whereby

NIBA assumed responsibility for the payment of NIBA members'

medical care claims up to the first $25,000.                  Blue Cross would

pay any remaining claims in excess of $25,000.                   The indictment

charged that Sokolow falsely represented to the public that NIBA

0
    In 1984, Sokolow began offering his health benefits plan
through the Pennsylvania Independent Business Association, Inc.
("PIBA"). NIBA was established as a successor to PIBA in 1987.
In 1988, NIBA was succeeded by the American Independent Business
Alliance, Inc. ("AIBA"), the association existing until the time
of liquidation on February 15, 1990.     For convenience, "NIBA"
will be used throughout the opinion to refer to the various
corporations.

                                       3
was fully-insured by Blue Cross, when, in fact, it was a self-

funded    plan,    thus    defrauding     members      of    their   premiums.     In

addition, Sokolow allegedly used the Blue Cross logo on marketing

and billing materials, in violation of NIBA's agreement with Blue

Cross, to foster the impression that NIBA was the equivalent of a

Blue Cross fully-insured health benefits plan.

       On June 30, 1988, Blue Cross terminated its service plan

with NIBA when Sokolow failed to pay approximately $2 million in

claims for which Blue Cross sought reimbursement.                      Sokolow then

contracted with another company for higher stop-loss coverage

that required NIBA to pay the first $50,000 of a member's medical

care     claims.       The    indictment       alleged       that    Sokolow     again

misrepresented that NIBA was fully insured by the new coverage,

when, in fact, it was self-funded.

       After      receiving     complaints       concerning          NIBA's    claims

administration        in     late   1988,      the      Pennsylvania        Insurance

Department     (the       "Department")       began     to    investigate      NIBA's

operations.        The Department determined that Sokolow had been

operating NIBA as an illegal, unlicensed insurer in Pennsylvania.

Sokolow objected to the Department's inquiries on the basis that

NIBA was a Multi-Employer Welfare Arrangement ("MEWA") that could

file a benefits plan under ERISA and, thus, was not subject to

state    regulation.0         The   Department        disagreed      with   Sokolow's

0
   Although Sokolow represented to the Department that he could
have filed the NIBA plan under ERISA, the evidence at trial
indicated that Sokolow represented to Virginia and Maryland
insurance regulators that the NIBA health plan was, in fact,
filed as an ERISA plan with the United States Department of
Labor, and, thus, not subject to state regulation.        Trial

                                          4
contentions and, on May 2, 1989, suspended NIBA's operations.                         On

August 31, 1989, the Commonwealth Court of Pennsylvania ruled

that   NIBA   did   not   constitute    a        valid   MEWA    plan,    but   was    a

commercial enterprise "marketing insurance, without the benefit

of a licensed company status, while purporting to be a valid

ERISA plan, such that state licensing would not be necessary."0

Appellant's App. [hereinafter "App."] at 1193.                       Consequently,

NIBA was ordered liquidated by the commonwealth court on February

15, 1990.

       Sokolow collected more than $34 million in premiums from

NIBA plan members who were allegedly defrauded by Sokolow during

the period covered by the indictment.                    The indictment alleged

that Sokolow converted approximately $4 million of the premiums

for    his    personal    benefit.          He     received      $2,239,575.67        in

commissions     through     AIM   and       two     other       related     insurance

companies0 ($1,837,152.30 of those commissions went to AIM) and

$1,806,259.23       in    salary,       officer's           loans,        and   other

disbursements.      These monies were deposited into AIM and NIBA

accounts.      The indictment alleged that Sokolow laundered these




testimony established, however, that Sokolow never filed the NIBA
plan with ERISA for the years 1987 through 1990.
0
    For purposes of determining insurance agents' liability, a
later en banc ruling of the commonwealth court found that NIBA
was a MEWA and not an insurance entity operating under
Pennsylvania state law. Pennsylvania Ass'n of Life Underwriters
v. Foster, 645 A.2d 907, 911-12 (Pa. Commw. Ct. 1994) (en banc),
aff'd without op., 668 A.2d 1113 (Pa. 1995) (per curiam).
0
   The related companies were Sokolow & McMillan, and Sokolow,
McMillan & O'Leary, two "in-house" insurance agencies of which
Sokolow was a partner, and which sold NIBA health benefits plans.


                                        5
funds through a number of bank and brokerage accounts, as well as

real property and mortgages.

     The jury trial commenced on January 10, 1994, and concluded

on March 18, 1994, with the return of guilty verdicts on all

counts considered by the jury.                  Sentencing proceedings were held

on   January    6     and    11,    and    February       6,    1995,    during    which

sentencing issues were argued, and evidence of forfeiture, loss

calculations, and restitution was presented.                      On March 14, 1995,

the district court filed three separate Memorandum Opinions and

Orders,     inter      alia,       determining      the     Sentencing      Guidelines

calculations,         and    ordering      the     restitution      and     forfeiture

obligation.         Following entry of judgment, Sokolow filed this

timely appeal challenging both his conviction and sentence.


                      II.    CHALLENGES TO THE CONVICTION

      A.     Evidentiary Challenges

     Sokolow challenges three evidentiary rulings made by the

district court.        Sokolow claims that the district court (1) erred

in admitting into evidence Government Exhibit B-110 ("Gov't Ex.

B-110"), a summary of unpaid insurance claims of NIBA members;

(2) improperly allowed evidence of NIBA's alleged operation as an

unlicensed insurance company; and (3) abused its discretion in

admitting      irrelevant      and      highly      prejudicial         victim    impact

testimony.       To    the    extent      the    district      court's   admission    of

evidence was based on an interpretation of the Federal Rules of

Evidence, our standard of review is plenary.                      See United States

v. Furst, 886 F.2d 558, 571 (3d Cir. 1989), cert denied, 493 U.S.



                                            6
1062 (1990).      Our review of a district court's ruling to admit or

exclude evidence, if premised on a permissible view of the law,

however, is only for an abuse of discretion.                  See id.; see also

United States v. Versaint, 849 F.2d 827, 831 (3d Cir. 1988).                    We

will address each of Sokolow's evidentiary challenges in turn.

            1.        Government Exhibit B-110

      Sokolow     contends     that     Gov't   Ex.   B-110    is    inadmissible

hearsay.    Gov't Ex. B-110 is a compilation and summary of over $7

million in unpaid insurance claims of NIBA members.                  The document

was prepared for the Department in July 1992 by Inservco, a

third-party administrator hired to adjust the unpaid claims after

the   commonwealth        court    ordered      the   liquidation       of   NIBA.

Originally, NIBA members' claims were documented in the course of

regularly conducted business by NIBA's third party administrators

-- National Benefits Corp., Insurance Benefits Services ("IBS"),

and Independent Insurance Administrators ("IIA").                   The companies

processed NIBA claims and kept records on behalf of NIBA, which

Sokolow later authorized to be turned over to the Department's

Statutory Liquidator in connection with NIBA's liquidation.                     As

custodian of the NIBA plan records, the Statutory Liquidator made

the records available to Inservco for the adjustment of unpaid

claims.

      Over Sokolow's objection, the district court admitted the

exhibit    as    an    admission   by    Sokolow,     under   Federal    Rule   of

Evidence 801(d)(2)(C).0        The district court reasoned:

0
    Rule 801(d)(2)(C) provides that



                                         7
       Inservco summarized information held by the Statutory
       Liquidator, who in turn obtained the information from
       another administrator hired by Sokolow.     Each entity
       that held the information had the express authorization
       of [Sokolow].     As such, Exhibit B-110 is a party
       admission . . . .

United States v. Sokolow, No. 93-394-01, 1994 WL 613640, at *5
(E.D. Pa. Nov. 1, 1994).           We disagree with the district court's

reasoning.

       Rule 801(d)(2)(C) specifically excludes from the definition

of hearsay any statements used against a party which were made by

another   person      authorized    by     the   party   to   make    a   statement

concerning the subject.           Fed. R. Evid. 801(d)(2)(C); Lightning

Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1198 (3d Cir. 1993).                      We

find, and the government admits, that Inservco's adjustments to

the NIBA members' claims were not "done with Sokolow's consent or

at his direction," and, thus, are not admissions by Sokolow.                     See

Appellee's     Br.    at   23.     The   government      continues     to    assert,

however, that the collection of these claims by NIBA's third-

party administrators constitutes an admission by Sokolow, and

are,   thus,    not   hearsay.      This     argument    is   untenable.        Rule

801(d)(2)(C)     requires    that    the     declarant   be   an     agent   of the

party-opponent against whom the admission is offered.                        Kirk v.
Raymark Indus., Inc., 61 F.3d 147, 164 (3d Cir. 1995), cert.

denied,   116    S.Ct.     1015    (1996).       We   find    that    neither    the

underlying claims submitted by NIBA insurance beneficiaries to

       [a] statement is not hearsay if . . . [t]he statement
       is offered against a party and is . . . a statement by
       a person authorized by the party to make a statement
       concerning the subject.

Fed. R. Evid. 801(d)(2)(C).

                                         8
NIBA's    third-party      administrators         nor    Sokolow's   subsequent

release   of     these   records   to       the   Department   constitutes    an

admission by Sokolow.        Thus, Gov't Ex. B-110 is hearsay because

the entries of NIBA members' claims, whether or not adjusted by

Inservco, were written out-of-court statements offered to prove

not merely the existence but the genuineness of the claims, and

ultimately, the underfunding of Sokolow's enterprise.

     We now turn to whether Gov't Ex. B-110 falls within one of

the exceptions to the hearsay exclusion.                 The government argues

that Gov't Ex. B-110 is admissible under the business records

exception   to    the    hearsay   rule.0         This   exception   allows   the

admission of hearsay documents provided a foundation is laid by

"the custodian or other qualified witness" that:
     (1) [t]he declarant in the records had personal
     knowledge   to  make   accurate  statements;   (2)  the
     declarant recorded the statements contemporaneously
     with the actions that were the subject of the reports;
     (3) the declarant made the record in the regular course
     of the business activity; and (4) such records were
     regularly kept by the business.


0
   Pursuant to Rule 803(6), the following are not excluded by the
hearsay rule even though the declarant is available as a witness:

       Records of regularly conducted activity.    A memorandum,
     report, record, or data compilation, in any form, of acts,
     events, conditions, opinions, or diagnoses, made at or near
     the time by, or from information transmitted by, a person
     with knowledge, if kept in the course of a regularly
     conducted business activity, and if it was the regular
     practice of that business activity to make the memorandum,
     report, record, or data compilation, all as shown by the
     testimony of the custodian or other qualified witness,
     unless the source of information or the method or
     circumstances    of    preparation   indicate    lack    of
     trustworthiness.

Fed. R. Evid. 803(6).

                                        9
United States v. Pelullo, 964 F.2d 193, 200 (3d Cir. 1992).

      We   find   that    Gov't    Ex.    B-110       is   admissible        under    the

business records exception.           Contrary to Sokolow's contentions,

the   NIBA   members'     claims     were      collected       in    the     course   of

regularly    conducted         business        of     NIBA's        original     claims

administrators.          IIA     initially       received      NIBA     plan     member

information from IBS, a prior third party administrator, with

Sokolow's consent and authorization.                 Pursuant to the liquidation

order, Sokolow specifically authorized the IIA to "release any

and all data base information as required concerning [NIBA] on

the   in-house     history        tapes        and    claims        system     to     the

[Department]."     App. at 826.           Joseph DiMemmo testified that as

the representative of the Statutory Liquidator, he took custody

of all NIBA records.           We find that a clear chain of custody and

foundation for this data, upon which Inservco based its claims

adjustment, was established.

      As to the claim adjustments made by Inservco, and summarized

in Gov't Ex. B-110, we find that this data also falls within the

business records exception.               As a third party administrator,

Inservco contracted with the Department to administer NIBA health

insurance claims.        The claims adjustments made by Inservco were

the same type of adjustments NIBA's third party administrators

would have had to make if NIBA had stayed in business.                         Margaret

Lee attested to the authenticity of Gov't Ex. B-110 and laid the

foundation for its admission.            Lee testified that Gov't Ex. B-110

was derived from Inservco's claims processing system and that

these records were made and kept in Inservco's regular course of


                                          10
business.           In    sum,    we     find         that    the    government          properly

established      the      admissibility           of       Gov't    Ex.    B-110        under    the

business records exception to the hearsay rule.

       Defendant          asserts,          however,         that      the      methods         and

circumstances under which Inservco prepared the summary of claims

were untrustworthy and unreliable.                           Sokolow argues that many

claims   were       not    checked       for     pre-existing          conditions,            double

submissions,        or    the    timeliness           of   the     claims.         We   disagree.

Inservco adjusted the claims according to NIBA policy guidelines,

and    these   adjustments         were        subject       to     committee        review      and

oversight      by    the    Department.               Final      approval       of      the    claim

adjustments was made by the Department.                          Although the adjustments

made by Inservco did not take into account the timeliness of

claims, trial testimony indicated that this information could not

be    determined         from    the   submissions           made     to     the     Department.

Further, Sokolow offers no specific evidence that the claims were

not    properly      inspected         by    Inservco.             Much    of   the      evidence

indicates the contrary.                In any event, such questions go to the

weight to be given to Gov't Ex. B-110, and not its admissibility.

       Finally, Sokolow claims that Gov't Ex. B-110 is a public

report   under       Federal      Rule      of   Evidence          803(8)(C),0       and,      thus,

0
   Rule 803(8)(C) excepts from the hearsay rule, even though the
declarant is available as a witness:

         Public records and reports.      Records, reports,
       statements, or data compilations, in any form, of
       public offices or agencies, setting forth, . . . in
       civil   actions and   proceedings  and   against   the
       Government   in  criminal  cases,   factual   findings
       resulting from an investigation made pursuant to
       authority granted by law, unless the sources of

                                                 11
should be excluded under the rationale set forth in United States

v. Oates, 560 F.2d 45 (2d Cir. 1977).         There the court held that,

"police and evaluative reports not satisfying the standards of

[Federal Rules of Evidence] 803(8)(B) and (C) may not qualify for

admission under [Rule] 803(6) or any of the other exceptions to

the hearsay rule."       Id. at 77.         Generally, a public report

consisting of "factual findings resulting from an investigation

made pursuant to authority granted by law," is not admissible

against a criminal defendant under Rule 803(8)(C).             We agree with

Sokolow that Gov't Ex. B-110 contains some indicia of a public

report under Rule 803(8)(C).        In processing NIBA members' claims,

Inservco    was   performing   a    fact-finding    function    and   acting

essentially as the agent of the Department, which was required to

liquidate NIBA pursuant to state law.        We disagree, however, with

Sokolow's contention that the findings made by the Department,

i.e. Inservco's adjustments, were inadmissible under the Oates

rule.

     Criticizing Oates as an unduly broad interpretation of Rule

803(8), many courts have declined to import the limitations of

Rule 803(8)(B)0 and (C) into other hearsay exceptions.                     See,

     information or other          circumstances   indicate    lack   of
     trustworthiness.

Fed. R. Evid. 803(8)(C).
0
   Rule 803(8)(B) excepts from the hearsay rule, even though the
declarant is available as a witness:

          Public records and reports.       Records, reports,
        statements, or data compilations, in any form, of
        public offices or agencies, setting forth, . . .
        matters observed pursuant to duty imposed by law as to
        which matters there was a duty to report, excluding,

                                      12
e.g., United States v. Picciandra, 788 F.2d 39, 44 (1st Cir.)

(upholding admission of DEA report against criminal defendants

under Rule 803(5) (past recollection recorded)), cert. denied,

479 U.S. 847 (1986); United States v. Metzger, 778 F.2d 1195,

1201    (6th     Cir.   1985)      (declining       to     read         Rule    803(8)(C)

limitations      into   Rule    803(10)        (absence      of    public      record    or

entry)), cert. denied, 477 U.S. 906 (1986).                     Although we have not

specifically       addressed      this    issue,0      the        Seventh      and   Tenth

Circuits    have    held   that    Rule     803(8)(C)        does       not    compel   the

exclusion of documents properly admitted under Rule 803(6) where

the author testifies.          See United States v. Hayes, 861 F.2d 1225,

1230 (10th Cir. 1988); United States v. King, 613 F.2d 670, 672-

73 (7th Cir. 1980).        The Hayes court stated that the Oates rule

does not apply in such circumstances "because such [investigator]

testimony protects against the loss of an accused's confrontation

rights, the underlying rationale for Rule 803(8) and the basis of

the    court's   concern   in     Oates."        861     F.2d      at   1230    (citation

omitted).      We reach the same conclusion here.


       however, in criminal cases matters observed by police
       officers and other law enforcement personnel.

Fed. R. Evid. 803(8)(B).
0
   In United States v. Wright-Barker, 784 F.2d 161, 173 (3d Cir.
1986), we declined to address the applicability of the Oates rule
to the admission of a Coast Guard report against criminal
defendants under Rule 803(6), the business records exception.
Even assuming inadmissibility, we found any error to be harmless.
Id. We also noted the many exceptions to the Oates rule, such as
the admission of law enforcement reports under Rule 803(6) where
the author is available to testify at trial. Id. at 173 n.12. We
declined, however, to decide the appropriateness or applicability
of such exceptions. Id.

                                          13
      Here, Margaret Lee, the Inservco employee who supervised the

claims    adjustments,    testified      and   was   cross-examined      at    some

length.     Lee personally audited part or all of each submitted

claim and stated that Gov't Ex. B-110 represented the results of

Inservco's processing of the NIBA members' claims.                 We find that

the circumstances surrounding the preparation of Gov't Ex. B-110

were probed and there was no loss of confrontation rights.                    Thus,

Gov't    Ex.    B-110   was   properly    admissible     under     the   business

records exception of Rule 803(6), and we will affirm on that

basis.
               2.   Evidence of NIBA's Non-Licensure

        At trial, the district court permitted the reading into

evidence of portions of a ruling made by the Commonwealth Court

of Pennsylvania upholding the NIBA suspension order entered by

the     Department.0      Denying   Sokolow's        motion   to   strike,      the

0
    Relevant excerpts read as follows:

        The activities conducted by [NIBA] clearly indicate to
        the Court as a matter of fact and law that [NIBA's]
        business operation clearly was not a valid ERISA
        employment benefit plan.

        . . . .

          The Court finds that NIBA was a means by which its
        principal[,] Craig Sokolow[,] was marketing insurance
        without the benefit of licensed company status while
        purporting to be a valid ERISA plan, such that state
        licensing would not be necessary.

        . . . .

        Since [NIBA] conducted business in Pennsylvania as an
        insurer without a license, it was appropriate for the
        Commissioner to intervene and take the drastic action
        of suspension.



                                      14
district court ruled that "the probative value [of the opinion]

outweigh[ed] the prejudicial value."                 App. at 608.          In addition,

various     testimony        regarding      the    non-licensure         of    NIBA      was

permitted to be addressed.

       Sokolow asserts that the district court erred in admitting

this evidence.      He argues that (1) the allegations of violations

of state law were confusing and unduly prejudicial, (2) NIBA's

alleged non-licensure was not an element of the mail fraud scheme

alleged in the indictment, (3) prejudicial effect is highlighted

by the fact that the deliberating jury requested Judge Colins's

opinion, and (4) the groundlessness of Judge Colins's opinion is

supported    by   an    en    banc    decision      in   a     related     case    by    the

commonwealth      court,      which    found      NIBA   was    a   MEWA     and   not    an

insurance entity under state law.                 See supra note 3.

       We find that the district court did not abuse its discretion

in admitting this evidence.                Under Federal Rule of Evidence 403,

"[relevant] evidence may be excluded if its probative value is

substantially      outweighed         by    the   danger     of     unfair    prejudice,

confusion of the issues, or misleading the jury."                        Fed. R. Evid.

403.    According to the government, the evidence of non-licensure

and the reading of Judge Colins's opinion was for the purpose of

providing    background        information        regarding       the   suspension       and

liquidation of NIBA.            The non-licensure of NIBA was a factual

allegation in the indictment which would demonstrate the nature




App. at 560-61, 1193 [hereinafter "Judge Colins's opinion"].


                                            15
of the fraud scheme and show the factual predicate for NIBA's

suspension and liquidation.

     Sokolow    asserts     that    the   evidence   of   non-licensure     was

unduly prejudicial and confusing, as evidenced by the jury's

request for Judge Colins's opinion.           We disagree.     In responding

to the jury's request, the district judge submitted the following

instruction, agreed to by the parties, rather than the requested

opinion:0
          [Judge Colins's opinion] was referred to in the
     evidence to give a historical background of the
     proceedings.   The opinion of Judge Collins [sic] is
     just that, an opinion. Judge Collins [sic] was not a
     witness to the facts.    You have seen and heard the
     witnesses. You must make your decision on the basis of
     the witnesses['] testimony, exhibits relating to facts
     and the stipulations of counsel - pursuant to my
     instructions on the law.

App. at 1203.       We find that any prejudicial effect was remedied

by this instruction.        Additionally, as indicated, Judge Colins's

ruling formed the basis for the liquidation of NIBA, and although

non-licensure was not an element of the mail fraud or money

laundering charges, it was a necessary factual predicate to the

mail fraud scheme.          Sokolow claimed to have created a valid

health   benefits    plan   filed    with   the   Department   of   Labor   and

operating under ERISA, when in fact, no such filing was ever

made.    Accordingly, we find the district court did not abuse its

discretion in admitting evidence of NIBA's non-licensure.0

0
     Sokolow's counsel, although agreeing to the instruction,
continued his objection to the admissibility of Judge Colins's
opinion.
0
   Sokolow also contends that the district court's ruling on this
issue amounted to collateral estoppel against him.     See United
States v. Pelullo, 14 F.3d 881, 897 (3d Cir. 1994)


                                      16
          3.        Victim Impact Testimony

     Sokolow        asserts     that      the   district    court       abused   its

discretion     in     permitting       highly    prejudicial      victim       impact

testimony to be admitted at trial.              The district court allowed 20

NIBA members to testify that they were denied payment of their

claims.   Some witnesses were also permitted to testify as to

collateral   losses      that      they   suffered.       One   witness,    Kenneth

Harris, who was injured in an auto race, was permitted to testify

as   to   $238,111.46         in    unpaid      claims,    and     to    his     long

hospitalization and prolonged rehabilitation.                    Additionally, he

was permitted to testify as to problems with collection agencies.

A year after the jury's verdict, the district court found that

Harris's claims were "caused by non-covered activity," and, thus,

he was not entitled to restitution.               Sokolow also points to the

testimony of Frank Yeager, who became a quadriplegic as a result

of a gunshot wound.       Sokolow asserts that collateral testimony as

to this witness's injury, and repeated reference to the injury by

government counsel in closing arguments, were unduly prejudicial.

     In general, to satisfy the elements for mail fraud, "[p]roof

of actual loss by the intended victim is not necessary."                       United

States v. Copple, 24 F.3d 535, 544 (3d Cir.), cert. denied, 115

(holding that defendant's prior conviction by jury for wire fraud
could not be used as collateral estoppel to establish predicate
act for violation of RICO in trial before second jury). Sokolow's
claim is unavailing. The district court denied the government's
motion in limine to preclude re-litigation of whether NIBA was an
unlicensed insurer or qualified as a MEWA under ERISA. Further,
as indicated, NIBA's non-licensure was a factual allegation in
the mail fraud scheme charged in the indictment. The government
established at trial that NIBA was neither properly filed with
the Department of Labor, nor operating under ERISA, as Sokolow
had falsely represented to various state insurance regulators.


                                           17
S.Ct. 488 (1994).          Evidence of loss, however, may be treated as

evidence of the schemer's intent to defraud.             See id. at 545.        In

Copple, we found that extensive victim impact testimony as to

collateral losses "went beyond anything that was reasonable to

prove [defendant's] specific intent to defraud."                   Id.    In that

case,   some   of    the    objectionable      collateral    impact      testimony

included testimony that money used to pay back losses came from

savings for children's college educations, that paying back the

money had affected the witnesses' health, caused weight loss, and

required   depletion       of   all   personal   savings.     Id. at      545-46.

Accordingly, the court found that the district court erred in

allowing   the      testimony    as    the    "[t]estimony   was    designed   to

generate feelings of sympathy for the victims and outrage toward

[defendant] for reasons not relevant to the charges [defendant]

faced."    Id. at 546.

      In the case before us, the victims testified to a careful

account of the dollar value of the loss suffered as a result of

the   fraud.     Many      of   the   victims    also   provided    significant

embellishment concerning adverse personal consequences, similar

to the victims in Copple.0            By asking every victim who testified

whether he or she suffered any adverse consequences from the

0
    For example, Suzanne Plattner testified that she had been
hassled by collection agencies, suffered from depression, and was
completely tormented; David Ahakinian testified that "his life
had been destroyed," that he was a "nervous wreck," and that he
had attorney's bills to pay because his claim was denied.      He
further testified that Sokolow had "created a monster company."
In addition, it appears that the claims of David Ahakinian and
Kenneth Harris were properly denied coverage, yet the district
court allowed into evidence their testimony regarding economic
loss as well as adverse consequences.

                                         18
unpaid claims, the government was attempting to highlight the

personal tragedies of the victims.

      Such testimony has little, if any, probative value and may

be unfairly prejudicial.             While normally the balancing under

Federal Rule of Evidence 403 is done by the district court, for

purposes of this discussion, we can assume, arguendo, that the

testimony was in fact prejudicial because we believe that its

admission was harmless.0            "Trial error is harmless if it is

highly probable that the error did not affect the judgment."                    Id.

(citing United States v. Simon, 995 F.2d 1236, 1244 (3d Cir.

1993)).      We stated in Simon that a high probability exists where

the   court    has   a    "'sure    conviction   that       the   error   did   not

prejudice the defendant.'"               995 F.2d at 1244 (quoting United

States v. Asher, 854 F.2d 1483, 1500 (3d Cir. 1988) (citation

omitted), cert. denied, 488 U.S. 1029 (1989)).                    In making this

determination,       we    are     not    required     to    "disprov[e]    every

'reasonable possibility of prejudice.'" Id. (citations omitted).

      Here    the    error   of     admitting    the    adverse     consequences

testimony was harmless because, as in Copple, 24 F.3d at 526-47,

the evidence of the scheme to defraud and of Sokolow's specific

intent was overwhelming.           As we have set forth above, the record

is replete with proof of Sokolow's intentional misrepresentations

to small business employers and employees and concealment of

material facts which induced them to purchase what they believed


0
   Except for the testimony of Kenneth Harris, Judge Scirica does
not believe the other victims' testimony was prejudicial. In any
event, the errors, if any, were harmless.


                                          19
to be fully insured health care coverage.                     Substantial evidence

of the actual scheme to defraud was also presented at trial.

Eighteen      of   the   twenty      victim-witnesses         who   testified    were

improperly denied coverage even though they paid premiums for

what   they    believed    to   be     a   fully    insured    health   care    plan.

Sokolow was forced to deny claims to make up for a shortage in

the claims reserve fund, since he diverted a large portion of the

collected premiums to his personal bank accounts.                       Thus, it is

"highly probable" that Sokolow would have been convicted of mail

fraud even without adverse consequences testimony.                       Any error,

therefore, was harmless.

       B.     Defendant's Challenges to Jury Instructions
              1.   Scienter Element for Violation of Money Laundering
                   Under 18 U.S.C. § 1957

       Sokolow     asserts      that       the     district     court    improperly

instructed the jury on the scienter element of 18 U.S.C. §1957.0


0
   The district court's instructions to the jury regarding the
money laundering offense, read as follows:

       [T]here are five elements in money laundering:

       1.     The Government must prove beyond a reasonable
              doubt the defendant knowingly engaged or attempted
              to engage in a monetary transaction.
       2.     The defendant knew the transaction involved in
              this case, I am going to use the word money,
              monies that were criminally received.
       3.     The criminally derived property must have a value
              in excess of $10,000.
       4.     The criminally derived property must have been in
              fact derived from a specified unlawful activity.
              That's the money laundering counts.
       5.     The money transaction must have taken place in the
              United States of America.

App. at 944-45.

                                           20
That    section    makes   it   unlawful     for    a   person   to   "    knowingly

engage[] or attempt[] to engage in a monetary transaction in

criminally derived property of a value greater than $10,000 and

is derived from specified unlawful activity." Id.                     The elements

necessary to prove a violation of § 1957 are that


       (1) the defendant engage or attempt to engage (2) in a
       monetary transaction (3) in criminally derived property
       that is of a value greater than $10,000 (4) knowing
       that the property is derived from unlawful activity,
       and (5) the property is, in fact, derived from
       'specified unlawful activity.'

United States v. Johnson, 971 F.2d 562, 567 n.3 (10th Cir. 1992).

       Defendant contends that the knowledge requirement of § 1957

requires "proof that Sokolow knew his conduct was prohibited by

law."    As Sokolow never objected to the instructions at issue,

the court's review is limited to plain error, that is, the error

must be "plain" and "affect[] substantial rights."                        See United

States v. Retos, 25 F.3d 1220, 1228-29 (3d Cir. 1994) (quoting

United States v. Olano, 113 S.Ct. 1770, 1777 (1993); see also

Fed.    R.   Crim.   P.    52(b)   ("Plain    errors     or   defects      affecting

substantial rights may be noticed although they were not brought

to the attention of the court.").

       In support of his argument, Sokolow relies primarily upon

the Supreme Court decision in Ratzlaf v. United States, 114 S.Ct.
655 (1994).       In Ratzlaf, the defendant was charged with violating

31   U.S.C.   §    5324,   which   makes     it    unlawful   for     a   person   to

"structure" numerous transactions with several banks to evade the

banks' obligation to report cash transactions exceeding $10,000.



                                       21
See id. at 658.           Section 5322(a), Title 31, United States Code,

imposes criminal penalties for a "person willfully violating" the

antistructuring          provision.           At    issue     was     the      trial    court's

instruction       that     the     government        did      not   have       to    prove    the

defendant        knew     the     "structuring"          in    which      he    engaged       was

unlawful,    but        only that       the   defendant        knew      of    the    reporting

obligation and attempted to evade that obligation.                              In reversing

the court of appeals, which upheld the conviction, the Supreme

Court     held     that     in     order      to    give      effect      to    §     5322(a)'s

"willfulness" requirement, the government must prove that the

defendant    knew        the     structuring        in   which      he   was        engaged   was

unlawful.         114 S.Ct. at 663.                 The Court was unpersuaded by

arguments that the offense of structuring is "so obviously 'evil'

or inherently 'bad' that the 'willfulness' requirement [of § 5324

is] satisfied irrespective of the defendant's knowledge of the

illegality of structuring."                Id. at 662.

    Sokolow        claims        that   the    offense        of    money      laundering     is

analogous to the offense at issue in Ratzlaf.                                 He argues that

engaging in monetary transactions, such as bank depositing, with

known criminal proceeds is not conduct that is "obviously evil or

inherently bad."           Sokolow contends the jury must find that he

knew his spending and regular bank transactions were prohibited

by law.

     Absent a "willfulness" requirement, however, we will not

require proof of knowledge of illegality to sustain a conviction

under the money laundering provision of 18 U.S.C. § 1957.                                     In

United States v. Zehrbach, 47 F.3d 1252, 1261 (3d Cir.), cert.


                                               22
denied, 115 S.Ct. 1699 (1995), in discussing the proof necessary

for bankruptcy fraud, we stated that "[t]he statutory requirement

that the underlying acts be performed 'knowingly' requires only

that the act be voluntary and intentional and not that a person

knows     that       he       is   breaking       the      law."        In        Zehrbach,   we

distinguished Ratzlaf on the basis of the "willfulness" element

required under the structuring offense.                             Id.; see also United

States v. Hilliard, 31 F.3d 1509, 1518 (10th Cir. 1994) (Ratzlaf

proof of knowledge of illegality requirement not applicable to,

inter alia, § 1957 money laundering provision); United States v.

Santos,    20    F.3d         280,   284    n.3     (7th     Cir.    1994)        (Ratzlaf    not

applicable       to       §   1956     money   laundering          provision        because   of

absence of willfulness requirement).                         Similarly, as § 1957 does

not   contain        a     willfulness      requirement,           we   decline       to   adopt

Ratzlaf for the money laundering provision at issue in this case.

      Moreover,           Sokolow's      citation       to    our    decision        in    United

States v. Curran, 20 F.3d 560 (3d Cir. 1994), is distinguishable.

In Curran, we followed Ratzlaf in construing the "willfulness"

component       of    18      U.S.C.    §   2(b),       which   makes        it    unlawful   to

deliberately cause another person to perform an act that would

violate federal criminal law.                  20 F.3d at 566-68.                 In that case,

defendant was charged with causing election campaign treasurers

to submit false reports to the Federal Election Commission in

violation of 18 U.S.C. §§ 2(b) and 1001, the false statement

statute.     Id. at 562.             Thus, unlike the money laundering statute

involved here, "willfulness" was an element of the crime at issue

in Curran.           See id. at 567-68.              In sum, we find the district


                                               23
court properly instructed the jury on the scienter element of

Sokolow's money laundering violation.
          2.   Criminally Derived Property Element of § 1957

     Sokolow      asserts    that   the    district    court   committed            plain

error in the jury instruction as to the element of § 1957 that

requires    the     criminally       derived     property      in        a    monetary

transaction to have a value in excess of $10,000.                   Specifically,

Sokolow asserts that in the court's explanation of "tracing"

criminal    proceeds,       the   district     court   erred   in    stating          the

following:
     [T]he Government need not prove that there [sic] $20,000
     came from this sale over here, because as I understand it,
     the Government's theory is these different sums -- they have
     to initially prove they came from NIBA.     It has to prove
     that it came from NIBA, initially, but not what NIBA
     account.

       So the matter goes from $20,000 from NIBA to Sokolow &
     Associates and then Sokolow & Associates spends the money or
     spends a similar sum of money some places. They don't have
     to prove it's the same $20,000 that went from Sokolow's
     [account] to Sokolow & Associates. The Government need not
     prove that all the property involved in the transaction was
     the proceeds of the money laundering. It is sufficient if
     the Government proves at least part of the property
     represents such proceeds.

App. at 945 (emphasis on alleged error).                Sokolow alleges that

the instruction "allowed the jury to convict simply on a showing

that even $1 of the proceeds of fraud were deposited into a

Sokolow account and later used to pay, in part, for the items

charged    [in    the   counts]     of   the   indictment."         We       find   this

contention is without merit.

     It is clear from the full context of the district judge's

explanation of the concept of proceeds that he is addressing the

absence of a legal requirement that the government trace the


                                          24
funds constituting criminal proceeds when they are commingled

with funds obtained from legitimate sources.       See United States

v. Johnson, 971 F.2d at 570 (noting that there is no requirement

that government "show that funds withdrawn from the defendant's

account could not possibly have come from any source other than

the unlawful activity.").        We find no error in the district

court's jury instructions in this regard.
          3.   Sokolow's Responsibility for Actions of His Agents

     Sokolow   alleges   error    in   the   district   court's   jury

instructions as to Sokolow's responsibility for actions of his

agents, particularly as it relates to "insurance agents' improper

use of the Blue Cross logo on advertisements as part of the fraud

scheme." The instruction read as follows:
       In order to sustain the burden of proof in this
     matter, it is not necessary in either of these counts
     to prove -- these types of crimes -- to prove that the
     defendant did everything, every act. A person can act
     through his agent, and therefore, if the acts or
     conduct of another were ordered by the defendant or
     directed by the defendant or authorized by the
     defendant, the law holds the defendant responsible for
     the acts, just as if he had personally done them. That
     includes both human beings and corporate agents.

App. at 945.    According to Sokolow, the jury instruction is

erroneous in that
     the jury could have found Sokolow guilty of mail fraud
     if he authorized employees to prepare marketing
     materials for his plan, and those employees on their
     own   misrepresented   the   extent  of   Blue   Cross
     underwriting in such materials. No proof that Sokolow
     directed the misrepresentations with an intent to
     defraud was demanded.

Appellant's Br. at 26.    Sokolow quotes the court in Curran, 20
F.3d at 567, which stated that, "Section 2(b) [of Title 18,

United States Code] imposes criminal liability on those persons



                                  25
who possess the mens rea to commit an offense and cause others to

violate a criminal statute."


     As defendant did not object to the jury instruction, we


review     the   district     court's   failure    to    provide   a   specific


instruction for plain error only.            See United States v. Xavier, 2


F.3d 1281, 1287 (3d Cir. 1993).          Reading the jury instructions in


context,     the   district     judge    clearly     explains    the   scienter


requirements to convict Sokolow of both the mail fraud and money


laundering offenses.          See App. at 941 ("[T]he defendant, Mr.


Sokolow, is charged with knowingly and unlawfully devising and


intend[ing] to defraud the members of [NIBA] . . . and that he


knowingly caused the United States [mails] to be used to execute


these schemes or this scheme."); App. at 944 ("[T]he Government


must prove beyond a reasonable doubt that there was -- that not


only was there a fraudulent activity, but the defendant had a


conscious intent to defraud. . . . [T]he defendant himself did


not have to mail anything.         He may or he can order someone to do


it.");      App.   at   945    ("The    Government      must   prove   that   the




                                        26
defendant knew that property involved in the money transaction


constituted or was derived, either directly or indirectly from a


criminal offense . . . .     [H]e has to know he received this money


through fraudulent means.        He has to be conscious of that."). The


jury was instructed properly that intent to defraud was required.


Thus, we find no plain error in the district court's instruction


and we affirm Sokolow's conviction.
                  III. CHALLENGES TO SENTENCING

     A.   Calculation Under the Sentencing Guidelines
     In determining the sentencing guideline range, the district
court grouped together Sokolow's mail fraud and money laundering
counts pursuant to U.S.S.G. § 3D1.2(c)0.      The higher offense
level for the two groups, the money laundering offense, was used
for computing the sentence.      Sokolow does not contest the
grouping of the counts.

           1.      The "value of funds"
      Sokolow asserts that the district court incorrectly applied

the   Sentencing    Guidelines    to   determine    the    "value   of   funds"

involved in the money laundering offense.               The "value of funds"

involved in a money laundering offense is a specific offense

characteristic.      U.S.S.G. § 2S1.2(b).          Under § 1B1.3, specific

offense   characteristics    are determined        by   "relevant   conduct,"

defined, inter alia, as

0
    All references to the United States Sentencing Guidelines
Manual are to the 1988 version, as used in the presentence
investigation report ("PSR") and apparently adopted by the
district court, unless otherwise noted.  See Appellant's Br.,
Addendum D at 2 n.2.


                                       27
      (1)   all acts and omissions committed or aided and
            abetted by the defendant, or for which the
            defendant would be otherwise accountable, that
            occurred during the commission of the offense of
            conviction, in preparation for that offense, or in
            the course of attempting to avoid detection or
            responsibility for that offense, or that otherwise
            were in furtherance of that offense;

      (2)   solely with respect to offenses of a character for
            which §3D1.2(d) would require grouping of multiple
            counts, all such acts and omissions that were part
            of the same course of conduct or common scheme or
            plan as the offense of conviction.

U.S.S.G. § 1B1.3(a)(1)-(2).            When reviewing a district court's

sentencing decisions, the court has plenary review over questions

as to the meaning of the Sentencing Guidelines.                United States v.
Edmonds,     52    F.3d     1236,     1244   (3d       Cir.   1995).      Factual

determinations underlying the application of the guidelines are

reviewed under the clearly erroneous standard.                Id.

      As    to    the     money     laundering     counts,     the     presentence

investigation report ("PSR") determined that over $2.2 million in

proceeds from the unlawful mail fraud scheme had been laundered

by Sokolow.       PSR at 6.       This amount represented the commissions

received    by    Sokolow    through    AIM,     and    the   related    insurance
agencies, Sokolow & McMillan, and Sokolow, McMillan & O'Leary. In

addition to this amount, the district court added the additional

$1.8 million Sokolow received in salary, officer's loans, and

other disbursements to calculate the "value of funds" involved in

the money laundering offenses under the Sentencing Guidelines.

The   district     court    concluded    that      Sokolow    had    converted   $4

million from the mail fraud scheme for personal benefit, and,

therefore, this amount represented the "accurate measure of harm



                                        28
from   Defendant's       money    laundering      offenses."0        See   Appellant's

Br.,   Addendum    D,    at    13.      Sokolow    argues      the    district   court

erroneously included the $1.8 million as relevant conduct of the

money laundering offense, without determining whether that amount

independently      satisfied      the    elements       of    §1957,   namely,      that

Sokolow engaged in monetary transactions in criminally derived

property of a value greater than $10,000.                          We disagree with

Sokolow's contention.

       We have previously noted that the commentary to U.S.S.G.

§2S1.1 does not define "the value of funds."                        United States v.

Thompson, 40 F.3d 48, 51 (3d Cir. 1994), cert. denied, 115 S.Ct.

1390   (1995).      In    Thompson,      we    stated    that      "[the   Commentary]

states that '[t]he amount of money involved is included as a

factor   because    it    is     an    indicator    of       the   magnitude   of   the

criminal enterprise, and the extent to which the defendant aided

the enterprise.'"         Id.        In United States v. Johnson, 971 F.2d

562, 576 (10th Cir. 1992), the court stated that "the measure of

harm under § 2S1.1 is the total amount of the funds involved." In

dicta, the Johnson court noted that
     [F]unds associated with uncharged instances of money
     laundering can be added in to determine the offense
     level under § 2S1.1 if those acts are within the scope
0
    Section 2S1.2(b)(2) (Engaging in Monetary Transactions in
Property Derived from Specified Unlawful Activity) of the
Sentencing Guidelines provides that:

       If the value of the funds exceeded $100,000, increase
       the offense level as specified in § 2S1.1(b)(2).

U.S.S.G. § 2S1.2. Section 2S1.1(b)(2) lists the value of funds
and the corresponding increase in offense level. The Guidelines
prescribe a seven level increase in the offense level when the
value of funds exceeds $3,500,000.


                                          29
     of relevant conduct under § 1B1.3(a)(2).      Thus, in
     determining the 'value of funds' under § 2S1.1, the
     district court is not necessarily limited only to the
     funds identified with the counts of conviction.

Id. at 576 n.10.
     We find that the district court did not err in finding the

additional $1.8 million as "relevant conduct" within the meaning

of the sentencing guidelines.         As previously noted, this amount

was derived from Sokolow's unlawful mail fraud scheme.               Further,

Sokolow's accountant testified that the $4 million represented

the total amount of funds disbursed from NIBA to Sokolow during

the period relevant to the mail fraud scheme.              As such acts were

"part of the same course of conduct or common scheme or plan as

the offense of conviction," U.S.S.G. § 1B1.3(a)(2), we find that

the $1.8 million was properly considered "relevant conduct" under

the Sentencing Guidelines even though this amount was not charged

in the money laundering counts.            See United States v. Rose, 20
F.3d 367, 372-73 (9th Cir. 1994) (finding that uncharged acts of

money laundering may be considered in determining appropriate

sentence under Sentencing Guidelines).
          2.   Abuse of position of trust enhancement.

     Sokolow    received    a   two-level     enhancement     for   abuse   of

position of trust under U.S.S.G. § 3B1.3.               That section states,

in relevant part:
     If the defendant abused a position of public or private
     trust, or used a special skill, in a manner that
     significantly facilitated the commission or concealment
     of the offense, increase by 2 levels.

U.S.S.G.   §   3B1.3.      At   the   time   of   the    relevant   offenses,

Application Note 1 in the commentary to this section stated the

following:


                                      30
      The position of trust must have contributed in some
      substantial way to facilitating the crime and not
      merely have provided an opportunity that could as
      easily have been afforded to other persons.    This
      adjustment, for example, would not apply to an
      embezzlement by an ordinary bank teller.

U.S.S.G. § 3B1.3, comment. (n.1).0              In applying this section, "a

sentencing court must determine whether a defendant was placed in

a position of trust, and if he was, whether he abused that

position in a way that significantly facilitated his crime."

United States v. Craddock, 993 F.2d 338, 340 (3d Cir. 1993).                      The

inquiry   into    whether      someone        obtains   a   position      of    trust

approaches a purely legal determination for which de novo review

is appropriate.        Id.; see also United States v. Lieberman, 971

F.2d 989, 993 (3d Cir. 1992).            Whether or not a defendant abuses

a position of trust more closely resembles a question of fact and

is   reviewed    for   clear    error.         Craddock,    993    F.2d    at   340.

      Sokolow argued before the district court, as he does here on

appeal,   that   enhancement     for     abuse     of   position    of    trust    is


0
   Application Note 1 of the Commentary has since been clarified
as follows:

      'Public or private trust' refers to a position of
      public or private trust characterized by professional
      or    managerial    discretion     (i.e.,    substantial
      discretionary   judgment   that  is   ordinarily   given
      considerable   deference).      Persons   holding   such
      positions ordinarily are subject to significantly less
      supervision than employees whose responsibilities are
      primarily non-discretionary in nature.         For this
      enhancement to apply, the position of trust must have
      contributed in some significant way to facilitating the
      commission or concealment of the offense (e.g., by
      making the detection of the offense or the defendant's
      responsibility for the offense more difficult).

U.S.S.G. § 3B1.3, comment. (n.1) (1994).

                                         31
inappropriate because Sokolow was not in a position of trust and

because there were no "victims" to the money laundering counts.0

Relying upon United States v. Lowder, 5 F.3d 467, 473 (10th Cir.

1993), the district court rejected Sokolow's argument. In Lowder,

the Tenth Circuit upheld an enhancement for abuse of position of

trust for a money laundering conviction where (1) as a CPA,

defendant   provided   tax   and   financial   advice    to   elderly   and

unsophisticated clients; (2) he advised his clients to place

their money with him and promised them security; and (3) as

president of the fraudulent investment corporations, he was free

to spend that money, without oversight.        Id.      In this case, the

district court determined that Sokolow, as CEO and President of

NIBA, abused a position of trust in facilitating the commission

0
   At sentencing, Sokolow received a two-level upward adjustment
for his organizer/leader role in the mail fraud offenses under
U.S.S.G. § 3B1.1. See Appellant's Br., Addendum D, at 5; PSR, ¶
27, at 6. Under the sentencing guidelines in effect on the date
of defendant's sentencing, the abuse of a position of trust
adjustment would also apply to the mail fraud offenses, in
addition to the organizer/leader role enhancement. See U.S.S.G. §
3b1.3 (1994).     It appears, however, that because the new
guidelines would result in an increased sentence, the district
court adopted the PSR's use of the sentencing guidelines in
effect at the time defendant committed the offenses.          See
Appellant's Br., Addendum D, at 2 n.2.          Thus, an upward
adjustment for the abuse of position of trust could "not be
employed in addition to that provided for in §3B1.1." U.S.S.G.
§3B1.1. Accordingly, the abuse of position of trust enhancement
could only apply to the money laundering counts.     See U.S.S.G.
§1.B1.11 (b)(1) ("If the court determines that use of the
Guidelines Manual in 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 date that the offense of conviction was committed.");
see also United States v. Corrado, 53 F.3d 620, 623 (3d Cir.
1995) ("to apply a change in the guidelines that enhances the
penalty would offend the ex post facto clause of the United
States Constitution").


                                   32
of the money laundering offenses.            The court relied upon the fact

that   Sokolow    marketed      his   insurance    plans    to    small-business

owners and self-employed persons, and was freely able to spend

the derived monies as he wished.

       We agree with the district court's conclusion.                     In United

States v. Pardo, 25 F.3d 1187, 1192 (3d Cir. 1994), we explained

that in determining whether a position constitutes a position of

trust for purposes of § 3B1.3, a court must consider:
     (1) whether the position allows the defendant to commit
     a   difficult-to-detect  wrong;   (2)  the   degree  of
     authority which the position vests in defendant vis-a-
     vis the object of the wrongful act; and (3) whether
     there has been reliance on the integrity of the person
     occupying the position.

Id.    The court further stated that, "[t]hese factors should be

considered in light of the guiding rationale of the section--to

punish 'insiders' who abuse their position rather than those who

take advantage of an available opportunity."               Id.

       Applying   the   Pardo    factors     to   this    case,    we   find   that

Sokolow held a position of trust under U.S.S.G. § 3B1.3.                     First,

as President of NIBA, Sokolow was able to commit difficult-to-

detect   wrongs,   as   he    had     sole   control     over    NIBA's    accounts

without oversight or supervision.            Second, Sokolow exercised the

requisite degree of authority over the object of his wrong.                      It

was within Sokolow's authority to withdraw funds from NIBA and

that authority was necessary for the commission of the money

laundering offenses.0        Finally, as the district court noted, the

0
   Our reference to the money laundering offenses is only to the
three money laundering counts that involved the laundering of
monies from NIBA accounts to other assets that Sokolow owned or
controlled. The remaining counts appear to us to have involved

                                        33
funds to be laundered were derived from Sokolow's marketing of

NIBA insurance plans to small business owners and self-employed

persons.         In selecting the NIBA health benefits plan for their

employees and families, these members clearly placed a measure of

reliance on the integrity of Sokolow in his position as President

of NIBA.     NIBA members testified to receiving materials regarding

the health benefits plan, signed by Sokolow in his capacity as

President.

       Sokolow argues that no fiduciary relationship existed with

NIBA   members      in    connection      with      the    submission       of     premiums.

Unlike      in    Lowder,    where       the    defendant         induced       elderly      and

unsophisticated          clients    to    entrust         money    to   him      to    invest

securely on their behalf, Sokolow contends that NIBA members had

no   similar      expectation      with    premiums        entrusted       to    NIBA.       We

disagree.        NIBA members submitted premiums with the expectation

that their health care claims would be covered by NIBA.                                      As

president of NIBA, Sokolow was entrusted with the proper use of

those funds.        Thus, Sokolow held a formal position of trust vis-

a-vis NIBA members.

       As   Sokolow      occupied     a    position         of    trust,      it      must   be

determined whether he abused this position "in a manner that

significantly facilitated the commission or concealment of the

only transfers of criminally derived monies from personal
accounts that Sokolow owned or controlled to other assets or
accounts that Sokolow owned or controlled.     As to these money
laundering counts, we find no position of trust warranting the
enhancement. See United States v. Hickman, 991 F.2d 1110, 1112
(3d Cir. 1993) ("To abuse a position of trust, a defendant must,
by definition, have taken criminal advantage of a trust
relationship between himself and his victim.").


                                               34
offense."        U.S.S.G. § 3B1.3.       As indicated, the district court

found that Sokolow's role as president facilitated the commission

of   the    money    laundering    offenses.         Sokolow      had     significant

authority over the distribution of NIBA funds.                        As the district

court noted, Sokolow was "free to spend the money as he wished."

Accordingly, we find that the district court did not clearly err

in finding an abuse of position of trust.                  In sum, we will affirm

the district court's application of the Sentencing Guidelines.
     B.   The Restitution Order

      The    district     court   ordered     Sokolow       to   pay     $690,246    in

restitution to 17 NIBA members in the amount of unpaid claims for

medical care and treatment.             According to the government, the

basis      for   calculating     the   losses   was    Gov't      Ex.     B-110,    the

Inservco compilation of adjusted, unpaid claims.                      The restitution

amount      excluded    $238,111.46     claimed       by    Kenneth       Harris    for

uncovered medical care claims.               The district court stated that

"[t]he evidence at trial and the sentencing hearing does not

support any other reductions in the amount of restitution."

      Generally, the "district judge must point to evidence in the

record     supporting     the    calculation    of    loss       to    the   victims."

Copple, 24 F.3d at 549-50.             Sokolow argues that other factual

evidence in the record warrants further adjustment to many of the

alleged     unpaid     claims.     Sokolow    cites    five      examples     of   NIBA

members whose alleged unpaid claims should have been reduced.


           (1) Martha Mosher submitted a $12,000 claim,
      which was valued by the liquidator at $512. The court
      awarded her $51,834.99.     In Gov't Ex. B-110, this



                                        35
     amount is listed as an adjusted unpaid claim for Shawn
     Mosher.

          (2)   Patricia and Gerald Ferrier's claims were valued
     by the statutory liquidator at zero.        This amount is
     reflected in Gov't Ex. B-110.      Yet, the district court
     granted them $3492 in restitution.

          (3) Olivia Anderson submitted no documents in support
     of her claim, and a letter from the statutory liquidator
     stated that all her bills had been paid but one. The court
     granted her $47,654.    Further, she is not listed in the
     excerpts of Gov't Ex. B-110, and the parties have not
     indicated from where this amount derives.

          (4) David Ahakinian and William Vincent Bradford were
     allegedly not paid claims because they misrepresented
     preexisting conditions. They disputed these allegations on
     the witness stand. The district court awarded them $45,450
     and $277,377 respectively.

See Appellant's Br. at 39-40.
     Sokolow correctly contends that the basis upon which the

restitution awards was granted is unclear from Gov't Ex. B-110,

and often contradicted by trial testimony.    We will remand the

restitution order for the district court to make specific factual

findings regarding the actual amount of recoverable loss

sustained by these claimants.

     C.   The Forfeiture Order

     The district court ordered Sokolow to forfeit $2,141,108.67,

plus the contents of a Commonwealth Federal Savings and Loan

Account, all to be satisfied from substitute assets.

          1.   Identifiable Forfeitable "Property"

     Sokolow challenges the validity of the special verdict forms

used by the jury with regard to 17 money laundering counts.     As

an example, the verdict forms for the counts read as follows:
     ITEM 1.   $125,000.00



                                 36
      We the jury find that the property identified as Item 1 is:

      a)     Property involved in the violation of money laundering
             (18 U.S.C. § 1957) charged in Count 126 of the
             Indictment   and[/]or  property   traceable  to   such
             property.

             YES     ________

             NO      ________


App. at 974.         The jury marked "YES" for each of the monetary

amounts listed for the money laundering counts.                  The criminal

forfeiture provision provides as follows:

      The court, in imposing sentence on a person convicted

      of an offense in violation of [inter alia, 18 U.S.C.
      §1957], shall order that the person forfeit to the

      United States any property, real or personal, involved

      in such offense, or any property traceable to such

      property.

18   U.S.C    §    982(a)   (1994).    Sokolow   argues   that   the    special

verdict      forms    are   invalid   because    they   failed   to    identify

specifically the property involved.             We disagree.     Federal Rule

of Criminal Procedure 7(c)(2) provides that
     [n]o judgment of forfeiture may be entered in a
     criminal proceeding unless the indictment or the
     information shall allege the extent of the interest or
     property subject to forfeiture.

Fed. R. Crim. P. 7(c)(2). Further, Rule 31(e) provides that
     [i]f the indictment or the information alleges that an
     interest or property is subject to criminal forfeiture,
     a special verdict shall be returned as to the extent of
     the interest or property subject to forfeiture, if any.

Fed. R. Crim. P. 31(e).         The indictment specifically alleges the

amounts involved, and from where the amounts are derived.                    We




                                       37
find that the special verdict forms elicited the proper findings

from the jury.

           2.    Substitutable Assets

     Sokolow argues that the forfeiture of substitute assets on

the basis of the invalid special verdict forms was improper.          As

noted above, however, the verdict forms were appropriate, and,

thus, Sokolow's argument on this ground is without merit.

     Sokolow     also   challenges    the   order   of   forfeiture   of

substitute assets on the basis that the government failed to

demonstrate that this action was appropriate.       In general, we may

not set aside the district court's factual findings unless they

are clearly erroneous.     United States v. One 1973 Rolls Royce, 43

F.3d 794, 804 (3d Cir. 1994).         Forfeiture of substitute assets

may be ordered if the property traceable to money laundering, as

a result of any act or omission of the defendant,


     (1) cannot be located upon the exercise of due
     diligence; (2) has been transferred or sold to, or
     deposited with, a third party; (3) has been placed
     beyond the jurisdiction of the court; (4) has been
     substantially diminished in value, or (5) has been
     commingled with other property which cannot be divided
     without difficulty.

21 U.S.C. § 853(p) (1994).      In this regard, the district court

found that Sokolow diminished the value of certain real estate

property owned by him, and transferred much of his assets to

other parties and family members, over whom he still exercised

control.   We find no clear error in the district court's order of

forfeiture of substitute assets.
          3.   Criminal Forfeiture Under Count 126



                                     38
       Count     126        charged       Sokolow        with     a        money   laundering

transaction involving $125,000 made on October 4, 1988.                              The most

recent   amendment          to   the      forfeiture         statute,       however,    became

effective on November 18, 1988.                   Sokolow asserts that, on ex post

facto grounds, this forfeiture should be vacated.

       Prior to November 18, 1988, 18 U.S.C. § 982 permitted the

forfeiture of


       any property, real or personal, which represents the
       gross receipts the person obtained, directly or
       indirectly, as a result of such offense, or which is
       traceable to such gross receipts.

18    U.S.C.    §     982(a)     (Supp.      V    1987)       (emphasis       added).      The

legislative history of the statute suggested a narrow reading of

the    statute        stating      that    "gross       receipts"          meant   "only   the

commission earned by the money launderer . . ., and not the

corpus laundered itself."                 S. Rep No. 433, 99th Cong., 2d Sess.

23 (1986).          According to Sokolow, only later was the statute

amended to cover "any property, real or personal, involved in

such   offense,        or    any    property          traceable       to    such   property."

Appellant's Br. at 48-49 (quoting Anti-Drug Abuse Act of 1988,
Pub. L. No. 100-690 § 6463, 102 Stat. 4374 (1988)).

       Neither party has cited any case law interpreting "gross

receipts" to mean the "corpus laundered."                         The government argues,

however,       that    where,       as    here,        the   defendant        committed    the

specified      unlawful       activity      as        well   as   the      money   laundering

violation, the corpus of the money is the "gross receipts" to the

defendant and is thus forfeitable.                     We agree.



                                                 39
       As Sokolow was the person committing the unlawful activity

of    mail   fraud      and   also      laundering       money      derived   from     that

unlawful     activity,        it   is     clear      that   he   obtained     the     total

$125,000 as the "gross receipts" of the money laundering offense.

There is no need for a finding that "Sokolow paid himself a

commission for laundering his own money."                     See Appellant's Br. at

49.    The money was derived from unlawful activity, and there is

no evidence indicating that this does not represent the "gross

receipts" of his money laundering scheme.                           As review by this

court is for plain error (Sokolow did not challenge this issue at

trial),      we    find   that      the       district      court    did   not   err     in

instructing the jury to determine whether the $125,000 was the

amount "involved in the violation of money laundering."

                                   IV.        CONCLUSION

       In light of the foregoing, we will affirm the judgment of

conviction        and   sentence,       and    the   forfeiture      order.      We    will

remand for entry of a new restitution order in accordance with

this opinion.




                                               40
