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

Nos. 02-1702, 02-1726 & 02-1925
UNITED STATES OF AMERICA,
                                                 Plaintiff-Appellee,
                                                  Cross-Appellant,
                                 v.


JOHN SERPICO and GILBERT CATALDO,
                                     Defendants-Appellants,
                                           Cross-Appellees.
                          ____________
           Appeals from the United States District Court
       for the Northern District of Illinois, Eastern Division.
          No. 99 CR 570—Blanche M. Manning, Judge.
                          ____________
 ARGUED OCTOBER 31, 2002—DECIDED FEBRUARY 20, 2003
                    ____________


 Before RIPPLE, MANION, and EVANS, Circuit Judges.
  EVANS, Circuit Judge. For 12 years, John Serpico and
Maria Busillo held and abused various influential positions
with the Central States Joint Board (“CSJB”), a labor or-
ganization that provides support to its member unions.
Among other responsibilities, Serpico and Busillo con-
trolled the management of the unions’ money. The pair,
along with longtime friend and business associate Gilbert
“Bud” Cataldo, collaborated on three schemes involving
the misappropriation of the unions’ funds. Two of those
2                         Nos. 02-1702, 02-1726 & 02-1925

schemes are the focus of this appeal by Serpico and
Cataldo (Busillo has not appealed her conviction).
  In their “loans-for-deposits” scheme, Serpico and Busillo
deposited large sums of union money in various banks. In
exchange, the two received overly generous terms and
conditions on personal loans totaling more than $5 million.
In the more complicated hotel loan kickback scheme, sev-
eral groups entered into the 51 Associates Limited Part-
nership, which planned to construct a hotel. The partner-
ship was unable to obtain financing for the construction of
the building without first securing a commitment for a
mortgage loan that would guarantee repayment of the
construction loan after the hotel was built. Serpico used
union funds to make a mortgage loan to the developers,
after which Mid-City Bank agreed to make the construc-
tion loan. In exchange for Serpico’s help in securing the
loan, 51 Associates paid $333,850 to Cataldo’s corpora-
tion, Taylor West & Company, for “consulting services” that
Cataldo never actually performed. Cataldo then kicked
back $25,000 to Serpico by paying Serpico’s share of a
$50,000 investment into an unrelated business project
(the Studio Network project) in which the two were part-
ners.
  Serpico, Busillo, and Cataldo were tried on charges of
racketeering, mail fraud, and bank fraud. At the close of
the evidence, the court granted motions by Serpico and
Busillo for acquittal on the racketeering and bank fraud
counts. The jury convicted Serpico and Busillo on mail fraud
charges relating to the loans-for-deposits scheme and
Serpico and Cataldo on mail fraud charges for the hotel
loan kickback scheme.
  At sentencing, the district court determined that Serpico
and Cataldo were each responsible for a loss of $333,850,
the amount paid to Cataldo, for the hotel loan kickback
scheme. For the loans-for-deposits scheme, the court
Nos. 02-1702, 02-1726 & 02-1925                            3

found the damage to the unions to be equal to the addi-
tional amount of interest the union assets would have
earned had Serpico purchased CDs at banks offering the
highest interest rates instead of those offering him special
deals on his personal loans. The court totaled loans from
Capitol Bank as well as six others, estimating the loss to
be between $30,000 and $70,000. The court thus in-
creased Serpico’s base offense level of 6 by 9 levels, plus 2
levels for more than minimal planning and 2 levels for
abuse of trust (19 total). Serpico and Cataldo were sen-
tenced to 30 and 21 months in prison, respectively.
  Serpico and Cataldo (collectively “Serpico” as we go
forward) appeal, challenging the verdicts and the applica-
tion of the sentencing guidelines on a number of grounds.
In its cross-appeal, the government also contests the ap-
plication of the sentencing guidelines.
  First, Serpico argues that his convictions should be
overturned because his schemes did not “affect” a financial
institution. The 5-year statute of limitations for mail and
wire fraud offenses under 18 U.S.C. § 3282 is extended
to 10 years “if the offense affects a financial institution,”
18 U.S.C. § 3293(2), and Serpico could not have been
prosecuted without that extension. Serpico claims that an
offense only “affects a financial institution” if the offense
has a direct negative impact on the institution. The dis-
trict court instructed the jury that the schemes affected
the banks if they “exposed the financial institution[s] to
a new or increased risk of loss. A financial institution
need not have actually suffered a loss in order to have
been affected by the scheme.”
  Although Serpico agreed to the jury instruction, he now
points to United States v. Agne, 214 F.3d 47, 53 (1st Cir.
2000) and United States v. Ubakanma, 215 F.3d 421, 426
(4th Cir. 2000), to support his claim that the financial
institution must suffer an actual loss. In Agne, however, the
4                           Nos. 02-1702, 02-1726 & 02-1925

court found that the bank “experienced no realistic pros-
pect of loss,” so it did not have to reach the question of
whether the bank must suffer an actual loss. Agne, 214
F.3d at 53. Similarly, Ubakanma simply held that “a wire
fraud offense under section 1343 ‘affected’ a financial
institution only if the institution itself were victimized
by the fraud, as opposed to the scheme’s mere utilization
of the financial institution in the transfer of funds.”
Ubakanma, 215 F.3d at 426. Neither side here argues
that “mere utilization” is sufficient; the question is wheth-
er an increased risk of loss is enough, even if the institu-
tion never suffers an actual loss.
  Several courts, including this one and the Fourth Circuit,
which produced Ubakanma, have concluded that an in-
creased risk of loss is sufficient in similar contexts. See, e.g.,
United States v. Longfellow, 43 F.3d 318, 324 (7th Cir.
1994) (quoting United States v. Hord, 6 F.3d 276, 282 (5th
Cir. 1993) (“risk of loss, not just loss itself, supports con-
viction” for bank fraud)); United States v. Colton, 231 F.3d
890, 907 (4th Cir. 2000); see also Pattern Criminal Federal
Jury Instructions for the Seventh Circuit (1990), p. 217
(The mail interstate carrier wire fraud statute “can be
violated whether or not there is any [loss or damage to
the victim of the crime] [or] [gain to the defendant].”).
  More importantly, the whole purpose of § 3293(2) is to
protect financial institutions, a goal it tries to accomplish
in large part by deterring would-be criminals from includ-
ing financial institutions in their schemes. Just as society
punishes someone who recklessly fires a gun, whether or
not he hits anyone, protection for financial institutions is
much more effective if there’s a cost to putting those
institutions at risk, whether or not there is actual harm.
Accordingly, we find no error in the district court’s jury
instruction.
  Serpico next argues that, even if the district court
correctly interpreted § 3292(2), his schemes did not “affect”
Nos. 02-1702, 02-1726 & 02-1925                          5

a financial institution because they did not create in-
creased risks for the banks involved in the schemes.
Essentially, Serpico claims that the banks in both schemes
were willing participants who would not have chosen to
participate unless it was in their best interests (that is,
factoring in the risks, they expected to make money on
the deals). But the mere fact that participation in a
scheme is in a bank’s best interest does not necessarily
mean that it is not exposed to additional risks and is not
“affected,” as shown clearly by the various banks’ dealings
with Serpico.
  For example, the hotel loan kickback scheme affected
Mid-City even though Mid-City believed it would make
money on the deal. Mid-City made a $6.5 million con-
struction loan, one it obviously would not have made
if it believed the risks associated with the loan out-
weighed the expected payoff. But the loan, as all loans do,
did carry some risk. Since Mid-City did not want to be
a long-term real estate lender, it agreed to the loan only
after Serpico misappropriated Midwest Pension Plan
(“MPP”) funds in making the MPP’s $6.5 million end-mort-
gage loan (which meant that, if all went well, Mid-City
would quickly be repaid). Therefore, Mid-City never would
have been exposed to the risks of its loan absent Serpico’s
scheme because it never would have made the loan.
  Serpico responds that MPP’s $6.5 million essentially
guaranteed the loan, so there was no risk to Mid-City.
But, under the terms of the loan, if the hotel was not
completed on time and under budget, the money MPP put
up would be returned to it. That would leave Mid-City
with a risky long-term loan it didn’t want. On top of
that, the kickback scheme increased the chances that the
project would run into trouble. Certainly a construction
project is more likely to be delayed when those running
it and putting up the money for it are doing so illegally,
6                          Nos. 02-1702, 02-1726 & 02-1925

making them subject to the disruption of investigation
and arrest at any time.
   The loans-for-deposits scheme shows even more dramati-
cally that a bank can take on higher risk while acting in
what it believes to be its own best interests. Banks, includ-
ing Capitol Bank (which no longer exists as a result of
punishments it received after pleading guilty to conspir-
ing with Serpico and Busillo to defraud the CSJB en-
tities), decided the benefits from the deposits made it
worth the risk of loss resulting from the generous terms
and conditions of the loans it gave Serpico. But the fact
remained that the bank made risky loans at low in-
terest rates that it never would have made absent the
scheme.
  In fact, at trial, Serpico’s counsel told the court that “if
the defendants were convicted of a loans-for-deposits
scheme, that conduct in and of itself would mean that they
affected a financial institution” and “I don’t know I could
conceivably argue that the particular scheme did not af-
fect a financial institution.” He now tries two arguments.
In addition to arguing that the bank was acting in its
own best interest, Serpico claims that a financial institu-
tion is not “affected” if it is an active perpetrator in the
offense. We find that argument unpersuasive. It is not
supported by Ubakanma, as Serpico claims, and we find
it hard to understand how a bank that was put out of
business as a direct result of the scheme was not “affected,”
even if it played an active part in the scheme.
  Next, Serpico argues that he was prejudiced by the
admission of evidence relating to various charges on
which the district court acquitted him before the case
went to the jury. In United States v. Holzer, 840 F.2d 1343,
1349 (7th Cir. 1988), we addressed almost this very issue:
    When, as is often the case (it was here), the jury acquits
    a defendant of some counts of a multi-count indict-
    ment, the defendant is not entitled to a new trial on
Nos. 02-1702, 02-1726 & 02-1925                            7

    the counts of which he was convicted, on the theory
    that the conviction was tainted by evidence, which the
    jury heard, relating to the counts on which it acquit-
    ted. . . . No rule of evidence is violated by the admis-
    sion of evidence concerning a crime of which the de-
    fendant is acquitted, provided the crime was properly
    joined to the crime for which he was convicted and
    the crimes did not have to be severed for purposes
    of trial. It makes no difference, moreover, whether the
    jury acquits on some counts or the trial or reviewing
    court sets aside the conviction.
  Serpico notes that his case is different in that the ad-
mitted evidence here concerned claims that the court
dismissed before they reached the jury. Still, the Holzer
reasoning applies. No rule of evidence was violated, and
the district court did not abuse its discretion in failing to
award a new trial to Serpico.
  We also reject Serpico’s claims that his conviction should
be overturned or he is entitled to a new trial because
there was not sufficient evidence to convict him and that
the record does not permit a confident conclusion that
Serpico is guilty beyond a reasonable doubt. Given the
evidence, the jury reasonably concluded that the $333,850
payment to Cataldo was made in exchange for the loan from
Serpico and that some of that $333,850 trickled down to
Serpico.
  Similarly, we reject Cataldo’s claim that the district
court abused its discretion in denying his severance mo-
tion. To succeed, Cataldo must show that he was “unable
to obtain a fair trial, not merely that a separate trial
would have offered [him] a better chance of acquittal.”
United States v. Bruce, 109 F.3d 323, 327 (7th Cir. 1997).
Cataldo claims he should have been tried separately
because there was a gross disparity in the evidence pre-
sented against him and his co-defendants. But a “simple
‘disparity in the evidence’ will not suffice to support a
8                        Nos. 02-1702, 02-1726 & 02-1925

motion for severance,” United States v. Caliendo, 910 F.2d
429, 438 (7th Cir. 1990). Moreover, the trial court in-
structed the jury to consider the evidence against each
defendant individually, and juries are presumed to be
capable of following such limiting instructions. United
States v. Williams, 858 F.2d 1218, 1225 (7th Cir. 1988).
Because there is no reason the jury here could not fol-
low that instruction, the district court did not abuse its
discretion in denying Cataldo’s motion.
  Finally, both Serpico and the government challenge the
district court’s application of the sentencing guidelines.
Serpico challenges the calculation of the loss from both
schemes. With regards to the hotel loan kickback scheme,
Serpico claims that the union entities suffered no loss
because the loan was repaid (the district court found the
loss attributable to both defendants to be $333,850, the
amount paid to Cataldo). But Serpico’s theory fails to
consider the fact that, although none of the $6.5 million
was lost, more money could have been earned. Obviously,
the 51 Associates partnership was willing to pay (and did
pay) an extra $333,850 in order to secure the loan. That
money could have gone to the union entities instead of
Cataldo if Serpico had been acting in the entities’ best
interests instead of his own. See generally United States
v. Briscoe, 65 F.3d 576, 589 (7th Cir. 1995) (kickbacks
“represent money that should have gone to the Union” and,
as such, were properly included in the loss calculation).
  We also reject Serpico’s alternative argument that
he (individually, as opposed to with Cataldo) should only
be accountable for the $25,000 that Cataldo kicked back
to him. Serpico and Cataldo are each accountable for
“all reasonably foreseeable acts and omissions of others
in furtherance of the jointly undertaken criminal activ-
ity.” USSG §1B1.3(a)(1)(B). Since Serpico knew money
was going to be paid back to Cataldo for work he never
did, the district court correctly held him responsible for
the full $333,850 loss.
Nos. 02-1702, 02-1726 & 02-1925                             9

  Serpico also argues that, in computing the losses from
the loans-for-deposits scheme, the district court should
not have included losses arising from CD purchases from
banks other than Capitol because the court did not have
sufficient evidence to support a conclusion that the
scheme extended to those banks. But the 12-year pattern
of union deposits into banks from which Serpico simulta-
neously sought personal loans, combined with documents
from Gladstone-Norwood Bank and Exchange Bank sug-
gesting that loans were approved in order to secure
union deposits, presented sufficient evidence.
  In its cross-appeal, the government first claims the
district court applied the wrong offense guideline. The
district court calculated the defendants’ sentences under
§2F1.1 (the fraud guideline), but the government argues
it should have applied §2E5.1 (the benefit plan bribery
guideline) during sentencing. We review the district
court’s selection of the applicable guideline section de novo.
United States v. Dion, 32 F.3d 1147, 1148 (7th Cir. 1994).
  Clearly, the government wants it both ways; having
chosen to prosecute Serpico under the mail fraud statute,
it wants him sentenced based on bribery. As unjust as
this practice might seem in a case like this (Serpico es-
sentially would be sentenced for a crime, bribery, he
could not have been charged with because the statute of
limitations had run), the guidelines not only allow but
even encourage this scheme, which someone could argue
is a little like an old bait-and-switch. Under §1B1.2(a),
however, the district court is instructed to “[d]etermine
the offense guideline section in Chapter Two (Offense
Conduct) applicable to the offense of conviction (i.e., the
offense conduct charged in the count of the indictment
or information of which the defendant was convicted).”
USSG §1B1.2(a) (1990). The commentary to that section
elaborates: “When a particular statute proscribes a variety
of conduct that might constitute the subject of different
10                         Nos. 02-1702, 02-1726 & 02-1925

offense guidelines, the court will determine which guide-
line section applies based upon the nature of the offense
conduct charged in the count of which the defendant was
convicted.” §1B1.2, comment. (n.1). In other words, as in
United States v. Hauptman, 111 F.3d 48 (7th Cir. 1997), the
sentencing judge should endeavor to locate the “essence”
of the defendant’s conduct, not merely the name attached
to the statute violated.
  Therefore, §1B1.2(a) encourages the district court to
find an appropriate guideline section to fit the conduct
(not just the charge). Section 2F1.1 of the 1990 guidelines,
under which Serpico was convicted and sentenced, notes:
     [T]he mail or wire fraud statutes, or other relative-
     ly broad statutes, are used primarily as jurisdictional
     bases for the prosecution of other offenses. . . . Where
     the indictment or information setting forth the
     count of conviction (or a stipulation as described in
     §1B1.2(a)) establishes an offense more aptly covered
     by another guideline, apply that guideline rather than
     §2F1.1.
§2F1.1, comment. (n.13).
  The indictment charged that Serpico “sought and received
a substantial personal benefit and kickback in exchange
for influencing” the MPP to provide the $6.5 million loan,
which is closer to bribery than mail fraud (in §2E5.1, a
“bribe” is “the offer or acceptance of an unlawful pay-
ment with the specific understanding that it will cor-
ruptly affect an official action of the recipient.” §2E5.1,
comment. (n.1)). Similarly, the loans-for-deposits scheme
was basic bribery, with Serpico promising union deposits
to the banks in exchange for favorable personal loans.
Therefore, the district court should have sentenced Serpico
under §2E5.1.
  Finally, the government argues that the district
court erred by failing to consider the approximately
Nos. 02-1702, 02-1726 & 02-1925                          11

$475,000 that Serpico derived from the loans-for-deposits
scheme through his investment in Studio Network. The
government argues that it showed that Serpico in-
vested $25,000 in the partnership in 1983, then sold his
share 5 years later for $500,000. The government claims
that the district court should have used Serpico’s gain as
an alternative measure of loss under §2F1.1 (which also
would be used under §2E5.1). See §2F1.1, comment. (n.8)
(“The offender’s gain from committing the fraud is an
alternative estimate that ordinarily will underestimate
the loss.”).
  We have interpreted §2F1.1 of the 1990 guidelines to
require that the amount of loss be based on “the net
detriment to the victim.” See United States v. Mount,
966 F.2d 262, 265. Therefore, the defendant’s gain
should only be used when the loss to the victim cannot
be reasonably estimated (as the 2001 guidelines make
clear: “The court shall use the gain that resulted from
the offense as an alternative measure of loss only if there
is a loss but it reasonably cannot be determined.”), §2B1.1,
comment. (n.2(B)). The district court reasonably esti-
mated the loss from the loans-for-deposits to be equal to
the additional amount the union entities could have
earned at banks offering more favorable rates on CDs. To
use the $475,000 that Serpico earned suggests that the
unions would have received an astounding 1,900 percent
return on their investments, a wholly unsubstantiated
claim.
  To summarize: We affirm the convictions and the loss
calculations but remand for sentencing under §2E5.1.
   AFFIRMED   IN   PART, REVERSED   IN   PART, and REMANDED.
12                    Nos. 02-1702, 02-1726 & 02-1925

A true Copy:
      Teste:

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




               USCA-02-C-0072—2-20-03
