               UNITED STATES COURT OF APPEALS
                           FOR THE EIGHTH CIRCUIT
                                     ______________

                                       NO. 98-2663
                                     ______________

United States of America,                *
                                         *
                     Appellee,           *
                                         *    Appeal from the United States
       v.                                *    District Court for the District
                                         *    of Minnesota.
Michael Patrick Otto,                    *
                                         *
                     Appellant.          *
                                    _______________

                                Submitted: March 11, 1999
                                  Filed: April 21, 1999
                                   ________________

Before BEAM and HEANEY, Circuit Judges, and FENNER,1 District Judge.

                                    ________________

FENNER, District Judge.

       Appellant, Michael Patrick Otto, appeals his sentence after pleading guilty to
eleven counts of bank fraud in a thirteen count indictment against him in the United
States District Court for the District of Minnesota. Additionally, Otto agreed to have
transferred from the Southern District of Florida and to plead guilty to a one-count
indictment charging him with bank fraud in Florida.



       1
       The Honorable Gary A. Fenner, United States District Judge for the Western District of
Missouri, sitting by designation.
       Otto's charges stemmed from a "check-kiting" scheme he utilized to create and
maintain falsely inflated balances in accounts at several federally insured financial
institutions. Otto used these falsely inflated balances to cause checks presented by him
to be honored for payment when he knew there were not sufficient funds actually on
deposit. Otto agreed that he owed restitution pursuant to his illegal activity in the
amount of $225,372.26.

       Otto raises two points on appeal. First, he argues that his case should be
remanded because the District Court was misled by the government at sentencing on
the proper way to consider any credit he should receive for time he had already served
pursuant to a related conviction in the State of Kansas.

       At sentencing, Otto requested a downward departure from the sentencing
guidelines because his offense conduct included his conviction in the State of Kansas
for which he had already served his sentence. Otto argued at sentencing that because
he had already served his sentence under the Kansas conviction and the court could not
credit his time served under U.S.S.G. § 5G1.3(b), that he should be granted a
downward departure. The government argued at sentencing that it should be left to the
bureau of prisons "with direction from the court, to account for the amount of time,
credit for time served, that [Otto] should receive as a result of him being in federal
custody and the Kansas offense counting toward that." As acknowledged by the
government at oral argument, its position at sentencing was improper because the
bureau of prisons does not have authority to grant Otto credit for time served under his
Kansas sentence. The district court denied Otto's request for a downward departure
and sentenced him within the guideline range. Nonetheless, Otto argues on appeal that
because the District Court was misled by the government's argument at sentencing, his
sentence should be vacated and his case remanded for re-sentencing.
       Judges are presumed to know the law and to apply it in making their decisions.
Wise v. Bowersox, 136 F.3d 1197, 1203 (8th Cir. 1998). In the case at bar, the District
Court denied Otto's request for a downward departure without making a recommendation


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to the bureau of prisons of the nature suggested by the government. It is presumed that
the District Court knew that the bureau of prisons was without authority to credit Otto
with time that he had already served on his Kansas sentence. This presumption is
supported by the fact that the District Court made no suggestion that any credit to which
Otto was entitled for time served while in federal custody should extend to his Kansas
sentence.

      Otto's first point is denied.

      In his second point, Otto argues that U.S.S.G. § 5G1.3(b) violates the equal
protection component of the Due Process Clause of the Fifth Amendment because it
mandates credit for undischarged sentences but not for discharged sentences.

       Section 5G1.3 sets forth the guidelines for the imposition of a sentence on a
defendant subject to an undischarged term of imprisonment. Section 5G1.3(b) provides,
in pertinent part:

      If . . . the undischarged term of imprisonment resulted from offense(s) that
      have been fully taken into account in the determination of the offense level
      for the instant offense, the sentence for the instant offense shall be imposed
      to run concurrently to the undischarged term of imprisonment.

U.S.S.G. § 5G1.3(b)

       By its terms, § 5G1.3(b) applies exclusively to undischarged sentences. United
States v. Burke, 91 F.3d 1052, 1053 (8th Cir. 1996); United States v. Mun, 41 F.3d 409,
413 (9th Cir. 1994), cert. denied, 514 U.S. 1077 (1995); United States v. Ogg, 992 F.2d
265, 266 (10th Cir. 1993). It is silent with regard to discharged sentences. However, a
District Court has authority to depart downward in order to give a defendant credit for
time served on his expired state sentence. United States v. O'Hagan, 139 F.3d 641, 657-
58 (8th Cir. 1998).


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       In the absence of a suspect classification based on race or other forbidden
grounds, a legislative distinction, such as the distinction between a discharged and an
undischarged sentence, is required only to have a rational basis to survive a challenge
that the classification violates the substantive component of the Due Process Clause of
the Fifth Amendment. United States v. Frieberger, 28 F.3d 916, 921 (8th Cir. 1994),
cert. denied, 513 U.S. 1097 (1995).

       With undischarged sentences, there remains uncertainty as to the amount of time
a defendant will actually serve. For example, a defendant could be paroled, placed on
probation after serving some period of shock detention, given credit off a sentence for
good behavior, or have the sentence vacated. There are no such contingencies in regard
to a discharged sentence and it is rational to treat the two differently. Thus, because
there is a rational basis for treating the two differently, there is no denial of due process
by virtue of U.S.S.G. § 5G1.3(b) mandating credit for undischarged sentences but not
discharged sentences.

       The judgment of the District Court is affirmed.




   A true copy.

              Attest:

                  CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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