
USCA1 Opinion

	




                            UNITES STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                                                                      ____________________        No. 95-1051                              UNITED STATES OF AMERICA,                                      Appellant,                                          v.                               GEORGE S. BENNETT, JR.,                                 Defendant, Appellee.                                                                                      ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Edward F. Harrington, U.S. District Judge]                                               ___________________                                                                                      ____________________                                Selya, Cyr and Boudin,                                   Circuit Judges.                                   ______________                                                                                      ____________________             William P.  Stimson, Assistant United States  Attorney, with whom             ___________________        Donald K. Stern, United States Attorney, was on brief for appellant.        _______________             Morris  M. Goldings, with whom  John F. Aylmer,  Jr. and Mahoney,             ___________________             ____________________     ________        Hawkes & Goldings were on brief for appellee.        _________________                                                                                      ____________________                                    July 31, 1995                                                                                      ____________________                    CYR, Circuit  Judge.   Following our remand  for resen-                    CYR, Circuit  Judge.                         ______________          tencing in United States  v. Bennett, 37 F.3d 687 (1st Cir. 1994)                     _____________     _______          ("Bennett I"), which vacated a downward adjustment for acceptance            _________          of responsibility, the district  court determined that the defen-          dant's restitutionary effort    an  element in its initial  down-          ward  adjustment  ruling      nonetheless  warranted  a  downward                __________          departure   from  its  recalculated  guideline  sentencing  range          _________          ("GSR").   The government again  appealed, and we  now remand for          resentencing within the recalculated GSR.                                           I                                          I                                      BACKGROUND                                      BACKGROUND                                      __________                    We relate only the  facts essential to an understanding          of the instant appeal.  For further detail, the reader is invited          to see Bennett I, 37 F.3d at 689-92.                   _________          A.   Factual Background and Initial Sentencing          A.   Factual Background and Initial Sentencing               _________________________________________                    Appellee Bennett abused positions of  trust with Daniel          Webster  Mortgage Company, Inc.  ("Daniel Webster"), by obtaining          more  than ten  fraudulent  real  estate  loans based  on  Daniel          Webster's  lines of  credit  with Plymouth  Federal Savings  Bank          ("Plymouth  Federal") and  New Bedford  Institution  for Savings,          which Bennett  applied toward the development  of real properties          held  in trust  for the  benefit of  himself and  his wife.   The          fraudulent borrowing scheme  involved aliases,  false loan  docu-          ments and concealment.   Following its  discovery by the  Federal          Deposit Insurance  Corporation during the spring  of 1990, Daniel                                          2          Webster  and Plymouth Federal sued Bennett.  On February 1, 1991,          the  parties  entered  into  a  settlement  agreement,  requiring          Bennett  to turn over cash and  other property, including certain          improved properties which remained in his possession.                      In  late  1991, Bennett  was  indicted  on nine  felony          counts for  fraudulently  obtaining  $900,000  from  a  financial          institution,  see  18 U.S.C.     20  (1988) (defining  "financial                        ___          institution"),  between August  1988 and  October  1989.   See 18                                                                     ___          U.S.C.   1344.  Following his trial and conviction on  all charg-          es, the district  court calculated the  total loss occasioned  by          Bennett  at  $900,000, see  U.S.S.G.     2F1.1(b), rejecting  the                                 ___          government's contention  that the  total loss should  include, as          relevant conduct, amounts  fraudulently borrowed but  not charged          in  the indictment.   The  district court  then deducted  (1) the          $589,000  Bennett had repaid on the indictment loans prior to the          discovery of his  crimes, and (2) the value to  Daniel Webster             "at least  $660,000"     of the civil  suit settlement  agreement          entered into after Bennett's crimes had been discovered.                    Having determined  that no loss had  been occasioned by          Bennett's fraud, the district court  ruled that Bennett merited a          two-level downward  adjustment, see U.S.S.G.    3E1.1, for accep-                              __________  ___          tance  of responsibility  by  agreeing to  settle the  indictment          loans in full.  The resulting Total Offense Level ("TOL") of  8,1                                        ____________________               1The  TOL  calculations  at  the first  sentencing  were  as          follows:                      2F1.1 (base offense level)                 6                      2F1.1(b)(1) (zero loss)                    0                                          3          together with a Criminal History Category of I, produced a GSR of          from 2 to  8 months'  imprisonment, 24 to  36 months'  supervised          release,  and a  $5,000  to $50,000  fine.   The  district  court          sentenced Bennett to  24 months' probation  and six months'  home          detention, special assessments totaling $450, and no fine.           B.   Bennett I          B.   Bennett I               _________                    On  appeal in Bennett I we held that the district court                                  _________          had  erred in  excluding from  the total  loss  calculation under          U.S.S.G.   2F1.1(b)(1), as relevant conduct, the losses resulting          from fraudulent borrowings not charged in the indictment, Bennett                                                                    _______          I,  37 F.3d  at  694, and  in  crediting Bennett  with "at  least          _          $660,000"  for the civil  suit settlement entered  into after his                                                                  _____          crimes had  been discovered.   Id.  at 695  ("'[T]he loss  is the                                         ___          amount of the loan not repaid at the time the  offense is discov-          ered, reduced by the amount the lending institution has recovered          (or can expect to recover) from any  assets pledged to secure the          loan.'")  (citing U.S.S.G.   2F1.1,  n. 7(b)).2  Finally, Bennett                                                                    _______                                        ____________________                      2F1.1(b)(2) (more than minimal planning)   2                      3B1.3 (abuse of position of trust)         2                      3E1.1 (acceptance of responsibility)      (2)                                                            _______                                        TOL                      8               2Bennett I established the following formula for calculating                _________          "actual loss" under U.S.S.G.   2F1.1 on remand:               1(a) the   total  dollar  amount  of  the  fraudulent  loans                    involved in the  nine counts of conviction  ($900,000);                    and                    ___                (b) the total dollar amount of all loans coming  within the                    "relevant  conduct"  guideline calculation  ($526,000);                    less                    ____                                          4          I held  that the two-level downward adjustment  for acceptance of          _                                   __________          responsibility was clear error,  since Bennett had neither demon-          strated  genuine  contrition nor  made  voluntary  restitution by                                                  _________          settling  the civil suit, nor  pled guilty to  the charges in the          indictment, but instead denied  the essential factual elements of          the  charges throughout  trial and  at sentencing  by maintaining          that he had never intended to defraud the banks.  See id. at 696-                                                            ___ ___          98.  We  therefore vacated  the first sentence  and remanded  for          resentencing.  Id. at 700.                         ___          C.   Resentencing          C.   Resentencing               ____________                    On  remand the  district court  recalculated the  total          loss  at $837,000, after  including the losses  occasioned by the          fraudulent borrowings for which Bennett was not indicted, result-          ing in a TOL of 18.3  Following Bennett's request  for a downward          departure, see 18 U.S.C.   3553(b), the district court identified          _________  ___                                        ____________________               2(a) the  total dollar  amount of  all  loans repaid  by the                                                             ______                    defendant  prior to  May 3,  1990 ($589,000),  the date                    Bennett's unlawful activities were discovered; and                                                                   ___                (b) the  total recoveries  realized  and reasonably  to  be                    expected  from all  collateral  pledged  to secure  the                    fraudulent loans involved  in all counts  of conviction                    and  encompassed within  the relevant  conduct calcula-                    tion.          See Bennett I, 37 F.3d at 695.          ___ _________               3The recalculated TOL is comprised as follows:                       2F1.1(a) (base offense level)                   6                      2F1.1(b)(1) (total loss of $837,000)            8                      2F1.1(b)(2) (more than minimal planning)        2                      3B1.3 (abuse of position of trust)              2                                                                 ______                                             TOL                     18                                          5          two  factors  ostensibly warranting  a  departure  from the  GSR.          First,  Bennett had  already  served a  portion  of the  original          sentence, including  the entire six months'  home detention term.          Second,  the civil suit  settlement constituted "an extraordinary          act that seldom occurs in the criminal courts. . . ."  According-          ly,  the district  court granted  a six-month  downward departure          from  the  recalculated 27-month  GSR minimum,  based on  the six          months'  home  detention term  already  served,  combined with  a          further 15-month  downward departure for the  "extraordinary act"          of  entering into  the civil suit  settlement agreement  to repay          $694,000.4   The  district court  then imposed  the minimum  six-          month prison term now under challenge on appeal.                                           II                                          II                                      DISCUSSION                                      DISCUSSION                                      __________                    The United  States contends that  Bennett I  foreclosed                                                      _________          both a  downward adjustment and  a downward departure  for accep-          tance of responsibility  based on the  civil settlement and  Ben-          nett's  belated  expression of  contrition  at  sentencing.   See                                                                        ___          Bennett I, 37 F.3d at 696-98; see also  U.S.S.G.   3E1.1 (permit-          _________                     ___ ____                                        ____________________               4As the  government has not appealed  the six-month downward          departure,  we do  not  address it.   But  cf.  United States  v.                                                ___  ___  _____________          Zackular,  945  F.2d 423,  425  (1st Cir.  1991)  (rejecting home          ________          confinement as "official  detention" for purposes of  18 U.S.C.            3585 (Credit for Prior Custody):   "While a defendant's  movement          may be  severely curtailed  by  . .  . home  confinement,  . .  .          confinement to the comfort of one's own home is not the function-          al equivalent of incarceration in either a practical or a psycho-          logical sense."); see also Reno v. Koray, 115  S. Ct. 2021 (1995)                            ___ ____ ____    _____          (construing phrase "official detention," see 18 U.S.C.   3585(b),                                                   ___          in  light of Bail Reform  Act of 1984,  related sentencing provi-          sions and Bureau of Prisons guidelines).                                          6          ting  two-level downward  adjustment for  clear demonstration  of                                    __________          acceptance of responsibility).            A.   Downward Departure          A.   Downward Departure               __________________                    A sentencing court may depart from the GSR "only in the                                           ______          extraordinary case  -- the case that falls  outside the heartland          for the offense of conviction . . . ."  United States v. Jackson,                                                  _____________    _______          30  F.3d 199,  201 (1st  Cir. 1994);  see also  United  States v.                                                ___ ____  ______________          Rivera,  994 F.2d  942, 947-49  (1st Cir.  1993).   The departure          ______          decision is subject to bifurcated review.  United States v. Fahm,                                                     _____________    ____          13 F.3d 447, 450  (1st Cir. 1994).  First,  all "quintessentially          legal" rulings  underlying the decision to  depart (viz., whether          the guideline  language encourages, permits or  forbids departure          for the kinds of reasons relied upon by the sentencing court) are                  _____ __ _______          reviewed de novo.  Id. at 450 (quoting Rivera, 994  F.2d at 951).                   __ ____   ___                 ______          Second,  the "heartland"  determination  itself is  reviewed with          "full awareness of, and respect for, the trier's  superior 'feel'          for the case."   Rivera, 994 F.2d at  952 (citation omitted); see                           ______                                       ___          also Fahm, 13 F.3d at 450.          ____ ____               1.   Extraordinary Act               1.   Extraordinary Act                    _________________                    Following Bennett I, the  district court found that the                              _________          $660,000  settlement agreement constituted  "an extraordinary act          that seldom  occurs in  the criminal  courts," for  which Bennett          "should be  rewarded .  .  . ."    The district  court  carefully          avoided  explicit  reliance  on  "acceptance  of responsibility,"          apparently in deference to  Bennett I, 37 F.3d at  698 (stressing                                      _________          that  restitution  must  be "'genuinely  voluntary,  rather  than                                          7          motivated  primarily  by a  collateral  consideration  such as  a          desire to settle  the civil lawsuit'") (quoting  United States v.                                                           _____________          Miller, 991 F.2d 552, 553 (9th Cir. 1993));  cf. United States v.          ______                                       __  _____________          Hendrickson, 22 F.3d 170, 176 (7th Cir.) (rejecting civil forfei-          ___________          ture, in light of its involuntary nature, as basis for finding of          "extraordinary acceptance of  responsibility"), cert. denied, 115                                                          _____ ______          S. Ct. 209 (1994).  Bennett I also held, however,  that the civil                              _________          suit  settlement was not  "genuinely voluntary," 37  F.3d at 698,          and  that "'restitution is relevant to the extent it shows accep-                                              __ ___ ______ __ _____ ______          tance of responsibility.'"  Id. (quoting Miller, 991 F.2d at 553)          _____ __ ______________     ___          ______          (emphasis added).   Consequently, whether  or not the  civil suit          settlement constituted an "extraordinary  act," there has been no          showing that it  formed a  material basis for  either a  downward          adjustment or  a downward  departure, let alone  for establishing          restitutionary conduct outside the  "heartland."  See Rivera, 994                                                            ___ ______          F.2d at 947.                      As the  only ground for the  challenged downward depar-          ture  had been foreclosed by  Bennett I, which  plainly held that                                        _________          the civil  suit settlement  was not genuinely  "voluntary" within          the meaning of U.S.S.G.    3E1.1, see Bennett I, 37 F.3d  at 698,                                            ___ _________          and  could not  form  the basis  for  a downward  adjustment  for                                                            __________          acceptance  of responsibility,  it  could  afford no  permissible          basis  for the 15-month downward departure.  See Miller, 991 F.2d                                           _________   ___ ______          at 553 (sentencing court may depart downward on basis of restitu-          tionary conduct only if it evinces an acceptance of responsibili-                                          8          ty  substantially  greater  than  that required  for  a  downward          adjustment under U.S.S.G.   3E1.1).           __________               2.   Overstated Loss and "Multiple Loss Causation"               2.   Overstated Loss and "Multiple Loss Causation"                    ____________________________________________                    On  appeal, Bennett  broaches  for the  first time  the          alternative arguments that the 15-month downward departure should          be upheld  either because  the $837,000 total  loss recalculation          significantly  overstates  the  seriousness of  his  conduct, see                                                                        ___          U.S.S.G.    2F1.1, n. 7(b) (1994),  or on the ground  of multiple          loss causation.   See, e.g.,  United States v.  Rostoff, 53  F.3d                            ___  ____   _____________     _______          398, 405 (1st Cir. 1995) (acknowledging that a downward departure          may be  warranted in the "few instances" where ". . . a misrepre-          sentation  . .  . is  not the  sole cause  of the  loss. .  . .")          (citing U.S.S.G.   2F1.1, n.11 (1987)); see also United States v.                                                  ___ ____ _____________          Gregorio, 956 F.2d 341, 345 (1st Cir. 1992).          ________                    Although  Bennett  contends  that  the  total  loss  is          overstated  as  a  consequence of  an  economic  downturn in  the          regional economy, insofar as the record on appeal permits assess-          ment it undermines Bennett's claim.  The valuation of the proper-          ty Bennett agreed to surrender under  the terms of the civil suit          settlement  was disputed  at  the initial  sentencing; viz.,  the          government contending for $431,024.16, Bennett $684,000.  At that          time, Bennett maintained  that a slumping economy had reduced the          value  of the settlement  after the banks  took title to  the im-                                    _____          proved properties  and other  assets tendered  by  Bennett.   The          district court accordingly rejected the lower valuation propound-          ed  by the government, and  found the settlement  worth "at least                                          9          $660,000."  Subsequently, at resentencing, it placed the value of          Bennett's "extraordinary act" at $694,000.                      Thus, not only did  Bennett not proffer record evidence          of a  sudden, unforeseen  downturn in  the regional economy  that          significantly lowered  the value of the  properties financed with          his  illegal  borrowings, but  throughout  both prior  sentencing          proceedings he  maintained that  market factors had  not affected          these properties.  We therefore hold both that the "multiple loss          causation" claim  has not  been preserved,  see United  States v.                                                      ___ ______________          Dietz, 950 F.2d  50, 55  (1st Cir. 1991)  ("[I]n connection  with          _____          sentencing  as in other contexts  . . .  arguments not seasonably          addressed to the trial court may not be raised for the first time          in  an appellate venue."), and  that it is  unsupported    indeed          contradicted    by the record.                                           III                                         III                                      CONCLUSION                                      CONCLUSION                                      __________                    As all available avenues  for a downward departure have          been  foreclosed, we vacate  the second  sentence imposed  by the          district court  and remand for resentencing  within the guideline          sentencing range  prescribed by the total  offense level recalcu-          lated by the district court at the first resentencing.                    SO ORDERED.                    SO ORDERED.                    __ _______                                                     10
