
USCA1 Opinion

	




                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 95-2121                                    UNITED STATES,                                      Appellee,                                          v.                                   HENRY J. PEPPE,                                Defendant - Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Douglas P. Woodlock, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                Selya, Stahl and Lynch,                                   Circuit Judges.                                   ______________                                 ____________________            Richard  H. Gens  with  whom Martin  K.  Leppo was  on  brief  for            ________________             _________________        appellant.            Gary  S. Katzmann,  Assistant United  States Attorney,  with  whom            _________________        Donald K. Stern, United States Attorney, was on brief for appellee.        _______________                                 ____________________                                    March 29, 1996                                 ____________________                      STAHL, Circuit Judge.  Pursuant to a plea agreement                      STAHL, Circuit Judge.                             _____________            with  the  government,  defendant-appellant  Henry  J.  Peppe            pleaded guilty  to a three-count indictment  charging him and            his   codefendant,   Joseph   S.   Mongiello,   with   making            extortionate extensions of credit  and using, and  conspiring            to use, extortionate means to collect and attempt  to collect            an  extension of credit.   The district court sentenced Peppe            to  twenty-seven  months'  incarceration  followed  by  three            years' supervised  release, a  special assessment fee,  and a            $10,000 fine.  Peppe  now appeals the imposition of  the fine            and   a  condition   of  his  supervised   release  requiring            probation-office  approval prior  to  any  incurring  of  new            credit charges or opening of new credit lines.1                                          I.                                          I.                                          __                       Factual Background and Prior Proceedings                       Factual Background and Prior Proceedings                       ________________________________________            A.  Offense Conduct            ___________________                      We  accept the facts of the offense as set forth in            the  unchallenged portions of the Presentence Report ("PSR").            See United States v. Grandmaison, No. 95-1674, slip op. at 2-            ___ _____________    ___________            3 (1st Cir. Mar. 1, 1996).                      In the  summer of 1993, Peppe  and Mongiello loaned            to John Wiltshire,  a self-employed  contractor, $3,000  upon                                            ____________________            1.  At oral  argument before  this court, Peppe  withdrew his            challenge   to  the  court's   imposition  of  an  additional            condition of  supervised release: that Peppe  grant access to            any and all financial  information requested by the probation            office.  Accordingly, we do not address this argument.                                         -2-                                          2            which Wiltshire was  required to  pay 5%  interest per  week.            When  Wiltshire was late  in making his  loan payments, Peppe            and  Mongiello  would intimidate  him  and  his wife  through            repeated,   threatening  telephone  calls.    In  June  1994,            Wiltshire  temporarily  stopped  making  the  weekly interest            payments because he  could no  longer afford them.   In  July            1994,  Wiltshire  agreed  to  do some  construction  work  at            Peppe's home in return for forgiveness of part of the debt.                      On August 1, 1994, Wiltshire contacted  the Federal            Bureau of Investigation ("FBI") about his situation.  By that            date,  he had  paid about  $6,000 in  interest on  the $3,000            loan.    As  part  of  the  FBI's  subsequent  investigation,            Wiltshire tape-recorded telephone conversations  and meetings            with   Peppe   and    Mongiello,   including    conversations            accompanying five  additional payments on  the loan.   On one            such  occasion,   Peppe  referred  to  his   "cuff  list"  of            delinquent loan-shark debtors to see how far behind Wiltshire            was.  In October 1994, Wiltshire told Peppe that he would not            make further payments on  the loan and indicated that  he had            relocated himself  and his  wife.  Upon  hearing this,  Peppe            became very angry and  warned Wiltshire, "I will catch  up to            you" and "I will find you."  At the time of his arrest, Peppe            had  in his  possession  a "cuff  list"  listing ten  debtors            overdue in their payments.                                         -3-                                          3            B.  The Plea Agreement            ______________________                      The  parties  agreed  that  Peppe's  plea would  be            tendered pursuant to Fed. R.  Crim. P. 11(e)(1)(B), and that,            "[w]ithin  the  maximum sentence"  possible  under applicable            law,  "the  sentence  to  be   imposed  is  within  the  sole            discretion of  the sentencing judge."   Peppe acknowledged in            the  plea agreement  that he  faced a  maximum penalty  of 20            years'  incarceration and a $250,000 fine on each count.  The            agreement stated  that,  under the  United States  Sentencing            Guidelines, Peppe's Base Offense Level was 20 and the parties            would  recommend to  the  court a  three-level reduction  for            Peppe's acceptance  of responsibility,  resulting in a  Total            Offense Level of 17.            C.  The Presentence Report            __________________________                      In  the  PSR,  Peppe's  Total   Offense  Level  was            computed at 17, his  Criminal History Category at I,  and the            applicable  Guideline  imprisonment  range  was  found  to be            twenty-four to thirty months  followed by two to three  years            of  supervised  release.   The fine  range was  determined at            $5,000 to  $50,000, pursuant  to U.S.S.G.     5E1.2(c)(1) and            (2).    While  the  government  contended  that  the  victim,            Wiltshire, was entitled to  restitution of the interest paid,            $6,000, the PSR stated that the issue of granting restitution            in  loan-sharking  cases  had  never been  addressed  in  the            District  of Massachusetts,  and  relayed the  matter to  the                                         -4-                                          4            court.  Peppe  complained that  the government's  restitution            figure came only  from Wiltshire and was exaggerated,  but he            did  not offer  his  own calculation  and  did not  otherwise            object to that portion of the PSR.                      The  PSR  also  included  the  following additional            facts to which  neither party  objected.  Peppe  is a  forty-            year-old high  school graduate with previous  work experience            as  a  bartender,  temporary  postal  employee, greyhound-dog            owner  and racer,  and employee  at his father's  smoke shop.            Peppe and his wife, Jayne Zannino Peppe, have three children,            the  youngest of whom  may have a  serious medical condition.            Peppe's wife manages the care of the family and home, working            part-time  as  a real  estate  agent.   Peppe's  assets total            $24,056.50,   comprised  of,   inter  alia,   bank  accounts,                                           _____  ____            securities, life insurance, real estate,  and an automobile.2            His  liabilities total  $50,000, made  up of  loans  from his            brothers  for attorney fees incurred in his defense.  The PSR            reports that Peppe has a negative net worth of $25,943.50 and            a monthly negative cash flow of $193.            D.  The Sentencing Hearing            __________________________                      The district court adopted the factual findings and            Sentencing Guideline  applications set forth in the  PSR.  At            the sentencing  hearing,  the district  court  confirmed  the                                            ____________________            2.  As of the time of the balance sheet set forth in the PSR,            Peppe no longer owned greyhounds.                                         -5-                                          5            PSR's calculation of Total Offense Level and Guideline ranges            for  the   fine  and  imprisonment  term.     The  government            recommended thirty  months' incarceration, a  fine of  $5,000            and  an order of restitution of $6,000.  Peppe responded that            restitution  should  not  be  an  issue  in  sentencing,  and            requested  a hearing should it become a factor.  With respect            to restitution, the court stated:                      [T]he  record,  frankly,  is   not  clear                      enough   for  me   to  do   anything  but                      speculate concerning the proper  level of                      restitution.    I  decline  to  take  any                      further time before  reaching a  sentence                      in  this case  to  attempt  to fashion  a                      restitutionary  remedy,  particularly  in                      light  of  the  fact  that   there  is  a                      potential for a fine.   And I will impose                      a fine in this case.                      The district court  sentenced Peppe to twenty-seven            months'  imprisonment   on   each   count,   to   be   served            concurrently, followed  by three years of supervised release.            The  court  further imposed  a  $10,000  fine, with  interest            waived,  to  be paid  in installments.    In addition  to the            standard conditions of supervised release,  the court ordered            that Peppe  could  not  "incur  new credit  charges  or  open            additional  lines of  credit  without prior  approval of  the            probation  officer"   who,   in   turn,   would   take   into            consideration  Peppe's  compliance   with  the  fine  payment            schedule.  At the  conclusion of the sentencing  hearing, the            court opined:                                         -6-                                          6                      I think I needn't say very much about the                      reasons for  the sentence.   I think  Mr.                      Pep[p]e  understands that this  is one of                      the costs of doing  this kind of business                      and that  there is imposed  in connection                      with those costs a  fine component, and a                      component  [of]  being  taken  away  from                      loved ones at critical times.                                         II.                                         II.                                         ___                                      Discussion                                      Discussion                                      __________                      Peppe now  argues that the court  erred by imposing            the $10,000  fine and by  prohibiting him from  incurring new            credit charges or opening  additional lines of credit without            prior approval  of the  probation office.   Neither challenge            was  raised before  the  sentencing judge,  however, and,  as            Peppe concedes, our review  is for plain error only.   United                                                                   ______            States v. Carrozza, 4  F.3d 70, 86-87 (1st Cir.  1993), cert.            ______    ________                                      _____            denied, 114 S. Ct. 1644 (1994).            ______            A.  Imposition of $10,000 Fine            ______________________________                      Peppe contends that the  court did not consider his            financial  resources  and earning  ability  in assessing  the            $10,000 fine.  He  points out that his  financial information            in the record  is undisputed, and argues that  it establishes            both  his  current   inability  to  pay  the   fine  and  the            unlikelihood that  he will be able  to pay it in  the future.            Peppe also suggests that  the fine contained a "restitutional            component," noting  that its amount  reflects an  approximate            combination of  the government's  recommendation  for a  fine                                         -7-                                          7            ($5,000) and restitution ($6,000), and that the court did not            consider  the  requisite  factors  to  support a  restitution            remedy.    He maintains  that,  in  addition to  waiving  the            interest on the fine,  the court should also have  waived the            fine  itself   and  imposed  alternative  sanctions  such  as            community service.                      When imposing a fine and its conditions, a district            court must  consider, inter alia, "any  evidence presented as                                  _____ ____            to  the defendant's  ability to  pay the fine  (including the            ability to pay over a period of time) in light of his earning            capacity and  financial resources"  and "the burden  that the            fine places on  the defendant and his  dependents relative to            alternative punishments."   U.S.S.G.   5E1.2(d); see  also 18                                                             ___  ____            U.S.C.    3572(a).    The   defendant  bears  the  burden  of            demonstrating that his case warrants an exception to the rule            that a fine  be imposed.  United  States v. Savoie,  985 F.2d                                      ______________    ______            612,  620 (1st  Cir. 1993);  U.S.S.G.   5E1.2(a)  ("The court            shall  impose a fine in all cases, except where the defendant            establishes that he  is unable  to pay and  is not likely  to            become  able to pay any  fine").  Moreover,  a district court            need  not  make  express  findings  regarding  a  defendant's            financial condition  so long as the record  is sufficient for            adequate appellate review.   Savoie, 985 F.2d  at 620 (citing                                         ______            United  States v. Wilfred Am. Educ. Corp., 953 F.2d 717, 719-            ______________    _______________________            20 (1st Cir. 1992)).  When a challenge to the imposition of a                                         -8-                                          8            fine is fully preserved  for appellate review, we  review for            abuse  of discretion.   Savoie, 985  F.2d at 620.   But here,                                    ______            because  Peppe did  not  object below,  we  review for  plain            error.  Carrozza, 4 F.3d at 86-87.                    ________                      First, we  do not agree  with Peppe that  the court            failed to consider his  financial condition when imposing the            fine.    The PSR,  adopted  by the  district  court, detailed            Peppe's assets, liabilities, and  monthly cash flow.  Wilfred                                                                  _______            Am. Educ. Corp., 953 F.2d at 719-20 (reviewing court will not            _______________            presume that the court below ignored relevant evidence in the            record).    The court's  consideration  of Peppe's  financial            condition  is evident in its  waiver of interest  on the fine            and written order  stating that it  "has determined that  the            defendant  does  not  have  the  ability  to  pay  interest."            Indeed,  in choosing $10,000, the  court chose a  fine at the            lower end of the applicable $5,000 to $50,000 range.                      Second, although it is undisputed that Peppe's  net            worth and monthly cash  flow are negative, these facts  alone            do  not compel  the  conclusion that  a  fine should  not  be            imposed.   Rather, it was Peppe's burden to establish that he            was  not able to pay  the fine, with  or without a reasonable            installment schedule.  At no time did Peppe offer evidence to            establish his inability to pay, and his inability to pay does            not  follow inexorably  from the  facts in  the record.   See                                                                      ___            United States v. Olivier-Diaz,  13 F.3d 1, 5 (1st  Cir. 1993)            _____________    ____________                                         -9-                                          9            (noting that plain  error will not  be found where  defendant            asserts a  fact that he failed to ask the sentencing court to            find, "unless  the desired  factual finding  is the  only one            rationally  supported by the record below.").  Interestingly,            all of Peppe's  debt is owed to family members who funded his            defense costs.   Further, Peppe  does not address  his future            ability to pay the fine, and given his age, good health,  and            past  employment  experience,  he  cannot  complain  in  this            regard.                      Finally,  Peppe contends  that the  court fashioned            the   fine  to   include  an   impermissible  "restitutionary            component."  This argument lacks merit.  The court explicitly            stated  that   a  restitutionary   remedy  would   be  purely            speculative, and  simply declined  to take  that route.   The            court did  not express the  desire to compensate  the victim,            Wiltshire;  rather, it  expressed the  goal to  punish Peppe.            Accordingly, the court imposed the  fine in an amount  higher            than recommended  by the government,  but still at  the lower            end of the Guideline  range.  The record shows that Peppe had            ample  notice  of  both the  potential  for  a  fine and  the            applicable fine range, and never claimed the inability to pay            any amount.                      We find no error -- certainly no plain, or obvious,            error  --  in  imposing  the  $10,000  fine.     We  decline,                                         -10-                                          10            therefore, to order any relief sought  by Peppe regarding the            fine.            B.  Probation Office Approval Prior to Obtaining New Credit            ___________________________________________________________                      Peppe  argues  that   requiring  probation   office            approval  prior  to  his  incurring  new  credit  charges  or            obtaining  additional  lines  of  credit  is  not  reasonably            related  to  his  offense and  constitutes  an  impermissible            occupational restriction that inhibits his  pursuit of lawful            business  activity.    He   also  contends  that,  under  the            Guidelines, the only purpose for this  condition is to ensure            compliance with a fine payment schedule; accordingly, he asks            this  court  to modify  the  condition  to resemble  U.S.S.G.              5E1.2(g).                      A  district   court  may  impose  a   condition  of            supervised  release  that  is  "reasonably related"  to:  the            defendant's offense, history,  and characteristics; the  need            for   deterrence  from   further  criminal   conduct;  public            protection;  and  effective  correctional  treatment  of  the            defendant.   U.S.S.G.   5D1.3(b);  see also United  States v.                                               ___ ____ ______________            Thurlow, 44 F.3d 46, 47 (1st Cir.), cert.  denied, 115 S. Ct.            _______                             _____  ______            1987   (1995).     Peppe's  offense   conduct  involved   the            extortionate  extension  of  credit.   His  "cuff  lists"  of            delinquent  loan-shark  debtors,  evidenced  in  the  record,            suggest  that  his  extortionate  lending  activity  was  not            limited to  the identified victim, Wiltshire.   The condition                                         -11-                                          11            of  prescreening  new credit  charges and  credit lines  is a            reasonable  information-gathering  device  for the  probation            office to  monitor Peppe's use  of money; when  Peppe desires            new  credit, the  probation  office  may  inquire as  to  its            purpose and planned disbursement.   Moreover, as the district            court  indicated at  sentencing, the  probation office  could            also use that opportunity  to monitor Peppe's compliance with            the fine  payment schedule.   Therefore, the  condition meets            the  requirements  of    5D1.3(b)  because  it is  reasonably            related to  Peppe's offense, preventing  his participation in            further extortionate lending, and ensuring his payment of the            fine.                      Peppe suggests that  the credit condition  inhibits            his ability to work or  engage in lawful business activities,            in derogation of  the requirements  of U.S.S.G.    5F1.5(a).3            We disagree.  First,   5F1.5(a) is inapplicable because Peppe            fails  to  explain  how  the court's  condition  affects  his            participation  in  a   "specified  occupation,  business,  or                                    _________            profession."  Id. (emphasis  added).  Even assuming it  is an                          ___            "occupational restriction" within the  meaning of   5F1.5, it                                            ____________________            3.  U.S.S.G.    5F1.5(a) provides  that  a court  may bar  or            limit a defendant's participation in a "specified occupation,            business,  or  profession"   if  it   determines  that   such            participation bears a "reasonably direct relationship" to the            relevant offense conduct, and the restriction  "is reasonably            necessary to  protect the public  because there is  reason to            believe  that, absent  such  restriction, the  defendant will            continue to engage in [similar unlawful conduct]."                                         -12-                                          12            is appropriate  for many of  the same  reasons that  it is  a            proper condition of supervised release under   5D1.3(b).  See                                                                      ___            supra  note 3  (noting  criteria considered  in occupational-            _____            restriction  condition).  Second, the condition requires only            prior approval of the probation office; it is not an absolute            bar to incurring credit charges or obtaining new  credit, and            it  applies only for the  duration of the supervised release.            Thus, we do not  see, and Peppe has  not explained, how  this            condition   impermissibly   restricts  his   lawful  business            activities.                        Finally, we  find  Peppe's argument  that  U.S.S.G.              5E1.2(g)  prohibits  the  condition   in  his  case  to  be            disingenuous.   See  U.S.S.G.    5E1.2(g)  (providing that  a                            ___            district  court  "may  impose  a  condition  prohibiting  the                                                         ___________            defendant  from  incurring  new  credit  charges  or  opening            additional lines of  credit unless he  is in compliance  with                                        ______ __  __ __ __________  ____            the payment schedule") (emphasis  added).  Here, the district            ___ _______ ________            court did not "prohibit" Peppe from obtaining credit, it only            required  prior   approval.    Further,  simply  because  the            Guidelines permit the condition in the circumstance reflected            in    5E1.2(g) does not mean that a court cannot employ it in            other cases under   5D1.3(b), the provision generally guiding            conditions  of supervised  release.   Finally, we  decline to            modify the  credit conditions  imposed on Peppe  to "comport"            (as  Peppe puts it) with  section 5E1.2(g), which would allow                                         -13-                                          13            Peppe to forego  credit prescreening as  long as he  complied            with  the payment schedule.   That condition is  not what the            district court deemed appropriate in its carefully  fashioned            sentence,  and we discern no  reason or basis  to disturb the            court's decision.                      The  district court  did  not err  in imposing  the            condition that Peppe obtain prior approval from the probation            office for new credit charges or lines of credit.                                         -14-                                          14                                         III.                                         III.                                         ____                                      Conclusion                                      Conclusion                                      __________                      Nothing  more  need be  said.    For the  foregoing            reasons,  all of  Peppe's  challenges on  appeal are  without            merit.    Affirmed.                      Affirmed                      ________                                         -15-                                          15
