                               PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                              No. 12-4636


UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

ROBERT J. FREEMAN, a/k/a Dr. Shine,

                Defendant - Appellant.



Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Roger W. Titus, District Judge. (8:10-
cr-00424-RWT-2)


Argued:   December 10, 2013                 Decided:   January 17, 2014


Before DUNCAN, WYNN, and THACKER, Circuit Judges.


Reversed and remanded by published opinion. Judge Thacker wrote
the opinion, in which Judge Duncan and Judge Wynn joined.


ARGUED: Nancy Susanne Forster, KADISH, FORSTER & FASTOVSKY,
Baltimore, Maryland, for Appellant.    Thomas Patrick Windom,
OFFICE OF THE UNITED STATES ATTORNEY, Greenbelt, Maryland, for
Appellee. ON BRIEF: Rod J. Rosenstein, United States Attorney,
OFFICE OF THE UNITED STATES ATTORNEY, Baltimore, Maryland, for
Appellee.
THACKER, Circuit Judge:

             Robert    J.    Freeman,         a/k/a      “Dr.      Shine”    (“Appellant”),

appeals the order of the district court directing him to pay

$631,050.52 in restitution to four individuals (the “purported

victims”)     as     part   of     his    sentence           for    obstructing     federal

bankruptcy     proceedings.              On        appeal,      Appellant      argues    the

district court erred because the purported victims to whom he

was ordered to pay restitution are not victims of the offense to

which   he    pled    guilty.        Rather,            he    contends,      the   purported

victims suffered losses when Appellant caused them to take out

significant loans for the benefit of his church -- conduct with

which he was not charged or convicted.                         The Government contends

that the purported victims are entitled to restitution because

Appellant’s        untruthfulness        during         his     bankruptcy     proceedings

rendered     them    otherwise      unable         to   be    repaid    for    their    loans

and/or recoup their ensuing losses.

             We hold that, because the specific conduct that is the

basis for Appellant’s conviction did not cause the purported

victims’     losses,        they    are        not       entitled       to     restitution.

Therefore, we reverse the judgment of the district court to the

extent it orders restitution.                      Given that the district court

ordered restitution in lieu of a fine, we remand this matter so

that it may consider whether or not to impose a fine.



                                               2
                                                        I.

                                                        A.

                   On    November         10,      2010,      Appellant       was    charged       by    a

superseding             indictment        with      two       counts    of    obstruction          of   an

official proceeding, two counts of making false statements in a

bankruptcy proceeding, and one count of providing false records

in a bankruptcy proceeding.                             On July 18, 2011, Appellant pled

guilty        to    one       count       of    obstructing        an    official          proceeding,

pursuant           to    18     U.S.C.         §    1512(c)(2).              The    plea     agreement

generally stated, “This Court may . . . order [Appellant] to

make        restitution         pursuant           to    18    U.S.C.    §§    3663,       3663A,       and

3664,” but it did not evince an agreement between Appellant and

the Government with regard to restitution.                               J.A. 24. 1

                   The statement of facts addendum to the plea agreement

(the “Statement of Facts”) provided the following:                                           Appellant

purported          to     be    a    minister,           and    between       1991    and     2003      he

incorporated             Save       the    Seed         Ministry,       Inc.,       Save     the    Seed

International Church, and Seed Faith International Church.                                              He

served as pastor and leader of all three.                                Shortly after forming

these        entities,           Appellant              began    using        church        funds        to

“accumulate             substantial            assets,         including       a     $1.75     million


        1
       Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.



                                                        3
residence and luxury automobiles, in the names of members of the

church.”         J.A. 30.         For example, Appellant caused one church

member     to    buy    a    Bentley      Arnage      and    lease    a   Maybach     luxury

automobile, valuing more than $340,000 combined, and another to

buy a $1.75 million home, in which Appellant and other church

members lived.           The Government contends that for each of these

purchases,       the    church     members      understood         that   although     their

names were on the loan documents, Appellant and/or the church

would take care of the appropriate payments.

                By October 2005, Appellant and his spouse owed debts

in    their     names       totaling     more       than    $1.3    million,     “including

$846,000 in back rent; more than $87,000 in lease payments on a

jet    airplane;        more      than    $160,000         for     payments     on   musical

instruments; and $220,000 in loan payments on a bus.”                            J.A. 31.

                Appellant      and       his    spouse       filed     for      Chapter     13

bankruptcy on October 14, 2005.                     In addition to the information

recounted       above,      the   Statement         of     Facts   also   set    forth    the

following       ways    in     which     Appellant         obstructed     the    bankruptcy

proceedings:

       •   He reported no real property in which he had any
           “legal, equitable or future interest.”

       •   He reported no “personal property of whatever kind,
           including property being held for the debtor by
           someone else.”

       •   He reported no “property owned by another that the
           debtor held or controlled.”

                                                4
     •   He reported that his “occupation” was “consultant of
         a maintenance company.”

     •   He   reported   receiving  no   gross  income  from
         employment, trade, or profession, or from operation
         of a business in 2003 and 2004, and only receiving
         $4,000 for 2005.     He reported receiving no other
         income during the two years immediately preceding
         the filing of bankruptcy.

J.A. 31-32 (emphases supplied).

           On December 2, 2005, Appellant attended a creditors’

meeting.    At that meeting, he testified that he and his spouse

rented a house at a certain address, which was not true.        He

further testified, “we lost our ministry, went out of business,”

but “[i]n fact, Freeman had not lost his ministry, which had not

gone out of business.”     J.A. 32.   Appellant also presented to

the trustee seven documents purporting to be earning statements

from a business called Automatic Data Processing, Inc., but “in

fact, the statements were wholly fictitious.”   Id.

           On December 12, 2005, Appellant’s Chapter 13 petition

was converted to a Chapter 7 petition, and the bankruptcy court

granted the Chapter 7 petition on March 8, 2006, resulting in

the discharge of “hundreds of thousands of dollars in debt[].”

J.A. 32.    Appellant was neither charged with nor convicted of

any conspiracy or scheme to defraud the purported victims.




                                  5
                                           B.

             The Presentence Report (“PSR”), which was filed August

29, 2011, did not recommend restitution.                        To the contrary, it

stated, “The government has advised there is no restitution or

forfeiture in this case.”                J.A. 235.            The PSR also stated,

“There are no specific victims in this case.                           The defendant’s

actions, however, jeopardized the integrity of the United States

Bankruptcy    Court.”        Id.    at     228.         The    Government       filed      no

objections to the PSR.

             Nonetheless,      on        June     21,     2012,        the     Government

submitted    to    the   district        court    a     number    of     victim       impact

statements,    including      statements         from     the    purported          victims.

About a month later, on July 16, 2012, the Government filed its

sentencing    memorandum,      requesting         for    the     first       time    on   the

record that the court order Appellant to pay restitution as part

of his sentence, theorizing:

       The church members who acted as nominees to purchase
       luxury automobiles and a mansion for the defendant
       . . . suffered significant losses as a result of the
       defendant causing them to purchase expensive assets
       under the mistaken belief that the defendant, through
       the church, would pay for the assets. As a result of
       the defendant’s failure to pay for the assets
       purchased by the nominee victims, several of the
       nominee victims suffered harm to their credit scores,
       lost properties they had owned, and/or had to file
       bankruptcy.

J.A.   85.        On   the   day    of    sentencing,         July     30,     2012,      the

Government filed a more specific request for restitution, for

                                           6
the first time mentioning the victims’ names in a public court

filing. 2   The request stated,

     The government requests that the defendant be ordered
     to pay the following amounts:

     Brenton   and    Wendy   Cloud    [(collectively,   the
     “Clouds”)]: $301,050.52.    Mr. and Mrs. Cloud owned
     their residence prior to serving as nominees for the
     defendant. As a result of serving as nominees for the
     defendant, however, Mr. and Mrs. Cloud incurred
     significant debts. Ultimately, the Clouds had to sell
     their residence at a short sale to pay the debts they
     had incurred on behalf of the defendant.    $301,050.52
     represents the equity that the Clouds lost as a result
     of having to sell their residence in order to repay
     the debts they incurred as nominees for the defendant.

     Cecil Dixon: $230,000. Mr. Dixon was employed as an
     investigator with WMATA [Washington Metropolitan Area
     Transit Authority] prior to serving as a nominee for
     the defendant.   As an investigator, Mr. Dixon earned
     $76,000 per year. After serving as a nominee for the
     defendant, Mr. Dixon incurred significant debts that
     ultimately forced him to resign from his job.
     Although Mr. Dixon is currently employed, he now earns
     only $30,000 per year.       $230,000 represents five
     years’ worth of the wages Mr. Dixon lost as a result
     of being victimized by the defendant.



     2
       The victim impact statements were not publicly filed, and
it does not appear that Appellant was aware of them until July
2012.   The Government cannot provide an exact date upon which
Appellant received the supplemental restitution information. It
submits, however, that Appellant “must have been aware of this
information by July 27, 2012, . . . because the defendant on
that date filed an ‘Opposition Memo in Response to Request for
Resitution [sic] Order’ opposing the government’s requests as to
the specific victims and amounts.” Appellee’s Br. 6 n.2 (citing
J.A. 101).   Thus, while it may be true that Appellant knew the
names and information regarding the specific purported victims
before the day of sentencing, it was certainly not long before.



                                  7
      Scott Washel: $100,000. Mr. Washel owned his residence
      prior to serving as a nominee for the defendant. As a
      result of serving as a nominee for the defendant,
      however,   Mr.   Washel  incurred  significant  debts.
      Ultimately, Mr. Washel had to sell his residence to
      pay the debts he had incurred on behalf of the
      defendant.    $100,000 represents the equity that Mr.
      Washel lost as a result of having to sell his
      residence in order to repay the debts he incurred as a
      nominee for the defendant. 3

Id. at 106-07.       The Government did not cite a statutory basis

for its restitution request.

           At sentencing on July 30, 2012, the district court

calculated Appellant’s offense level at 16 and criminal history

category at I.      His Sentencing Guideline range was, thus, 21-27

months.   The court sentenced Appellant to 27 months.                    Notably,

the court also ordered three years of supervised release and

imposed   total     restitution    of       $631,050.52   to   the   purported

victims, in the exact amounts requested by the Government.                    The

court stated, “I’ll impose the mandatory and standard conditions

of   supervision,    with   the   additional      provision[]   .    .    .   that

[Appellant] make payments . . . to the clerk of this court for

distribution to the victims in the monthly amount of at least

$750 a month.”      J.A. 211.     The district court did not, however,

      3
       On December 5, 2013, the Government filed a letter with
this court conceding that the restitution amounts requested and
ultimately awarded to three of the four purported victims --
that is, the Clouds and Washel -- are incorrect.      Because we
decide herein that none of the purported victims are entitled to
restitution, however, this matter is moot.



                                        8
cite a statutory basis for the restitution award.                               The court

also       noted      that   no       fine     would    be    imposed   because    of    the

restitution award. 4              Appellant timely appealed, challenging only

the legality of the order of restitution.

                                                 II.

                 We    review     a    district       court’s   restitution     order    for

abuse of discretion.                   See United States v. Leftwich, 628 F.3d

665, 667 (4th Cir. 2010).                       “Federal courts do not have the

inherent         authority      to     order    restitution,      but   must    rely    on   a

statutory source to do so.”                      United States v. Davis, 714 F.3d

809,       812     (4th      Cir.      2013)     (internal       quotation      marks    and

alteration            omitted).         Indeed,        “[a]    restitution     order    that

exceeds the authority of the statutory source is no less illegal

than       a   sentence      of       imprisonment      that    exceeds   the    statutory

maximum.”          Id. (internal quotation marks omitted).                      Discretion

in ordering restitution “is circumscribed by the procedural and

substantive protections of the statute authorizing restitution.”

Leftwich, 628 F.3d at 667 (internal quotation marks omitted).




       4
       The maximum fine for the offense to which Appellant pled
guilty was $250,000. See 18 U.S.C. § 3571(b)(3).



                                                  9
                                            III.

                                             A.

             We   must    first      address       which    statutory     provision    is

implicated in the district court’s order of restitution, as the

district   court     did       not   mention       a   statute    in   its    sentencing

colloquy or judgment order. 5               There are four possible statutory

provisions which could be implicated: the Victim and Witness

Protection    Act   of     1982      (the   “VWPA”),       18    U.S.C.   §   3663;   the

Mandatory Victims’ Restitution Act (the “MVRA”), id. § 3663A;

and the provisions governing restitution imposed as a condition

of   probation,     id.    §    3563(b)(2),        and     supervised     release,    id.

§ 3583(d).

           After a close review of the sentencing transcript and

judgment documents, it becomes clear that the district court

imposed restitution as a condition of supervised release.                              At

the sentencing hearing, the district court first announced that

it would impose restitution in lieu of a fine when discussing

the factors set forth in 18 U.S.C. § 3553(a).                      The court stated,


      5
       We regret that this extra wrinkle was added to this appeal
and remind the Government and sentencing judges to clearly set
forth the statutory provisions they rely upon in requesting and
imposing restitution. See United States v. Stuver, 845 F.2d 73,
75 (4th Cir. 1988) (Sentencing judges should “specify in the
record the precise statute under which they act in imposing
restitution”   to   ensure   “effective   appellate   review   of
restitution orders.”).



                                             10
    Finally, I’m required to consider the need to provide
    restitution to any victims of the offense.      In this
    case I think a restitution order is appropriate.

    . . .

    There is no question that loose money lending
    practices    in   this  case   helped    this   crime   get
    committed, but the essence of the crime was to take
    unwitting people relying upon the notion of doing
    things   for    their  church   to   go   out   and   incur
    substantial debts when money was easy to get and
    provide   those    assets   directly    for   the   benefit
    principally of the defendant on trial before me. . . .

    Accordingly, I am going to enter -- in lieu of a fine,
    I’m going to enter an order of restitution to the
    victims identified in the Government’s sentencing --
    restitution memorandum that was filed before the
    Court.

J.A. 208-09.   The court went on to impose the sentence of 27

months, but returned to the specifics of the restitution award

when discussing the supervised release conditions.          The court

stated,

    I’m going to     impose   a   sentence   of   27   months   of
    incarceration.

    I will impose a period of supervised release of three
    years.

    I’ll impose the mandatory and standard conditions of
    supervision, with the additional provision[] . . .
    that [Appellant] make payments . . . to the clerk of
    this court for distribution to the victims in the
    monthly amount of at least $750 a month.     That is
    within his ability to pay as reflected by the
    financial statement attached to the -- or which is
    part of [the PSR].

     . . .



                                  11
        I will not impose any fine, in light of the large
        restitution obligation that I’ll be imposing as I
        previously indicated.

Id. at 211-12.

            Furthermore,        the         judgment     order       specifies          the

restitution amount under the section heading “SUPERVISED RELEASE

ADDITIONAL CONDITIONS.”             J.A. 219.          The Schedule of Payments

also provides, “The restitution in the amount of $631,050.52

shall be paid in monthly installments of at least $750.00 per

month    over    the   period      of   3    year(s)     to    commence         when    the

defendant       is   placed   on     supervised        release.”          Id.      at   221

(emphasis       supplied).         Reading       the   judgment      order        and   the

transcript together, it is clear restitution was imposed as a

condition of supervised release.                  Therefore, we must view the

arguments       of   the   parties      through        the    lens   of      18     U.S.C.

§ 3583(d). 6




     6
       The Government argues Appellant waived this argument for
failure to address 18 U.S.C. § 3583(d) in his opening brief. It
is true that Appellant did not mention § 3583(d) in his opening
brief;   however,   he   did   present  arguments   related   to
interpretation of the phrase “of the offense,” which is the main
issue in this appeal.      Thus, Appellant’s arguments in his
opening brief, albeit couched in terms of the VWPA and MVRA, are
certainly pertinent to the outcome of this appeal.      Further,
Appellant can hardly be faulted for failing to cite the specific
statute under which restitution was imposed, when neither the
Government nor the district court did so in connection with the
sentencing proceedings.



                                            12
                                          B.

             Ascertaining    the    meaning      and        context      of   18    U.S.C.

§ 3583(d) involves applying several cross-references.                               Section

3583(d)     itself    provides,    “The    court      may       order,   as   a     further

condition of supervised release, . . . any condition set forth

as a discretionary condition of probation in section 3563(b)

. . . .”       18 U.S.C. § 3583(d).              The reference to § 3563(b)

invokes the statute allowing the imposition of restitution as a

condition of probation, which states,

      The court may provide, as [a] further condition[] of a
      sentence of probation . . . that the defendant . . .

             (2) make restitution to a victim of the
             offense under section 3556 (but not subject
             to the limitation of section 3663(a) or
             3663A(c)(1)(A)).

Id. § 3563(b)(2) (emphasis supplied).                 In turn, 18 U.S.C. § 3556

provides, “The court, in imposing a sentence on a defendant who

has been found guilty of an offense shall order restitution in

accordance     with     section    3663A       [the     MVRA],        and     may     order

restitution in accordance with section 3663 [the VWPA].”                                Id.

§   3556.      Therefore,    by    operation       of       §    3556,   an    order     of

restitution imposed as a condition of supervised release shall




                                          13
be made “in accordance with” VWPA and MVRA, but not subject to

“the limitation” therein. 7

                                  C.

          Having discussed the applicable statutes, we now turn

to the crux of this appeal:       whether the purported victims are

victims   “of   the   offense”   for   the   purposes   of   18   U.S.C.

§ 3563(b).




     7
       The “limitation” mentioned in § 3563(b) is not specific.
The VWPA subsection referenced as a “limitation” discusses the
type of offenses for which restitution may be awarded, see 18
U.S.C. § 3663(a)(1)(A) (providing that a court may order
restitution to a victim of a Title 18 offense, certain
Controlled Substances Act offenses, and other federal offenses
involving aircraft piracy and transportation of hazardous
materials), and the type of harm a victim must experience, see
id. § 3663(a)(2) (defining victim as “a person directly and
proximately harmed as a result of the commission of an offense
for which restitution may be ordered including, in the case of
an offense that involves as an element a scheme, conspiracy, or
pattern of criminal activity, any person directly harmed by the
defendant’s criminal conduct in the course of the scheme,
conspiracy,  or   pattern”).     Likewise,  the   MVRA  mandates
restitution only “for convictions of, or plea agreements
relating to charges for, any offense . . . that is . . . a crime
of violence . . . ; an offense against property under this title
. . . including any offense committed by fraud or deceit; an
offense . . . relating to tampering with consumer products; or
an offense . . . relating to theft of medical products.”     Id.
§ 3663A(c)(1)(A)(i) – (iv).       Because we decide that the
purported victims are not victims of Appellant’s offense of
conviction, we need not address these potential limitations
here.


                                  14
                                            1.

             We   first    discuss      whether         the    statute      requires     the

purported     victims      to    be    victims          only    of    the      offense   of

conviction.       As explained below, we conclude it does.

             In 1990, the Supreme Court held, “the language and

structure of [the VWPA] make plain Congress’ intent to authorize

an award of restitution only for the loss caused by the specific

conduct that is the basis of the offense of conviction.”                            Hughey

v. United States, 495 U.S. 411, 413 (1990) (emphasis supplied).

This concept was later extended to cases such as this, in which

the    restitution      was     ordered      as     a    condition        of    supervised

release.      See, e.g., United States v. Batson, 608 F.3d 630, 637

(9th Cir. 2010) (“We now join our sister circuits in holding

that    an   award    of      restitution         ordered       as    a     condition     of

supervised release can compensate ‘only for the loss caused by

the    specific    conduct      that    is    the       basis    of   the      offense    of

conviction,’ so long as that offense does not involve an element

of scheme, conspiracy or pattern of criminal activity.” (citing

Hughey, 495 U.S. at 413) (emphasis supplied)); United States v.

Varrone, 554 F.3d 327, 334 (2d Cir. 2009) (“We now join our

sister circuits in concluding that Hughey’s construction of the

VWPA    is   applicable         to    the    restitution         provision        of     the

supervised release statute.                 We hold that restitution can be

ordered as a condition of supervised release under 18 U.S.C.

                                            15
§§ 3583(d), 3563(b)(2) only to compensate for losses caused by

the    specific         conduct     that   is    the        basis    for   the   offense      of

conviction.”); United States v. Frith, 461 F.3d 914, 920 (7th

Cir. 2006); United States v. Romines, 204 F.3d 1067, 1069 (11th

Cir. 2000) (per curiam); Gall v. United States, 21 F.3d 107, 110

(6th Cir. 1994).

                 In    the   face     of   this           overwhelming      authority,        the

Government essentially conceded at oral argument that in order

to collect restitution, the purported victims must be victims of

the    offense         for   which    Appellant            was    convicted.      See     Oral

Argument at 25:16-25:24, United States v. Freeman, No. 12-4636

(Dec. 10, 2013), available at http://www.ca4.uscourts.gov/oral-

argument/listen-to-oral-arguments                         (“The     Government     is     only

arguing that the basis of the restitution award was based on the

offense         of    conviction,    not   on        the    relevant       conduct.”).        We

nonetheless pause to consider this issue, as it is one we have

not yet addressed in a published opinion. 8

                 Persuaded by our sister circuits’ reasoning, we join

them       in    holding     that     awards         of    restitution       ordered     as    a

       8
       We have addressed the issue in an unpublished opinion.
See United States v. Rosser, No. 91-5856, 1992 WL 113384, at *1
(4th Cir. May 29, 1992) (unpublished per curiam) (vacating
restitution award imposed as a condition of supervised release
because “the district court failed to limit restitution to the
amount of loss the Government sustained as a result of the
offense for which Rosser was convicted”).



                                                16
condition of supervised release must compensate “only for the

loss caused by the specific conduct that is the basis of the

offense of conviction.”               Hughey, 495 U.S. at 413.

            The plain reading of the applicable statutory language

compels this result.               Section 3563(b) states that a district

court may, as a condition of probation or supervised release,

“make    restitution        to    a    victim       of   the   offense.”         18       U.S.C.

§ 3563(b)(2) (emphasis supplied).                         Further, restitution as a

condition of probation (and supervised release) is to be ordered

“under section 3556.”                 Id.      Section 3556 refers to orders of

restitution pursuant to the VWPA and the MVRA, which provide,

“[t]he    court,      when       sentencing         a    defendant    convicted           of       an

offense    [under     listed          titles    or      statutes]    may   order          .    .    .

restitution to any victim of such offense,” id. § 3663(a)(1)(A),

and     “when    sentencing        a     defendant        convicted       of    an    offense

described in subsection (c), the court shall order . . . that

the defendant make restitution to the victim of the offense,”

id. § 3663A(a)(1) (emphases supplied); see also Batson, 608 F.3d

at 636.

            As    Batson         explains,      “The      natural    reading         of       these

provisions is that restitution is authorized for the offense of

conviction      and   not    for       other     related       offenses    of    which          the

defendant was not convicted.”                  Batson, 608 F.3d at 636.               Indeed,

these statutes do not allow restitution for “relevant conduct,”

                                               17
“a   related    offense,”       or    a    “factually          relevant      offense,”        but

rather,    “the      offense,”       which       can    only    be    read      to    mean    the

offense of conviction.               See Hughey, 495 U.S. at 418 (“[H]ad

Congress      intended    to    permit       a     victim      to    recover      for    losses

stemming      from     all     conduct       attributable            to    the       defendant,

including      conduct       unrelated       to        the   offense       of     conviction,

Congress      would    likely     have       chosen      language         other      than    ‘the

offense,’      which     refers      without        question         to   the     offense      of

conviction.”).         To hold otherwise would be to improperly read

the words “of the offense” out of the statute.                                    See United

States v. Nordic Vill., Inc., 503 U.S. 30, 36 (1992) (declining

to adopt a construction that would violate the “settled rule

that a statute must, if possible, be construed in such fashion

that every word has some operative effect”).

              In sum, regardless of whether restitution is ordered

pursuant to the VWPA, the MVRA, or as a condition of supervised

release or probation, the alleged victims must be victims of the

offense of conviction.            See United States v. Newsome, 322 F.3d

328, 341 (4th Cir. 2003) (“[T]he focus of the court in applying

the MVRA must be on the losses to the victim caused by the

offense.” (emphasis supplied)); id. (“[I]t is the ‘offense of

conviction,’ not the ‘relevant conduct,’ that must be the cause

of   losses    attributable       as      restitutionary            liability.”);        United

States v. Blake, 81 F.3d 498, 506 (4th Cir. 1996) (“For a person

                                              18
to be considered a victim under the [VWPA], the act that harms

the individual must be . . . conduct underlying an element of

the offense of conviction . . . .” (emphasis supplied)). 9

                                      2.

           Therefore, we must next address whether the purported

victims’ losses were “caused by the specific conduct that is the

basis of” the defendant’s offense of conviction.               Hughey, 495

U.S. at 413.      The Government bears the burden of showing the

causal connection and the amount of the loss.               See 18 U.S.C.

§ 3664(e) (“The burden of demonstrating the amount of the loss

sustained by a victim as a result of the offense shall be on the

attorney   for   the   Government.”      (emphasis   supplied));   see    also

United States v. Kieffer, 681 F.3d 1143, 1171 (11th Cir. 2012)

(demonstrating    that   it   is   the     Government’s   burden   to    prove

alleged victims are “victims of Defendant’s criminal conduct.”




     9
       This court has recognized that the act that harms the
alleged victim could also be “an act taken in furtherance of a
scheme, conspiracy, or pattern of criminal activity that is
specifically   included  as   an  element   of  the  offense  of
conviction.”   Blake, 81 F.3d at 506; see also United States v.
Henoud, 81 F.3d 484, 489 (4th Cir. 1996) (affirming a
restitution order where the defendant was convicted of a
criminal scheme and “the district court had the authority to
order restitution for the losses by the entire fraud scheme”
(internal quotation marks omitted)).    Given that Appellant was
not convicted of a scheme, conspiracy, or pattern, we are not
presented with such a situation in this case.



                                      19
(internal       quotation      marks       omitted)).          We    conclude       that       the

Government fell far short of meeting its burden in this matter.

                                             a.

             This court has overturned restitution awards in which

the Government could not show the requisite causal connection

between      the      specific       conduct       underlying            the    offense         of

conviction      and    the    victims’       losses.       For      example,        in    United

States v. Broughton-Jones, 71 F.3d 1143 (4th Cir. 1999), the

defendant was indicted on four counts of perjury and one count

of wire fraud in connection with a fraudulent brokerage scheme.

See id. at 1145.             Broughton-Jones pled guilty to one count of

perjury, based upon false testimony she provided to a federal

grand jury.        At sentencing, the district court ordered her to

pay    restitution      in    the    amount       of   $25,000,      the       amount     of    an

advance      payment     she        obtained       from    a     client         under     false

pretenses, which served as the basis for the wire fraud charge.

See id.

             Pursuant to Hughey, we held Broughton-Jones did not

have    to   pay   restitution        to    her    unwitting        client      because        the

restitution order did not “compensate[] a victim of Broughton-

Jones’s      perjury     for        some    loss       caused       by    that      offense.”

Broughton-Jones, 71 F.3d at 1148 (emphasis supplied).                                     After

examining the “specific conduct” underlying the conviction of

grand    jury    perjury,      we    held,     “[a]lthough          there      is   a    factual

                                             20
connection    between     Broughton-Jones’s       perjury   and   her   alleged

financing scheme, that connection is legally irrelevant.”                    Id.

at 1149.     Therefore, we vacated the entire sentence and remanded

for resentencing.

           In   United    States   v.    Blake,    81   F.3d   498   (4th    Cir.

1996), we again concluded that alleged victims’ losses were not

caused by a defendant’s offense of conviction and vacated the

restitution award to those individuals.                 In that case, Blake

pled guilty to using unauthorized access devices (i.e., stolen

credit   cards),    and    the   district    court      ordered   him   to   pay

restitution to the owners of the credit cards.                 See id. at 503.

Again citing Hughey, we overturned the award of restitution with

regard to $1,922 that stemmed from “expenses related to lost

property and document replacement,” i.e., pocketbooks, wallets,

and other items Blake took when he stole the cards, reasoning

that the district court was required to look at the “specific

conduct that is the basis of the conviction.”               Id. at 502, 506.

We explained,

     For a person to be considered a victim under § 3663,
     the act that harms the individual must be either
     conduct underlying an element of the offense of
     conviction, or an act taken in furtherance of a
     scheme, conspiracy, or pattern of criminal activity
     that is specifically included as an element of the
     offense of conviction. But, if the harm to the person
     does not result from conduct underlying an element of
     the offense of conviction, or conduct that is part of
     a pattern of criminal activity that is an element of
     the offense of conviction, the district court may not

                                        21
       order the defendant                  to    pay        restitution          to    that
       individual.

Id. at 506 (citations omitted).                          We then explained that the

elements of the crime to which Blake pled guilty (using the

stolen credit cards) did not “include the theft of the credit

cards,”     and     thus,    “the    loss        to    the    robbery         victims       was    not

caused      by     Blake’s    offense        of       conviction.”             Id.     at    506-07

(emphasis supplied).

              More       recently,     we    held       that       a    homeowner      could       not

collect restitution under the VWPA where the defendant broke

into   a    home     and     stole   a      firearm,         but       pled   guilty        only   to

possession of a stolen firearm.                       See United States v. Davis, 714

F.3d     809,      816    (4th   Cir.       2013).            The       homeowner       requested

restitution         of    $500   for     his          insurance         deductible      for        the

unrecovered        stolen     firearm,       and       $185    for       damage      caused       when

Davis broke the window to enter the residence.                                See id. at 812.

The district court ordered Davis to pay $685 in restitution to

the homeowner, but we reversed.                   Relying on Blake, we explained,

       Like Blake’s credit card theft, Davis’s burglary and
       theft of the firearm represent “necessary step[s] in
       the accomplishment of his objective,” here, possession
       of a stolen firearm.    But, like Blake, “the factual
       connection between” these “necessary step[s]” and
       Davis’s offense of conviction “is legally irrelevant
       for the purpose of restitution.”

Id.    at    814     (quoting    Blake,          81     F.3d       at    506).         Therefore,

restitution was improper because the loss to the alleged victim


                                                 22
“was not caused by possession of a stolen firearm, the sole

offense of conviction.”          Id. (internal quotation marks omitted).

                                         b.

            In    2012,   the    court   was   presented     with   an     award    of

restitution imposed as a condition of supervised release under

18 U.S.C. § 3583(d).             See United States v. Oceanpro Indus.,

Inc., 674 F.3d 323, 330 (4th Cir. 2012).

            Oceanpro Industries, Inc. (“Oceanpro”) was a seafood

wholesaler business operating in Maryland and Virginia.                            See

Oceanpro, 674 F.3d at 327.           Oceanpro and two of its buyers were

convicted of purchasing untagged and oversized striped bass and

giving a false statement to law enforcement officers during the

investigation related to the same.              See id.     The district court

ordered Oceanpro and two of its fish buyers to, inter alia, pay

$300,000 in restitution, jointly and severally, to Maryland and

Virginia.    See id.       Oceanpro’s restitution was made a condition

of   probation,     and   the     fish   buyers’     restitution     was    made     a

condition    of    supervised       release.         All   three    appealed       the

restitution order.        See id.

            This    court       recognized     the    “analysis     for    ordering

restitution as a condition of probation and supervised release

is similar” to that of the VWPA.              See Oceanpro, 674 F.3d at 331.

It noted that the VWPA “defines victim as a person ‘directly and

proximately harmed as a result of the commission of an offense

                                         23
for which restitution may be ordered,’” but also recognized that

§ 3563(b)(2) “specifically indicates that the restitution to a

‘victim of the offense’ for purposes of [supervised release or]

probation is ‘not subject to the limitation of’ the VWPA.”                     Id.

at   330-31    (quoting     18   U.S.C.    §     3663(a)(2))      (emphasis     in

original).       This     fact   “indicat[es]     that     the    definition    of

‘victim’ in this context is even broader than the definition of

‘victim’ under the VWPA.”        Id. (emphasis in original).

           But the court did not say how much broader, nor did it

need to.      Indeed, the court concluded that under the VWPA, the

MVRA, and as a condition of supervised release/probation, “the

district court was authorized to require the defendants to make

restitution    to   the    ‘victims.’”         Oceanpro,    674    F.3d   at   332

(emphasis in original).           It went on to declare Virginia and

Maryland “merely had to have interests that were ‘harmed’ as a

result of the defendants’ criminal conduct,” and because the

states had “a legitimate and substantial interest in protecting

the fish in their waters as part of the natural resources of the

State[s] and [their] fishing industries,” “their interests were

indeed harmed,” and restitution was appropriate.                 Id. at 331-32.




                                      24
                                          c.

            In light of this precedent, we conclude the Government

utterly failed to provide any evidence that the losses sustained

by   the   purported     victims    here       were   caused       by    the   specific

conduct    underlying      Appellant’s           offense    of          conviction         --

obstruction of federal bankruptcy proceedings.                          The Government

simply states generally,

       Each victim suffered significant losses as a result of
       Freeman’s causing him or her to purchase expensive
       assets under the mistaken belief that Freeman would
       pay for the assets, when in fact Freeman, by virtue of
       his   obstruction,   failed   ever   to  repay   these
       individuals (and sought, through his obstruction, to
       eliminate any legal obligation that he be required to
       do so).

Appellee’s   Br.   16.      Further,      the     Government       argues,     “due        to

Freeman’s obstruction, when the debts these victims incurred on

the defendant’s behalf came due, each individual was prevented

from    collecting     against      the        defendant,     or        from   pointing

creditors to the defendant as the real party in interest.”                           Id.

            But these arguments suggest no more than a tangential

connection    between     the      purported       victims’        losses      and    the

specific conduct underlying Appellant’s obstruction conviction.

Per a plain reading of the relevant statutes, and following the

lead of Hughey, Davis, Blake and Broughton-Jones, we look to the

elements of the offense of conviction and the “‘specific conduct

underlying these elements.’”              Davis, 714 F.3d at 814 (quoting


                                          25
Blake, 81 F.3d at 507).               As delineated in the plea agreement,

the elements of obstruction are “(1) the defendant corruptly

attempted to and did obstruct, influence and impede an official

proceeding,     in    this     case       a    bankruptcy          proceeding;           (2)   the

defendant     knew     or    should       have           known     that      the     bankruptcy

proceeding was pending; and (3) the official proceeding, was a

federal proceeding.”         J.A. 23; see also 18 U.S.C. § 1512(c)(2).

             The “specific conduct” that serves as the basis for

these   elements      clearly    did          not    cause       the    purported         victim’s

losses.      See Hughey, 495 U.S. at 413.                          As set forth in the

Statement of Facts, the specific conduct relevant to this appeal

is that Appellant falsely reported that he had no real property

in which he had any “legal, equitable or future interest,” no

“personal property of whatever kind, including property being

held for [Appellant] by someone else,” and no “property owned by

another that [Appellant] held or controlled.”                               J.A. 31-32.        The

Government    has    failed     to    show          that,      even    had    Appellant        been

completely truthful about these matters, the purported victims

would not have suffered the same harm.                             Cf. United States v.

Messner, 107 F.3d 1448, 1455 (10th Cir. 1997) (“Because the same

treatment     would     have     resulted                had    Mr.     Messner          initially

disclosed     his    ownership       of       the        assets,       it    is    not    evident

creditors were actually harmed by Mr. Messner’s initial attempt

to   defraud        them.”).           It           is     unclear          how     Appellant’s

                                               26
untruthfulness in the bankruptcy proceedings caused certain of

the purported victims to sell their homes and another to resign

from his job.       We decline to make the leap the Government’s

theory requires based on no more than speculation.

             Rather, it is quite obvious that the harm that befell

the   purported    victims     stemmed      from   Appellant’s     scheme   of

inducing church members to incur substantial debts in the name

of the church, conduct for which Appellant was neither charged

nor convicted.      Indeed, the court’s own words demonstrate the

attenuated     relationship    between      the    conduct   underlying     the

offense of conviction and the purported victims’ losses.                    See

J.A. 209 (“It was lying about [the debts of the church members

on Appellant’s behalf] to the Bankruptcy Court that produced the

offense of conviction, but under no circumstances do I consider

that it would not be appropriate to order restitution when there

have been victims of the very things about which this defendant

lied to this court.”); see also id. at 205 (“[T]he offense of

conviction is one committed . . . against . . . the Bankruptcy

Court.”).      Appellant’s     untruthfulness       during   his   bankruptcy

proceedings may have exacerbated the purported victims’ harm,

but   it   certainly   did    not   cause    it,   as   required   under    our

precedent.




                                      27
                                             d.

              Finally,    we       address     the    Government’s        reliance     on

Oceanpro.      It argues that if the definition of “victim” is meant

to be “broader” for purposes of supervised release than it is

for the purposes of the VWPA and MVRA, Oceanpro, 674 F.3d at

331, then the purported victims in this case must fall into that

broader definition.           We disagree.

              First, in Oceanpro, the court decided that Maryland

and Virginia were “victims” under the VWPA, the MVRA, and 18

U.S.C. §§ 3563(b) and 3583(d).                    Thus, the statement that the

term “victim” is “broader” under the supervised release statute

versus the VWPA or MVRA is dicta.                      See The Pittston Co. v.

United States, 199 F.3d 694, 703 (4th Cir. 1999) (defining dicta

as   “statement[s]       in    a    judicial      opinion    that     could   have    been

deleted without seriously impairing the analytical foundation of

the holding -- that, being peripheral, may not have received the

full and careful consideration of the court that uttered it.”)

(internal quotation marks and citations omitted)); Edwards v.

Prime, Inc., 602 F.3d 1276, 1298 (11th Cir. 2010) (“[D]icta is

not binding on anyone for any purpose.”).

              Furthermore, Oceanpro, in stating that the definition

of   victim    is   broader        in   a   supervised      release    context,      cites

Batson.     See Oceanpro, 674 F.3d at 331 (quoting Batson, 608 F.3d

at 636).      However, Batson, as explained above, ultimately holds

                                             28
that    regardless       of     which      statute         is   used,       “restitution      is

authorized      for     the    offense      of       conviction       and    not    for    other

related offenses of which the defendant was not convicted.”                                  608

F.3d at 636.

            Additionally, the language in Oceanpro, which states

the victims “merely had to have interests that were ‘harmed’ as

a result of the defendants’ criminal conduct,” must be read in

the    specific       context       of   that    case.          674   F.3d    at    332.      In

Oceanpro,       the     defendants         were       convicted,        inter       alia,    of

conspiracy to violate the Lacey Act, 18 U.S.C. §                                    317.     See

Oceanpro, 674 F.3d at 327.                  Congress has specifically expanded

the VWPA definition of victim in such cases: “the term ‘victim’

means . . . in the case of an offense that involves as an

element a scheme, conspiracy, or pattern of criminal activity,

any person directly harmed by the defendant’s criminal conduct

in the course of the scheme, conspiracy, or pattern.”                               18 U.S.C.

§ 3663(a)(2) (emphasis supplied).                     Here, Appellant did not plead

guilty to a crime involving a conspiracy, scheme, or pattern as

an element.        This court recognized, and it still remains good

law, that the VWPA’s expansion of the definition of victim in

such    cases     “does       not    authorize         a   district         court    to    order

restitution to all individuals harmed by a defendant’s criminal

conduct.”       Blake, 81 F.3d at 506.                 Furthermore, unlike here, in

Oceanpro it is clear the interests of Maryland and Virginia were

                                                29
directly harmed by the illegal purchasing untagged and oversized

fish swimming in the states’ waters, as required by the VWPA.

            Therefore,    the    Government’s         argument   that,      under

Oceanpro, a “broader” reading of “victim” under §§ 3563(b) and

3583(d) would necessarily encompass the purported victims falls

flat.

            We thus have no trouble concluding the district court

abused its discretion in awarding restitution to the purported

victims, as the award was contrary to the legal principles set

forth in Hughey, Davis, Broughton-Jones, and Blake.                 See Teleguz

v. Pearson, 689 F.3d 322, 327 (4th Cir. 2012) (“When a court

bases its decision on an error of law, it necessarily abuses its

discretion.”).

                                       IV.

            Therefore, we reverse the district court’s judgment to

the extent it orders restitution.             Given that the district court

ordered     restitution    in    lieu        of   a   fine,   see    J.A.     209

(“Accordingly, . . . in lieu of a fine, I’m going to enter an

order of restitution to the victims . . .”), we remand this

matter so that the court may consider whether or not to impose a

fine.     Cf. Batson, 608 F.3d at 636 (“There is no indication that

the   amount   of   the   fine   was    conditioned      on   the    amount   of

restitution, and we decline to reopen the matter.”).

                                                       REVERSED AND REMANDED

                                       30
