                                               Filed:   January 8, 2004

                    UNITED STATES COURT OF APPEALS

                        FOR THE FOURTH CIRCUIT


                             No. 03-4209
                              (CR-02-34)


UNITED STATES OF AMERICA,

                                                 Plaintiff - Appellee,

           versus

HOWARD K. BAXLEY,

                                                Defendant - Appellant.


                              O R D E R


     The court amends its opinion filed December 24, 2003, as

follows:

     On page 1, district court information, line 2 -- the word

“Middle” is deleted and replaced with the word “Eastern” and the

word “Durham” is deleted and replaced with the word “Raleigh.”



                                          For the Court - By Direction



                                          ____________________________
                                                      Clerk
                          UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


UNITED STATES OF AMERICA,              
                 Plaintiff-Appellee,
                 v.                               No. 03-4209
HOWARD K. BAXLEY,
             Defendant-Appellant.
                                       
          Appeal from the United States District Court
     for the Eastern District of North Carolina, at Raleigh.
    Malcolm J. Howard, District Judge, sitting by designation.
                           (CR-02-34)

                      Argued: December 5, 2003

                      Decided: December 24, 2003

        Before WILKINS, Chief Judge, and WILKINSON
                  and MOTZ, Circuit Judges.



Affirmed by unpublished per curiam opinion.


                             COUNSEL

ARGUED: Jane Ely Pearce, OFFICE OF THE FEDERAL PUBLIC
DEFENDER, Raleigh, North Carolina, for Appellant. Anne Margaret
Hayes, Assistant United States Attorney, Raleigh, North Carolina, for
Appellee. ON BRIEF: Thomas P. McNamara, Federal Public
Defender, Stephen C. Gordon, Assistant Federal Public Defender,
Raleigh, North Carolina, for Appellant. Frank D. Whitney, United
States Attorney, Christine Witcover Dean, Assistant United States
Attorney, Raleigh, North Carolina, for Appellee.
2                      UNITED STATES v. BAXLEY
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).


                              OPINION

PER CURIAM:

   This appeal raises a single question: does controlling circuit prece-
dent permit a sentencing court to calculate the amount of loss result-
ing from a completed (rather than simply attempted) fraud offense by
looking to the amount of intended loss. We conclude that it does and
that the applicable sentencing guidelines require this whenever
intended loss can be determined and is greater than the amount of
actual loss. Therefore, we affirm.

                                   I.

   Howard K. Baxley pled guilty to four counts of mail fraud in viola-
tion of 18 U.S.C. § 1341 (2000). The guilty plea arises from fifteen
life insurance policies with a combined face value of $501,340, which
Baxley obtained without revealing his infection with the human
immune deficiency virus ("HIV"). Baxley viaticated most of these
policies and received immediate payouts totaling $38,866. In essence,
Baxley lied on his applications for life insurance to secure policies
that, in light of his HIV positive status, the insurers likely would not
have issued. He then sold these fraudulently obtained policies to third
party investors, who accepted the obligation to pay the policy premi-
ums and became the beneficiaries under the policies, and, in return,
gave Baxley ten to fifteen percent of a policy’s face value.

   The Sentencing Guidelines provide that the offense level for a
fraud offense increases by increments based on the total dollar
amount of loss associated with the offense. See United States Sen-
tencing Guidelines ("U.S.S.G.") § 2F.1(b)(1). In its final Presentence
Investigation Report ("PSR"), the probation office calculated the total
dollar amount of loss in Baxley’s case by looking to the amount of
loss that Baxley intended and found that "[a]s a result of BAXLEY’s
conduct, the loss for guideline purposes is $ 501,340," or the face
                       UNITED STATES v. BAXLEY                         3
value of the life insurance policies. Although the probation office did
not explain its reasoning in detail, it appears to have determined that,
by fraudulently obtaining life insurance policies that insurers would
not have otherwise granted to an HIV positive individual, Baxley ren-
dered the insurers liable for the face value of the policies upon his
death and that Baxley therefore intended to create this "loss" to the
insurers as a necessary step to receive his viatication payouts.

   Baxley objected to the loss calculation set forth in the PSR on the
ground that, under United States v. Bailey, 975 F.2d 1028 (4th Cir.
1992), the sentencing court could include intended loss only when
calculating loss for attempt offenses, not completed fraud offenses,
like those he committed. According to Baxley, our holding in Bailey
limits the loss in this case, involving a completed fraud offense, to
actual loss, or the amounts received by Baxley through viatication.
Baxley also moved for a downward departure pursuant to § 2F1.1,
Application Note 10, which provides that "[i]n a few instances, the
loss determined under subsection (b)(1) may overstate the seriousness
of the offense," such that "a downward departure may be warranted."

   The district court declined to follow Bailey and accepted the loss
calculation (which included intended loss) set forth in the PSR —
$501,340. Accordingly, the court assigned Baxley an offense level of
18, which, in conjunction with his criminal history category of III,
resulted in a guideline range of 33 to 41 months. The district court
further determined, however, to grant Baxley’s motion for a down-
ward departure because the court found "that the $ 501,000 is a bit
of an over-statement, when the actual was only $ 36,000. I believe the
legal theory is correct for the intended loss to be calculated but I find
that over-states [sic] the seriousness of the offense and . . . that the
more appropriate finding is that the loss was $ 250,000." Based on a
total loss amount of $ 250,000 (which reduced Baxley’s offense level
to 16 with a guideline range of 27 to 33 months), the district court
sentenced Baxley to 27 months on each count, to be served concur-
rently, and a term of supervised release of two years.

                                   II.

   On appeal, Baxley argues once again that Bailey bars the inclusion
of intended loss in the total loss amount for completed fraud offenses
4                      UNITED STATES v. BAXLEY
and controls in this case because there is "no decision explicitly over-
ruling" Bailey. Brief of Appellant at 8 and 14.

   In Bailey, 975 F.2d at 1031, issued in 1992, we held that "[a] close
reading of" the then-applicable commentary to U.S.S.G. § 2F1.1 "re-
veals that the Sentencing Commission meant to limit" intended loss
"to attempt crimes." Baxley acknowledges, as he must, that four years
later in United States v. Williams, 81 F.3d 1321, 1328 (4th Cir. 1996),
we concluded that § 2F.1 required a court to calculate loss to include
"not just actual loss but intended loss whenever the later can be deter-
mined," including when the loss "is attributable to a completed fraud."
(emphasis added). See also United States v. Miller, 316 F.3d 495, 499
(4th Cir. 2003); United States v. Loayza, 102 F.3d 257, 266 (4th Cir.
1997). Baxley contends, however, that we must follow Bailey,
because "a panel of this court cannot overrule, explicitly or implicitly,
the precedent set by a prior panel of this court." Mentavlos v. Ander-
son, 249 F.3d 301, 312 n.4 (4th Cir. 2001).

   The Mentavlos principle does not apply here. Although Bailey and
Williams reached different conclusions as to whether intended loss
should be calculated in calculating the loss resulting from a completed
fraud offense, they did so based on very different guideline commen-
tary. They do not, therefore, constitute "irreconcilable" precedent as
Baxley suggests, but merely interpretation and application of different
underlying guideline commentary.

   Bailey apparently interpreted and applied the 1990 Sentencing
Guidelines, while Williams interpreted and applied the Guidelines
amended as of November 1, 1994.1 The district court sentenced Bax-
ley under the 1997 Sentencing Guidelines, which were, in relevant
part, substantively the same as those applicable in Williams. After we
decided Bailey and before we decided Williams, the Sentencing Com-
    1
   Neither Bailey nor Williams identify the year of the Sentencing
Guidelines applied. However, the sentencing in Bailey took place some-
time after April 1990 and the court relied on language in the Guidelines
that no longer existed by November 1, 1991. 975 F.2d at 1030, 1031. In
Williams, it appears that the sentencing took place after December 16,
1994, 81 F.3d at 1323-24, and the court references a provision that did
not take effect until November 1, 1991, 81 F.3d at 1327.
                       UNITED STATES v. BAXLEY                         5
mission amended the commentary to § 2F1.1 and that of an accompa-
nying interrelated guideline section at issue here, § 2B1.1, in such a
way as to clarify that intended loss is to be included in calculating the
loss amount for all fraud offenses — completed or attempted.

   The Supreme Court has directed that "commentary in the Guide-
lines Manual that interprets or explains a guideline is authoritative
unless it violates the Constitution or a federal statute, or is inconsis-
tent with, or a plainly erroneous reading of, that guideline." Stinson
v. United States, 508 U.S. 36, 38 (1993). A change in commentary
can change the law of the circuit by indicating that the circuit’s prior
interpretation of a guideline does not accord with the Commission’s
intent. United States v. Capers, 61 F.3d 1100, 1110-1113 (4th Cir.
1995). When a change in the commentary mandates an interpretation
different than that previously employed, courts may apply a guideline
in accord with the new commentary without overruling any prior,
contrary circuit precedent.2

   Although the amendments to the commentary made after Bailey
and prior to Williams do not expressly state that intended loss applies
to completed offenses, they do make that principle significantly more
evident. When interpreted in Bailey, application note 7 in the com-
mentary to § 2F1.1 provided:

      In keeping with the Commission’s policy on attempts, if a
      probable or intended loss that the defendant was attempting
      to inflict can be determined, that figure would be used if it
      was larger than the actual loss.
  2
   Baxley recognizes some of the differences in commentary text, but
argues that "[distinguishing Bailey from Williams on the basis that the
cases involved different versions of Application Note 7 . . . is not very
convincing" because "Bailey’s logic, that intended losses are counted
only when the crime is an attempt, should seemingly have applied in Wil-
liams." Brief of Appellant at 13. We do not here attempt to distinguish
the holdings of Bailey and Williams (we find the Government’s attempt
to do so by characterizing the reference to attempts in Bailey as dicta
unavailing), but rather to ascertain the commentary text underlying the
holdings.
6                         UNITED STATES v. BAXLEY
See Bailey, 975 F.2d at 1031 (first emphasis added; second emphasis
in original). Similarly, when we decided Bailey, Application Note 2
to § 2B1.1 stated that "[i]n cases of partially completed conduct, the
loss is to be determined in accordance with the provisions of § 2X1.1
(Attempt, Solicitation, or Conspiracy)."3

   In 1991, the Commission removed the sentence in Application
Note 7 to § 2F1.1, set forth above, which we had quoted and relied
on in Bailey, and added a sentence that provides: "Consistent with the
provisions of § 2X1.1 (Attempt, Solicitation or Conspiracy), if an
intended loss that the defendant was attempting to inflict can be deter-
mined, this figure will be used if it is greater than the actual loss." The
Commission also revised the discussion of partially completed
offenses and moved it out of the primary paragraph of Application
Note 2 to § 2B1.1 placing it apart and further down in a separate para-
graph. And in 1992, the Commission added the following sentence to
Application Note 7 to § 2F1.1: "As in theft cases, loss is the value of
the money, property, or services unlawfully taken; it does not, for
example, include interest the victim could have earned on such funds
had the offense not occurred."

   Cumulatively, these and other changes clarified that loss resulting
from fraud in all cases should include intended loss, if that loss can
be determined. As the probation office explained:

        Note 7 clearly defers to the Commentary of 2B1.1 for dis-
        cussion of the valuation of loss . . . . In Application Note 7,
        it goes on to note that, consistent with the provisions of
        2X1.1, if an intended loss the defendant was attempting to
        inflict can be determined, that amount is to be used for loss
        purposes if it is greater than the actual loss. Application
        Note 7 does not indicate that like 2X1.1, the crime itself
        must be an attempt for intended loss to apply.
    3
   Section 2X1.1 remained in relevant part the same from Bailey to Wil-
liams and specified the calculation of offense level for attempt, solicita-
tion, and conspiracy; its commentary discusses the addition of offense
characteristics for "actually intended" actions and the computation of
offense level for a partially completed offense. § 2X1.1, cmt. n.2, 4.
                        UNITED STATES v. BAXLEY                          7
PSR Addendum at 2 (emphasis in original).

   The best evidence of the import of the amendments to the commen-
tary can be found in the Commission’s explanation of its amend-
ments. Most significantly, when the Commission amended
Application Note 7 to § 2F1.1 in 1992 it explained: "This amendment
clarifies that interest is not included in the determination of loss. In
addition, it clarifies that in fraudulent loan application cases, as in
other types of fraud, if the intended loss is greater than the actual
loss, the intended loss is used." U.S.S.G., Appendix C, amend. 470
(effective November 1, 1992) (emphasis added).

   The Commission also generally described its amendments as
designed to remove ambiguity about the calculation of loss under
§ 2F1.1. Thus, with regard to the relevant 1991 amendments, the
Commission explained that they were effected to "provide[] a more
precise reference in the commentary of these guidelines to the discus-
sion in § 2X1.1 that applies in the case of a partially completed
offense" and "reorder[] the material in these notes, and divide[] them
into separate paragraphs for greater clarity." U.S.S.G., Appendix C,
amend. 393 (effective November 1, 1991). The Commission further
noted that the amendments "conform[] the working of Application
Note 7 of the commentary to § 2F1.1 to Application Note 2 of the
commentary to § 2B1.1 to make clear that the treatment of attempts
in cases of fraud and theft is identical," and "provide[] additional
guidance with respect to the determination of loss." Id.

   In holding that, because in Williams we relied on a different ver-
sion of the Guidelines commentary than in Bailey, the former did not
overrule the latter sub silentio, we do not suggest that every time the
Commission amends the guideline commentary prior precedent inter-
preting earlier commentary is defunct or open to wholesale reinterpre-
tation. Rather, we reach our holding only because of the unusual
circumstances present here. In this case, the Commission not only
amended the commentary to § 2B1.1 and § 2F1.1 in a way that clari-
fied that intended loss should be calculated for completed offenses,
but expressly stated in the course of doing so that "in . . . fraud, if the
intended loss is greater than the actual loss, the intended loss is used."
Further, in Bailey we relied on a "close reading of the Commentary"
and quoted the sentence in the former Application Note 7 that would
8                       UNITED STATES v. BAXLEY
most suggest that intended loss is limited to attempt crimes — "In
keeping with the Commission’s policy on attempts, if a probable or
intended loss that the defendant was attempting to inflict can be deter-
mined, that figure would be used if it was larger than the actual loss."
Bailey, 975 F.2d at 1031 (emphasis added by the Bailey court). The
Commission had significantly altered this sentence by the time we
decided Williams. And, after Williams, the Commission made its
intent on this point even more explicit — § 2B1.1 now encompasses
both theft and fraud and expressly provides in commentary that "loss
is the greater of actual or intended loss" and intended loss "means the
pecuniary harm that was intended to result from the offense."
U.S.S.G., § 2B1.1, cmt. n.2 (2002).

    Finally, we note that at oral argument, Baxley contended that, even
if a sentencing court could consider intended loss in calculating loss
for a completed fraud offense, the district court erred in this case by
setting the loss amount as the face value of the insurance policies, and
that we must remand for the district court to recalculate the amount
of loss. Baxley suggested a number of theories in support of remand,
e.g., that the face value of an insurance policy does not represent loss,
but lost profit such that it falls within the rule that "loss . . . does not
. . . include interest the victim could have earned on such funds had
the offense not occurred," § 2F1.1, cmt. n.7; that intended loss cannot
be calculated in this case because the amount of intended loss cannot
"be determined" with sufficient certainty, § 2F1.1, cmt. n.7 (providing
that "if an intended loss can be determined, this figure will be used")
(emphasis added); and that the district court incorrectly determined
that Baxley "intended" the loss to include the amounts of the face val-
ues of the policies. Baxley, however, failed to raise these alternative
arguments in his appellate brief and therefore waived them. See
11126 Balt. Blvd. Inc. v. Prince George’s Co., 58 F.3d 988, 993 n.74
(4th Cir. 1995) (en banc).

   In any event, a district court’s factual determinations as to the
amount of intended loss could only be reversed if clearly erroneous.
Miller, 316 F.3d at 503. Baxley conceded at the sentencing hearing
that the amount of the "potential intended loss" is $501,340. The dis-
trict court granted a downward departure, holding Baxley accountable
for only $250,000 of loss. Under the Sentencing Guidelines, "the loss
need not be determined with precision. The court need only make a
                      UNITED STATES v. BAXLEY                        9
reasonable estimate of the loss, given the available information."
§ 2F1.1, cmt. n.8 (1997). Given Baxley’s concession, the district
court’s final determination of loss amount, and the governing law, we
would be hard pressed to conclude that the district court clearly erred
in its factual determinations. See generally United States v. Lorefice,
192 F.3d 647, 655 (7th Cir. 1999) (upholding district court’s factual
finding that the face value of life insurance policies constituted
intended loss under § 2F1.1).

                                 III.

  For the foregoing reasons, the judgment of the district court is

                                                         AFFIRMED.
