                     United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 02-3388
                                    ___________

United States of America,            *
                                     *
           Plaintiff-Appellee,       *
                                     *     Appeal from the United States
     v.                              *     District Court for the
                                     *     District of Minnesota.
Michael Alan Mooney,                 *
                                     *
           Defendant-Appellant.      *
                                ___________

                              Submitted: November 20, 2003
                                 Filed: July 23, 2004 (Corrected 7/27/04)
                                  ___________

Before MURPHY, LAY, and BRIGHT, Circuit Judges.
                           ___________

PER CURIAM.

       Michael Alan Mooney was convicted by a jury of eight counts of mail fraud,
four counts of securities fraud, and five counts of money laundering. The district
court1 sentenced him to 42 months, and Mooney appeals. He seeks a judgment of
acquittal because of insufficient evidence, a new trial because of evidentiary error, or
resentencing. We affirm Mooney's conviction but remand for further proceedings in
respect to his sentence.


      1
       The Honorable James M. Rosenbaum, Chief Judge, United States District
Court for the District of Minnesota.
       Mooney was formerly vice president of underwriting for United Healthcare
Corporation (United). United is one of the largest health care management service
companies in the country, and its stock trades on the New York Stock Exchange.
Mooney opened a margin account in 1990 at the brokerage house Recom which he
used solely to invest in United stock. Recom extended him a line of credit equal to
half the value of the securities he maintained in the account. If the value of his
securities were to fall below half the account's total value, Recom would make a
margin call. Mooney would then have to make a deposit to restore equity in the
account or Recom could sell assets of his to restore the 50% margin.

      As part of United's strategy to acquire health insurance companies, it
approached privately owned MetraHealth (Metra) in early 1995 and entered into
negotiations with it in February. At that time Metra provided health insurance to
more individuals than United, and it also had a substantial indemnity business. If
United were to succeed in acquiring Metra, it would become the largest health care
services company in the United States. It would have more than 40 million people
enrolled in a variety of health care programs, with projected annual revenue of more
than $8 billion. Mooney received stock options from time to time as part of his
compensation at United, and on April 13 he exercised his right to purchase 20,000
shares of United stock for $36,000. The market value on that day for that amount of
stock was $917,500.

       During the 1995 negotiations, United and Metra conducted due diligence
inquiries which involved confidential meetings at the headquarters of each company.
Mooney had attended many such meetings on behalf of United in the past, and he and
other senior representatives of United went to Metra's Virginia headquarters on May
11, 1995 for due diligence meetings. They spent four days looking through Metra's
financial records, membership projections, cost data, and confidential Book of
Business. United's corporate counsel reminded the participants in the meetings not
to trade in stock during the due diligence period and to protect the secrecy of the

                                        -2-
proceedings by referring to the proposed merger transaction as "Project Fjord" and
to Metra as "Musky."

       United has a written policy on insider trading which prohibits United
employees from trading in its stock in two situations: (1) during the blackout period
at the end of each quarter before the United earnings report is released, and (2) when
an employee possesses material nonpublic information. The insider trading policy
defines material nonpublic information as information that a reasonable investor
would use in deciding whether to invest. It also states that information about
proposed mergers and acquisitions by United is material. United's policy was
frequently published in employee newsletters and mentioned in oral reminders at due
diligence meetings.

       After Mooney returned from the meetings at Metra's Virginia headquarters, he
contacted his stockbroker on May 17, 1995 to sell the 20,000 shares of United
common stock he had purchased in April. The sale cleared on May 24, and Mooney
used part of the $775,500 proceeds to purchase call options in United stock. The call
options were purchased between May 24 and June 14 for a total price of $258,283.03.
They gave him the right to buy a total of 40,000 shares of United stock at $35 a share
in the following months of September, December, and January. Both the sale of his
United shares and his purchases of the United call options occurred before the end of
the due diligence period in the Metra transaction.

      Mooney subsequently sold his call options at a profit.2 On July 14, 1995 he


      2
        The purchase and sale prices of Mooney's options to buy United stock in the
three future months are shown below:
      Options for     Bought                       Sold
      September       $63,004.75 (June 6)          $94,536.52 (July 14)
      December        $81,800.83 (June 14)         $139,298.57 (October 4)
      January         $113,477.45 (May 24, 26)     $298,647.40 (October 5)
                      $258,283.03                  $532,482.49             (+$274,199.46)

                                             -3-
sold the September options, and early in October he sold the December and January
options. His total return on these sales was $532,482.49, and between August 3 and
November 20, 1995 he deposited $428,000 into an account he had at Firstar Bank.
These deposits were made by five checks drawn on his account at Recom Securities.3

       The first media mention of the acquisition appeared on June 21, 1995 in the
New York Times, which reported that United was in advanced discussions with
Metra. United issued a press release on the same day, confirming the ongoing
discussions. The daily volume of trade in United shares increased markedly, and the
stock price rose 5%. On June 22 the Wall Street Journal reported speculation about
United's approaching acquisition of Metra, and United common stock rose another
6%. Then on June 26 United announced its agreement to acquire Metra for $1.65
billion in cash and stock. On June 20, the day before the first national media story,
United stock had traded at $40.125. By July 15 the price was $44.50 a share, and by
October 5 it was over $49.00.

       Shortly after the public announcement of United's acquisition of Metra, stock
market surveillance officials notified the Securities and Exchange Commission (SEC)
about bullish positions taken in United call options prior to the announcement of the
acquisition. The SEC asked United to investigate whether Mooney had engaged in
prohibited securities trading. Although Mooney denied it to United's corporate
counsel, the SEC filed a civil action against him on August 2, 1999, alleging that the
options were purchased while he had material nonpublic information regarding
United's plan to acquire MetraHealth. The SEC sought an injunction, disgorgement
of his gains, and a civil penalty. Shortly thereafter on August 9, United suspended
Mooney for violating its insider trading policy. He later resigned. The SEC's civil
action was stayed after he was indicted in this case.


      3
      Mooney deposited $138,000 on August 3; $70,000 on August 9; $20,000 on
October 23; $100,000 on November 3; and $100,000 on November 20.

                                         -4-
       The second superceding indictment alleged that Mooney knowingly devised
and engaged in a scheme to defraud United and its shareholders through his May sale
of United common stock and his subsequent purchase and sale of United call options,
all while in possession of material nonpublic information concerning United's
negotiations to acquire Metra. The indictment charged Mooney with eight counts of
mail fraud in violation of 18 U.S.C. §§ 1341 and 1346; four counts of securities fraud
in violation of 15 U.S.C. §§ 78j(b), 78ff(a), and 17 C.F.R. § 240.10b-5; and five
counts of money laundering in violation of 18 U.S.C. § 1957. The mail fraud counts
referenced eight separate mailings of confirmation slips, for his May 17 sale of
United common stock and for his subsequent call option transactions. The securities
fraud counts covered his four separate purchases of call options. The money
laundering counts were based on his deposits of five checks from Recom into his
Firstar Bank account during August, October, and November 1995; the indictment
alleged that these funds were derived from his securities and mail fraud.

       Mooney was found guilty by a jury on all counts and required to forfeit
$70,000. The district court denied his motions for judgment of acquittal or new trial
and sentenced him to 42 months in prison and a $150,000 fine. Mooney appeals from
the judgment, alleging insufficient evidence, abuse of discretion in an evidentiary
ruling, and sentencing error.

       In reviewing the sufficiency of the evidence in a case such as this, the evidence
is considered in the light most favorable to the government, evidentiary conflicts are
resolved in its favor, and all reasonable inferences are drawn from the evidence in
support of the jury's verdict. See United States v. Ramirez, 350 F.3d 780, 783 (8th
Cir. 2003). We will reverse only if no reasonable jury could have found the accused
guilty beyond a reasonable doubt. Id.

      Mooney argues that the government did not prove a scheme to defraud beyond
a reasonable doubt. The government alleged that Mooney acquired material,

                                          -5-
nonpublic information relating to United's acquisition of MetraHealth and that he
breached the duty of trust he owed to United and its shareholders by purchasing the
call options as part of a fraudulent scheme. Mooney's securities fraud charges alleged
the use of manipulative and deceptive devices in connection with the purchase or sale
of securities, see 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5, and false and
misleading statements willfully made. See 15 U.S.C. § 78ff(a). Fraudulent intent
need not be proven directly, but can be inferred from the facts and circumstances
surrounding the defendant's actions. See United States v. Flynn, 196 F.3d 927, 929
(8th Cir. 1999).

       Mooney contends that there was insufficient evidence to prove that he used
material nonpublic information in violation of the securities laws. Mooney argues
that his case differs from the typical insider trading case. He claims that an inside
trader ordinarily knows to a greater degree of certainty how the stock price will be
affected by the release of nonpublic information. See, e.g., United States v. O'Hagan,
521 U.S. 642 (1997) (defendant knew that price of stock would increase after hostile
tender offer announced). He argues that it was not certain that the United stock price
would increase because of the merger with Metra. The legal test is not whether the
price would certainly rise, however, but whether the inside information used was
material. See Basic, Inc. v. Levinson, 485 U.S. 224, 236 (1988). A fact is material
in the securities fraud context if there is a substantial likelihood that a reasonable
investor would consider it important in making an investment decision. Id. at 231-32.

       There was more than enough evidence here for a reasonable jury to find that
Mooney's inside information was material. He exercised employee stock options to
purchase United stock on April 13 after negotiations with Metra had begun. As soon
as he returned home from the May due diligence meetings, he began to purchase call
options for United stock. The jury could infer that Mooney sought to capitalize on
his nonpublic information and anticipated he could profit by purchasing call options
that could later be sold at a higher price. Mooney also had access to information that

                                         -6-
the acquisition of Metra was likely to present new growth opportunities for United.
Because of his participation in high level confidential meetings, Mooney knew that
the due diligence review had not derailed negotiations and that United would only
proceed with acquisitions that were expected to increase earnings. He also knew that
United would grow considerably in size, programs, and projected revenue. All of this
information would have been of interest to a reasonable investor, and the jury could
have found a substantial likelihood that it would have been considered important in
making investment decisions.

       Mooney also contends that his transactions were not part of a fraudulent
scheme, but rather began as a result of a margin call forcing him to sell some of his
United common stock. His broker testified, however, that there was no record
Mooney ever received a margin call, and other evidence showed that his account had
not gone below the margin requirements before he sold his United shares in May.
The broker also testified that Mooney's sale of United stock had had no significant
effect on the margin status of his account. The trier of fact was entitled to find from
this evidence that Mooney's May sale of United stock had nothing to do with a
margin call.

       Mooney also argues that any rational investor who observed the seasonal trends
in the price of United stock would have made similar investment decisions. Whether
or not that might be true, there was sufficient evidence for a reasonable jury to find
Mooney's sale of common stock was part of a fraudulent scheme to use the sale
proceeds to purchase the United call options, that these transactions were based on
his use of material nonpublic information, and that there was sufficient evidence on
all elements of the securities fraud counts.

       Mooney argues that the government did not prove beyond a reasonable doubt
that the mails were used to carry out the fraudulent scheme. A mail fraud conviction
under 18 U.S.C. § 1341 requires proof that the defendant voluntarily and intentionally

                                         -7-
devised or participated in a scheme to defraud, that he entered into the scheme with
the intent to defraud, that he knew that it was reasonably foreseeable that the mails
would be used, and that he used the mails in furtherance of the scheme. See United
States v. Bearden, 265 F.3d 732, 736 (8th Cir. 2001).

       Mooney contends that the only evidence of use of the mails was the mailing of
confirmation slips to him by Recom after his May 17 sale of United stock and his
subsequent purchases and sales of call options. Although he asserts that these
mailings occurred after the alleged fraud, they fell within the time period of the
fraudulent scheme alleged in the indictment, from "on or about February 1995 . . .
continuing until October 6, 1995." The confirmation slips recorded transactions on
May 24, 25, 30; June 7, 15; July 17; and October 5, 6, 1995. He argues further that
he did not conceive these mailings to be part of the scheme's execution, citing
Schmuck v. United States, 489 U.S. 705, 710 (1989). Mooney overlooks Schmuck's
holding that the mailings need only be "incident to an essential part of the scheme"
or a "step in [the] plot," id. at 710-11, and mailings that are in any way part of the
execution of the scheme are sufficient to satisfy the mailing element of the offense.
See id. at 713.

       Experienced investors such as Mooney expect confirmation slips to confirm
their transactions, and Mooney could have anticipated that his buy and sell orders
would result in the mailing of confirmation slips. Confirmation slips are integral to
an investor's contract relationship with his broker. See United States v. Naftalin, 606
F.2d 809, 811 (8th Cir. 1979). Because the broker's use of the mails is attributable
to the investor's buy or sell order, it is sufficient to satisfy the requirement of use of
the mails in furtherance of a fraudulent scheme. Id. at 811-12. These slips recorded
the sale of Mooney's United stock and the number of call options he purchased and
sold, at what price and date, their expiration dates, and details of their sale. The jury
could reasonably find that these mailed records aided Mooney in his scheme to
defraud. See United States v. O'Hagan, 139 F.3d 641, 652 (8th Cir. 1998). The jury

                                           -8-
was entitled to consider the confirmation slips in deciding whether the mails had been
used as part of Mooney's fraudulent scheme, and we conclude there was sufficient
evidence to satisfy the mailing element of the mail fraud counts.

       Mooney also challenges the sufficiency of the evidence for his money
laundering convictions under 18 U.S.C. § 1957. Money laundering is defined in the
statute as knowingly engaging in, or attempting to engage in, a monetary transaction
in criminally derived property that is valued at more than $10,000. Mooney argues
that the money laundering counts must fail if the predicate offenses of securities fraud
and mail fraud were not established, but as already discussed there was sufficient
evidence to support his convictions for those offenses.

       Mooney argues that there was insufficient evidence to prove that the funds
deposited into his Firstar Bank account were proceeds of insider trading. The
evidence showed that the deposits consisted of five withdrawals from the Recom
account Mooney used for transactions in United stock. He contends that there was
enough United common stock or "clean money" in the account to cover the deposit
checks. There was thus insufficient evidence he argues, to show that the deposits
were from proceeds of the sale of his call options or "dirty money." The government
contends that the issue is unreviewable because Mooney did not raise this
commingled funds theory in his motion for acquittal. See United States v. Olano, 507
U.S. 725, 733-34 (1993) (timely assertion necessary to obtain appellate review). The
point is well taken, but we note in any event that the government need not trace each
dollar to a criminal source to prove a violation of 18 U.S.C. § 1957. See United
States v. Hetherington, 256 F.3d 788, 794 (8th Cir. 2001) (citing United States v.
Pennington, 168 F.3d 1060, 1066 (8th Cir. 1999)); see also United States v. Ross, 210
F.3d 916, 919-21 (8th Cir. 2000) (same rule adopted for 18 U.S.C. § 1956).

      Mooney's theory would allow wrongdoers to evade prosecution for money
laundering simply by commingling criminal proceeds with legitimate funds.

                                          -9-
Moreover, the jury could reasonably find from the evidence that Mooney was only
able to withdraw the funds from his Recom account without going below his margin
limit because the account contained the proceeds from the sale of his call options.
We conclude that there was sufficient evidence to support Mooney's convictions for
illegal monetary transactions.

       Mooney also argues that the district court abused its discretion by denying his
motion in limine. Before trial he asked the court to rule that his 1986 state tax
conviction could not be used to impeach him if he were to testify. The court's denial
of the motion caused him not to testify he says, because he feared he would be
prejudiced by mention of his conviction in front of the jury. A trial court's
evidentiary rulings are generally reviewed for abuse of discretion, see, e.g., United
States v. King, 351 F.3d 859, 864 (8th Cir. 2003), but Mooney's issue is unreviewable
because he did not testify. See Luce v. United States, 469 U.S. 38, 43 (1984).
Nevertheless, the court's decision to allow impeachment by use of his tax conviction
was not an abuse of discretion. See United States v. Carter, 528 F.2d 844, 847 (8th
Cir. 1975). Mooney has not shown that he is entitled to a new trial.

       Mooney's sentencing arguments are directed at the district court's calculation,
under § 2B1.4 of the guidelines, of the gain resulting from his offenses. See United
States Sentencing Guidelines Manual [U.S.S.G.] § 2B1.4 (2002). He contends that
the district court erred in its interpretation of § 2B1.4 and in its finding that the gain
from his insider trading was $274,199.46. That amount is the gain Mooney realized
by the sale of his United call options for $532,482.49 after purchasing them for
$257,283.03. The district court's interpretation and application of the guidelines are
reviewed de novo. See United States v. Gonzalez-Lopez, 335 F.3d 793, 795 (8th Cir.
2003). We review the district court's factual findings for clear error. See United
States v. Bush, 352 F.3d 1177, 1181 (8th Cir. 2003).




                                          -10-
       Although Mooney was sentenced on August 21, 2002, the district court applied
the 1994 guidelines because those in effect in 2002 would have resulted in a higher
sentencing range for the amount of gain found to have resulted from his offenses. See
U.S.S.G. § 1B1.11(b)(1) (unless there is an ex post facto problem, the guidelines in
effect on the date of sentencing should be used rather than those in effect on the date
of the offense); United States v. Reetz, 18 F.3d 595, 597-98 (8th Cir. 1994). Mooney
does not challenge the court's use of the 1994 guidelines, and § 2B1.4 is identical in
both versions except for the use of gender neutral language in 2002. Compare
U.S.S.G. § 2B1.4 (2002) with U.S.S.G. § 2F1.2 (1994) (deleted by consolidation with
§§ 2B1.1, 2B1.4 effective Nov. 1, 2001).

        The key difference between the 1994 and 2002 guidelines for Mooney's case
is in the tables used to find the level of the sentencing enhancement for gain resulting
from the offenses. The material difference is that the 2002 guidelines would be more
favorable to Mooney if the gain resulting from his offenses is under $70,000, but the
1994 guidelines are more favorable to him if his gain is higher than that.4 Mooney
argues that his gain was only $50,467.47, rather than the $274,199.46 found by the
district court. In his briefing he cites to the 2002 manual and its table, which would
produce a lower guideline range if his interpretation of § 2B1.4 were adopted. For
ease of reference we cite to the 2002 manual, except where the 1994 version would
be more beneficial to Mooney.

      At sentencing the district court applied the guideline grouping rules which
require grouping of offenses which involve substantially the same harm. See
U.S.S.G. § 3D1.3. Mooney's securities and mail fraud convictions were grouped

      4
       Compare U.S.S.G. § 2B1.1(b)(1) (2002) with § 2F1.1(b)(1) (1994). See
Reason for Amendment, U.S. Sentencing Guidelines Manual app. C, vol. II, amend.
617 (Nov. 1, 2001) at 179-80 (2003). Other changes in the 2002 guidelines manual
included the consolidation and renumbering of certain economic crime sections and
a new unitary table for fraud and money laundering offenses.

                                         -11-
under U.S.S.G. §§ 3D1.2(b) and (d), since they involved the same criminal objective.
They were then grouped with his convictions for laundering the fraudulent proceeds.
See U.S.S.G. § 3D1.2(c). Since the money laundering convictions had the highest
offense level of the grouped offenses, they supplied the base offense level of 17. See
U.S.S.G. § 3D1.3(a). Two levels were added for Mooney's knowledge that the
proceeds were from a fraudulent scheme. See U.S.S.G. § 2S1.2(b)(1)(B) (1994).

       The final adjustment to Mooney's base offense level was an enhancement of
two levels for engaging in monetary transactions involving between $200,000 and
$350,000 in illegal proceeds. See U.S.S.G. §§ 2S1.1(b)(2)(C), 2S1.2(b)(2) (1994).
This enhancement is the subject of Mooney's sentencing appeal. The illegal proceeds
involved in his money laundering were those derived from his insider trading
offenses, and the district court found the gain from those offenses to be $274,199.46
under U.S.S.G. § 2B1.4. With a total offense level of 21 and a criminal history score
of I, Mooney's sentencing range was 37 - 46 months. The court sentenced him in the
middle of the range to 42 months.

        The district court found that the gain resulting from Mooney's offenses was the
total amount he gained from his illegal purchase and sale of United call options, but
Mooney argues his gain should not be determined from the proceeds he received on
their sale. The formula he urges would use instead the increase in the market value
of the call options in the period before his inside information became public and was
absorbed by the market. Mooney claims that the market would have reasonably
absorbed his inside information by June 28, just two days after United announced its
Metra acquisition, and that the information would have been reflected in the market
value of his call options on that date. His brief puts that value at $309,750,5 from
which he subtracts the purchase price of $258,283.03 to arrive at a gain figure of
$50,467.47. The proceeds of the sales in July and October should not be a factor he


      5
       This appears to be a typographical error; we assume $308,750 is intended.

                                         -12-
says because the sales occurred after June 28, his estimated date for absorption of the
inside information into the market. His proposed gain figure would result in a
sentencing range of 24 - 30 months.

        Mooney argues that the sentencing guideline term "gain resulting from the
offense" is not clear and that a market absorption approach should be borrowed from
civil insider trading cases to interpret the guideline. Cf. 15 U.S.C. § 78u-1(f) (using
trading price of the security a reasonable period after public dissemination of the
nonpublic information). He points to SEC v. MacDonald, 699 F.2d 47, 53-55 (1st
Cir. 1983) (en banc), a civil case holding that defrauded sellers could recover the
amount they lost before they could have reasonably obtained access to the material
nonpublic information. He neglects to mention that the MacDonald court
characterized this damages formula for defrauded investors as remedial in nature, and
that the court contrasted it to the punitive nature of criminal penalties. Id. at 54; see
also id. at 55 (Coffin, C.J., dissenting). Accord United States v. Perry, 152 F.3d 900,
903-04 (8th Cir. 1998) (disgorgement is a civil sanction serving nonpunitive goals).6

       The government responds that the district court did not err by focusing on the
amount of gain which Mooney realized from his fraudulent transactions. It notes that
the official commentary for the insider trading guideline expressly disapproves of any
attempt to measure the severity of the offense in terms of victim losses, and it says
that different standards are intended for the criminal sentencing guidelines than for
civil disgorgement actions. In the civil context the amount to be disgorged is limited
to victim losses because using total gain could result in an unjust windfall for private
victims. The government points out that Mooney's proposed standard to measure
gain is inherently speculative and would require the sentencing court to identify the

      6
         The SEC's civil fraud case against Mooney was stayed when the United States
decided to charge him with criminal fraud and money laundering; his formula for gain
in this criminal case would apply the same type of disgorgement remedy sought in the
SEC's civil case.

                                          -13-
point at which material nonpublic information is fully assimilated by the market.
That would involve extensive factfinding, and in the present case it would be difficult
to say when, if ever, the market had fully assimilated all of the nonpublic information
Mooney possessed.

       Mooney cites no support in the guidelines or in judicial decisions for
incorporating civil law standards into the relevant guideline. The criminal cases he
does cite were decided before the Sentencing Reform Act introduced guideline
sentencing, and they are inapposite: Chiarella v. United States, 445 U.S. 222 (1980)
(construing §10b-5 disclosure requirements); United States v. Boyer, 694 F.2d 58,
60 (3d Cir. 1982) (construing scienter requirements); United States v. Charnay, 537
F.2d 341, 348 (9th Cir. 1976) (indictment sufficiently charged the elements of § 10b-
5 violation).

       In interpreting the guidelines, we start with the plain language of the guideline
itself. See Gonzalez-Lopez, 335 F.3d at 797. Section 2B1.4 and its phrase "gain
resulting from the offense" are simple and straightforward. The guideline phrase
refers to the gain that has resulted from the defendant's offense. It refers to the
defendant's gain, not to market gain, and it ties gain to the defendant's offense. It
speaks of gain that has resulted, not of potential gain. The guideline does not say "the
gain in market value that has resulted from the offense"; such a phrase might support
Mooney's theory, but that is not the language used. Any question about the
guideline's meaning, however, is decisively resolved by the authoritative definition
provided in the commentary to § 2B1.4.

       The official commentary to § 2B1.4 makes the meaning of the guideline very
clear. The commentary defines gain resulting from insider trading in this way:

      This guideline applies to certain violations of Rule 10b-5 that are
      commonly referred to as "insider trading." Insider trading is treated
      essentially as a sophisticated fraud. Because the victims and their losses

                                         -14-
      are difficult if not impossible to identify, the gain, i.e., the total increase
      in value realized through trading in securities by the defendant and
      persons acting in concert with the defendant or to whom the defendant
      provided inside information, is employed instead of the victims' losses.
U.S.S.G. § 2B1.4, cmt. background (2002) (emphasis added).

       In explaining what is meant by the defendant's gain and why it is used for
sentencing inside trading offenses, the commentary specifically rejects using victim
losses in the calculation. The guideline employs the concept of gain resulting from
the offense as an alternative measure of loss because of the difficulty of ascertaining
the victims and their losses for such offenses. See U.S.S.G. §§ 2B1.1 cmt. n.2(B),
2B1.4 cmt. background. It thus rejects the kind of remedy in SEC v. MacDonald and
the civil securities laws which are based on victim losses rather than the defendant's
gain.

       The commentary focuses on "the total increase in value realized through
trading in securities by the defendant" (emphasis added). That is the commentary's
definition of gain, and it uses common words with widely understood meanings.
There is nothing difficult about the terms "total increase in value" or "trading in
securities." Words are to be taken in their ordinary meaning unless they are technical
terms or words of art. Cf. Salinas v. United States, 522 U.S. 52, 63 (1997) ("When
Congress uses well-settled terminology of criminal law, its words are presumed to
have their ordinary meaning and definition.").

      "Realized" is a key word in the commentary definition of gain. In the context
of securities transactions, to realize means to convert securities or paper money into
cash. See Oxford English Dictionary (2d ed. 1989). To realize is commonly used to
mean "to bring in (a sum) as profit by sale," see American Heritage Dictionary (4th
ed. 2000), and "to convert into actual money; as, to realize assets." See Webster's
Revised Unabridged Dictionary (1998). The ordinary meaning of the word is also


                                           -15-
used in the tax context where to realize a gain in the value of property, the taxpayer
"must engage in a 'sale or other disposition of [the] property.'" Cottage Sav. Ass'n v.
Comm'r, 499 U.S. 554, 559 (1991) (citing Treas. Reg. § 1001(a)). By use of the word
"realized" the commentary makes clear that gain is the total profit actually made
through a defendant's illegal securities transactions. As applied to this case, it means
that the gain resulting from Mooney's offenses was the amount he actually realized
by his trading in call options while he possessed material inside information. In other
words, his gain was the profit he realized when he received $532,482.49 for sale of
the call options he had purchased for $258,283.03.

       The guideline commentary is binding on federal courts, see Stinson v. United
States, 508 U.S. 36, 42 (1993), and the guidelines themselves indicate that the
purpose of the accompanying commentary is to interpret the guideline and to explain
how it is to be applied. See U.S.S.G. § 1B1.7. The Supreme Court pointed out in
Stinson that the commentary accompanying the guidelines not only explains them, but
it "provides concrete guidance as to how even unambiguous guidelines are to be
applied in practice." 508 U.S. at 44. Not only is the commentary "an authoritative
guide to the meaning" of a guideline, id. at 42 (citing Williams v. United States, 503
U.S. 193, 201 (1992)), but the "failure to follow interpretive and explanatory
commentary could result in reversible error." Id. at 47. The commentary to § 2B1.4
is clear and consistent and must be given controlling weight. See United States v.
Hendricks, 171 F.3d 1184, 1186 (8th Cir. 1999). Stinson teaches that we are not free
to ignore the definition in the commentary or to create our own definition of gain, and
Mooney's theory borrowed from the civil law cannot be substituted for the
authoritative guidance of the commentary.7




      7
        Mooney's argument that his interpretation should be adopted under the rule of
lenity is thus without merit. See United States v. Oetken, 241 F.3d 1057, 1060 (8th
Cir. 2001).

                                         -16-
       Since the governing guideline does not measure gain by increase in unrealized
value, Mooney cannot prevail with his argument that his gain should be interpreted
to be the paper increase in the value of his call options as of June 28, and there are
good policy reasons for this. Using actual sales to calculate gain provides a clear and
coherent brightline rule, eliminating the need for extensive factfinding to try to
determine when the market has absorbed nonpublic information. See SEC v.
MacDonald, 725 F.2d 9, 11 n.2 (1st Cir. 1984) (per curiam) ("determinations of this
type are more an art than a science, dependent upon a mix of factors for which there
are no precise standards or guidelines"). Imprecise standards are particularly
inappropriate in the criminal context, and Mooney's approach would be especially
difficult in this case. Mooney's use of June 28 as the date he claims the market would
have absorbed the inside information is most problematic given the evidence in the
record. Because Metra was privately held and much information about it was not
publicly available, it is questionable how quickly the stock market could learn and
absorb material information about the value of United's acquisition.8 The guideline's
focus on the increase in value realized by the defendant's trades provides a simple,
accurate, and predictable rule for judges to apply and follows the Congressional
mandate that sentences reflect the seriousness of the offense. See 18 U.S.C. § 3553;
28 U.S.C. § 991. We conclude that the district court correctly interpreted and applied
§ 2B1.4.

       Mooney also makes an additional argument that he actually made no gain from
his offenses. His zero gain theory is based on the argument that he sold the 20,000
shares of United stock on May 17 because he had received a margin call rather than


      8
        Regulatory approval for the $1.65 billion acquisition was not obtained until
September 29, the acquisition was not completed until October 3, 1995, and market
analysis of the acquisition continued into the fall of 1995. Paine Webber released its
report "Implications of the MetraHealth Acquisition, Corporate Metamorphosis," in
August, and Piper Jaffray issued "Reshaping the Delivery of Healthcare in America––
An Analysis of the MetraHealth Acquisition" in October 1995.

                                         -17-
because of a fraudulent scheme, that the margin call forced him to sell the shares at
a lower price than their market value on April 13 when he had exercised his employee
options to purchase the stock, and that the difference in market value on those dates
should have been deducted from the profit he made through his purchase and sale of
call options. By substituting his gain figure of $50,467.47 for the district court's
finding that he gained $274,199.46 by his insider trading, and then deducting the
$142,000 difference in market value of United stock on the two dates, he arrives at
a zero gain and a sentencing range of 8 - 14 months.

       Mooney's zero gain theory is without foundation for it lacks factual support in
the record. He did not lose $142,000 by his sale of the 20,000 shares. He actually
made a large profit on the sale. He sold the 20,000 shares on May 17 for $775,500,
after paying only $36,000 for them by exercising his employee options on April 13.
He did not have to pay the market price for his shares, and he did not sell them when
their market value was $917,500. He sold them after the Virginia meetings at Metra
were concluded, at a time when their market value was lower than in April. The
evidence does not support Mooney's contention that he was forced to sell his stock
in response to a margin call. The evidence showed that Mooney made arrangements
to sell the 20,000 shares as soon as he returned from the Metra due diligence
meetings, that his Recom account had no margin problem at that time, and that he
never received a margin call. The record also showed that as soon as his sale of the
20,000 shares cleared on May 24, he began to purchase United call options with the
proceeds of the sale. There was more than sufficient evidence from which the trier
of fact could find that he sold his stock in order to carry out his fraudulent scheme ––
to profit from transactions in United call options by using insider information.

      Mooney cites no authority to support his theory that he should be credited with
an unrealized loss, and the guidelines do not provide for any such credit. Section
2B1.4 focuses on realized value actually gained by the defendant through insider
trading, not on differences in market value that did not result in actual gain or loss.

                                         -18-
In insider trading a defendant's gain from the offense is used in the guidelines to
approximate victim losses, and costs to carry out the defendant's fraudulent scheme
have no effect on the amount lost by market victims. Furthermore, the law does not
favor crediting a defendant for the costs involved in his fraudulent scheme. See
United States v. Whatley, 133 F.3d 601, 606 (8th Cir. 1998) ("[W]e are not inclined
to allow the defendants a profit for defrauding people or a credit for money spent
perpetuating a fraud."). Accord United States v. Frank, 354 F.3d 910, 928 (8th Cir.
2004); United States v. Blitz, 151 F.3d 1002, 1012 (9th Cir. 1998). The district court
did not err by declining to make the requested deduction.

       Almost immediately after the Supreme Court's recent decision in Blakely v.
Washington, 542 U.S. ___ (2004), 2004 WL 1402697 (June 24, 2004), Mooney filed
three documents related to his sentence. The first was his third motion for release
pending appeal, which argues that there is "a significant likelihood that [he] will be
forced to serve an unjust sentence" because the district court's finding of gain raised
his guidelines range and his "correct sentence may be 24 - 30 months." Several days
later he filed a 28(j) letter referencing Blakely and saying that he had already served
more time than he should have and that his sentence cannot now be upheld because
it was based on a finding of "fraud loss" [sic] made by the judge, rather than by a jury.
On the same day he moved for supplemental briefing in light of Blakely.

       The government responded to the motion for release by arguing that Blakely
does not undercut Mooney's sentence because the Court majority expressly stated in
its footnote 9 that it was expressing no opinion as to the federal sentencing guidelines
and because existing precedent permits a guideline enhancement based on facts not
charged or proven to a jury, citing Edwards v. United States, 523 U.S. 511, 514-15
(1998), among other Supreme Court cases. It also contends that Mooney's 42 month
sentence should be upheld because it lies between the statutory maximum and
minimum.



                                          -19-
       Since his case is still on direct appeal, Mooney is clearly entitled to raise the
sentencing argument he advances under Blakely. See Griffith v. Kentucky, 479 U.S.
314, 328 (1987). Mooney's 28(j) filing argued that the issue of the amount of gain
resulting from his offense should have been submitted to the jury under Blakely.
While it did not question the constitutionality of the federal sentencing guideline
system, that issue was raised in the government's response to Mooney's recent motion
for release from imprisonment. Until today our court has not taken a position on
whether Blakely applies to the federal sentencing guidelines or whether it makes the
guideline system unconstitutional, but many other circuits have. See, e.g., In re Dean,
2004 WL 1534788 (11th Cir. July 9, 2004) (Supreme Court has not spoken to federal
guidelines; declined to apply Blakely retroactively on collateral review); United
States v. Booker, 2004 WL 1535858 (7th Cir. July 9, 2004) (2-1) (application of the
guidelines violated the Sixth Amendment as interpreted by Blakely); United States
v. Pineiro, 2004 WL 1543170 (5th Cir. July 12, 2004) (declined to apply Blakely to
the federal guidelines; affirmed sentence imposed on judge found facts); United
States v. Penaranda, 2004 WL 1551369 (2d Cir. July 12, 2004) (en banc) (recognized
ambiguities within Blakely and certified three questions to the Supreme Court about
possible application to the federal guidelines and judicial fact finding); United States
v. Montgomery, 2004 WL 1562904 (6th Cir. July 14, 2004) (Blakely made mandatory
guidelines unconstitutional), vacated and reh'g en banc granted July 19, 2004.

        Since Mooney began serving his sentence on October 2, 2002, there is good
reason for his motion for release to be heard as soon as possible, and the district court
would be in the better position to hear that motion expeditiously and to consider any
possible conditions of release. Since the merits of Mooney's sentencing issue under
Blakely are tied up with the standard for granting a motion for release pending
appeal, see 18 U.S.C. § 3143(b), the most efficient way to proceed would be to
remand that issue also. The district court will then be able to order supplemental
briefing on the application of Blakely to Mooney's sentence and to develop the record
for final resolution of the issue. It is not clear from the record before us, for example,

                                          -20-
whether Mooney asked the district court at trial to submit the issue of gain to the jury
or not.9 If he did, appellate review on that issue would not be confined to a plain
error standard. See Johnson v. United States, 520 U.S. 461, 467 (1997); United States
v. McKinney, 120 F.3d 132, 134-35 (8th Cir. 1997).

       Our panel is united in the decision to remand the sentencing issue in this case
for further consideration in light of Blakely, but divided on the issue of its proper
interpretation. Judges Lay and Bright hold for the court that the federal sentencing
guidelines are unconstitutional under Blakely, while the author of this opinion
dissents and would hold that Blakely did not address or decide that issue and that it
did not overrule existing Supreme Court precedent upholding the guidelines. In the
interest of expediting consideration of the particular circumstances of Mooney's case,
we attach brief separate opinions on the application of Blakely.

       In summary, we conclude that Mooney is not entitled to prevail on any of his
arguments for judgment of acquittal or new trial and we affirm his conviction. The
district court did not err in its interpretation of gain resulting from the offense under
U.S.S.G. § 2B1.4, but we remand Mooney’s sentence to the district court for
consideration of the issue he raises under Blakely v. Washington. Since Mooney
began serving his sentence on October 2, 2002, the district court should schedule an
expedited hearing on the sentencing issue and on his third motion for release which
we remand by separate order. The panel will retain jurisdiction in the event of any
further appeal.



      9
       Although no fact issue on the gain resulting from Mooney's offense was
submitted to the jury, the basis for his other sentencing enhancement was. In respect
to one of the money laundering counts, the jury made a finding beyond a reasonable
doubt that Mooney had knowledge that the money involved was derived from his
fraudulent scheme. Mooney has never raised any issue about this enhancement on
his appeal or in his recent submissions.

                                          -21-
LAY and BRIGHT, Circuit Judges, join in this additional opinion for the Court.

      We concur with Judge Murphy in the result of remanding this case for
resentencing in light of Blakely v. Washington, 542 U.S. __, 2004 U.S. LEXIS 4573
(June 24, 2004). We briefly state our views and the consequences for resentencing.

        No party disputes that Mooney received enhancements or increases to his
sentence based on facts found by a judge by a preponderance of the evidence.
Neither does any party suggest that the Guidelines did not require the district court
to employ those enhancements, once it found the underlying facts. Finally, no party
disputes that the enhancements increased the maximum sentence Mooney could have
received under the Guidelines if he had been sentenced without judge-found facts.
Therefore, the sentencing proceedings in the district court violated Mooney’s Sixth
Amendment right to have a jury find beyond a reasonable doubt any and all facts
legally necessary to his sentence. See Blakely, 2004 U.S. LEXIS 4573 at *14 (“When
a judge inflicts punishment that the jury's verdict alone does not allow, the jury has
not found all the facts ‘which the law makes essential to the punishment,’ and the
judge exceeds his proper authority.” (internal citation omitted)). In the absence of the
defendant’s consent to sentencing under the Guidelines, his sentence here becomes
unconstitutional. The logic of Blakely renders Mooney’s sentence a violation of his
Sixth Amendment rights to an impartial jury trial. See U.S. Const., Amend. VI (“In
all criminal prosecutions, the accused shall enjoy the right to a speedy and public
trial, by an impartial jury . . . .”). We are aware of the Fifth Circuit opinion to the
contrary in United States v. Pineiro, 2004 U.S. App. LEXIS 14259 (5th Cir. July 12,
2004) (holding that Blakely does not apply to the federal Guidelines), but we are far
more persuaded by the thorough and logical opinion of Judge Posner in United States
v. Booker, 2004 U.S. App. LEXIS 14223 (7th Cir. July 9, 2004) (holding that Blakely
does apply to the federal Guidelines),10 and the recently vacated opinion of Judge
      10
       Accord United States v. Ameline, 2004 U.S. App. LEXIS 15031 (9th Cir. July
21, 2004) (holding that Blakely applies to the federal guidelines but determining that

                                         -22-
Merritt in United States v. Montgomery, 2004 U.S. App. LEXIS 14384 (6th Cir. July
14, 2004), vacated and reh’g en banc granted July 19, 2004. Booker and the panel
opinion in Montgomery well illustrate that the Supreme Court has never, before
Blakely, directly held whether judicial fact-finding under determinate sentencing
schemes like the Guidelines violate a defendant’s right to trial by jury under the Sixth
Amendment of the United States Constitution. All previous cases upholding
enforcement of the Guidelines considered separate issues unrelated to the issue
resolved by Blakely. Certainly, defendants have no weaker rights under the Sixth
Amendment against the federal government than they do against the States.

       A variety of potential remedies have circulated within the courts. The district
courts in this Circuit have an urgent need for clarification. To that end, we adopt the
careful and wise remedy of Judge Cassell, announced in United States v. Croxford,
2004 U.S. Dist. LEXIS 12156 (D. Utah June 29, 2004) (holding the Guidelines
wholly unconstitutional and granting the sentencing court the exercise of discretion
within the statutory maxima and minima, using the Guidelines as advisory but not
necessarily binding). See also United States v. Croxford, No. 2:02-CR-00302-PGC,
2004 U.S. Dist. LEXIS 12825 (D. Utah July 12, 2004) (refuting the Government’s
arguments that Blakely does not apply to the Guidelines). We also agree with Judge
Sachs in United States v. Lamoreaux, 2004 U.S. Dist. LEXIS 13225 (W.D. Mo. July
7, 2004) that the Guidelines were designed as an integrated regime, and therefore
cannot be severed into constitutional and unconstitutional parts while still remaining
true to the legislative purpose. We observe that this result is also consistent with the
Government’s proposed solution (if we held the Guidelines unconstitutional, as we
do today). See Response to Mot. for Release Pending App., passim (arguing that if
the Guidelines are unconstitutional, they are unseverable).




the guidelines are severable and remanding for the possible convening of a sentencing
jury).

                                         -23-
       On remand, we direct the district court to follow Judge Cassell’s procedure of
treating the Guidelines as non-binding but advisory, unless the defendant consents
to a Guidelines sentence. The district court shall exercise its sound discretion to
resentence Mooney within the statutory minima and maxima of the offenses for which
he was convicted.11

MURPHY, Circuit Judge, dissenting from the decision to declare the federal
sentencing guidelines unconstitutional.

      I dissent from the majority's decision to declare the federal sentencing
guidelines unconstitutional. The Supreme Court did not hold all determinate
sentencing schemes unconstitutional in Blakely, 125 S. Ct. at 2540, and it did not
address the constitutionality of the federal sentencing guidelines. Id. at 2538 n.9.
This court should not rush to judgment on that issue, particularly in a case where it
has not been thoroughly briefed and the appellant has only raised a narrower question.

       The Supreme Court has instructed lower courts to follow its existing precedent
until the Court has overrruled it, even if the reasoning of that precedent has been
questioned in a subsequent case. See, e.g., State Oil Co. v. Kahn, 522 U.S. 3, 20
(1997); Agostini v. Felton, 521 U.S. 203, 237 (1997); Rodriguez de Quijas v.
Shearson/American Express, Inc., 490 U.S. 477, 484 (1989). It is the Court's
prerogative to overrule its own decisions, State Oil Co., 522 U.S. at 20, and lower
courts "are obligated to follow what the Supreme Court has said, not guess what it



      11
        Both of Mooney’s enhancements, for gain and for knowledge, are subject to
reconsideration by the district court. The record is unclear on whether the elements
of the knowledge enhancement for sentencing purposes were, in this case, proven to
the jury beyond a reasonable doubt as part of the charged offenses. However, our
holding that the Guidelines are entirely unconstitutional means that the knowledge
enhancement itself can be at most persuasive to the district court.

                                        -24-
might say in the future." United States v. Maynie, 257 F.3d 908, 918 (8th Cir. 2001)
(emphasis in original).

       In each of its decisions dealing with the federal sentencing guidelines, the
Supreme Court has upheld their constitutionality, beginning with Mistretta v. United
States, 488 U.S. 361 (1991) (Congress did not violate separation of powers principle
or excessively delegate legislative authority to the Sentencing Commission).12 See,
e.g., Stinson v. United States, 508 U.S. 36, 42 (1993) (courts are bound by the
guidelines and the accompanying policy statements and commentary); Witte v. United
States, 515 U.S. 389, 399-401 (1995) (guideline use of uncharged conduct does not
constitute double jeopardy); United States v. Watts, 519 U.S. 148, 157 (1997) (per
curiam) (guideline sentence may be enhanced by a judge based on charges acquitted
by a jury); Edwards v. United States, 523 U.S. 511, 514-15 (1998) (guideline
sentence may be based on conduct found by a judge rather than a jury).

       Although the Supreme Court might well apply the Sixth Amendment rationale
underlying Blakely to the federal sentencing system in a future case, we cannot know
exactly how the Supreme Court would choose to apply it. Indeed, the multitude of
lower court decisions which have already applied Blakely to the federal system
illustrate some of the many alternatives the Supreme Court might consider. Must
factfinding which raises a sentence above a guideline range, created not by statute but
by an independent body within the judicial branch, be done by a jury? Is some aspect
of the federal guidelines unconstitutional? Would any infirmity be severable or is the
whole guideline system unconstitutional? If so, may judges use their discretion to
sentence at any point below the statutory maximum? Or are they to use the guidelines

      12
        A not irrelevant cite to Mistretta by one of the five justices in the Blakely
majority was made in a concurring statement in Apprendi v. New Jersey, 530 U.S.
466, 523 n.11 (2000), the case upon which Blakely rests. There, Justice Thomas
noted that the Court did not need to consider the applicability of its rule to the federal
sentencing guidelines "given the unique status that they have under Mistretta."

                                          -25-
as advisory but not binding, as our majority holds? Must all relevant sentencing
factors be charged in an indictment and proved to a jury beyond a reasonable doubt?
Should the defendant's Sixth Amendment right be ensured by use of a bifurcated trial
or a separate sentencing jury? And so on.

       The rule that lower courts should follow Supreme Court precedent until it is
clearly overruled by the Court is especially prudential in an area like sentencing,
where the legislative and executive branches also have keen interest and active
involvement. The many conflicting decisions around the country applying Blakely
in different ways are creating wide sentencing disparity, and prevention of such
disparity was a major policy reason behind the Sentencing Reform Act and the
creation of the federal sentencing guidelines. See, e.g., 28 U.S.C. § 991(b)(1)(B)
(Congress wanted to "provide certainty and fairness in meeting the purposes of
sentencing, avoiding unwarranted sentencing disparities"). Individual sentencing
systems undermine the expressed legislative interest in providing predictability,
uniformity, and fairness in federal criminal sentencing.

        The Supreme Court may decide to end the uncertainty about sentencing at an
early date, perhaps by granting the Second Circuit's certification request in United
States v. Penaranda, 2004 WL 1551369 (2d Cir. July 12, 2004) (en banc), or by
granting the certiorari petitions of the United States in United States v. Booker, 2004
WL 1535858 (7th Cir. July 9, 2004) petition for cert. filed July 21, 2004 (No. 04-
104), and United States v. Fanfan, No. 03-00047 (D. Me. June 30, 2004) petition for
cert. filed July 21, 2004 (No. 04-105). It is also worthy of note that the United States
Senate passed a unanimous resolution on July 21, 2004 urging the Court to "act
expeditiously to resolve the current confusion and inconsistency in the Federal
criminal justice system." S. Con. Res. 130, 108th Cong. (2004). Our court need not
create its own new constitutional rule in the interim, and it should not.

      For these reasons I respectfully dissent.

                                         -26-
BRIGHT, Circuit Judge, dissenting in part.

      The majority’s interpretation of U.S.S.G. § 2B1.4 may well end up as an
advisory opinion, given our holding today that the Guidelines are unconstitutional.
However, because the Guidelines may retain limited utility as guidance for sentencing
judges exercising their discretion, I respectfully dissent on this issue.

         The plain language of the Guideline, the language of the commentary, caselaw
and common sense uniformly suggest that Mooney’s gain should not depend on the
vagaries of the market when he happened to sell his stock. The Guideline itself says,
“If the gain resulting from the offense exceeded $5,000, increase [the offense level]
. . . .” U.S.S.G. § 2B1.4(b)(1) (emphasis added). Upswings in the price of Mooney’s
securities that occurred after the market fully accounted for the merger news cannot
plausibly “result[] from the offense” for which Mooney was convicted; that extra gain
has nothing to do with the merger news. When Mooney actually sold his securities,
all investors knew of the merger and market forces beyond Mooney’s knowledge
dictated the market price from day to day. Mooney’s sentence should only receive
the gain enhancement for “the total increase in value realized through trading in
securities,” U.S.S.G. § 2B1.4, cmt. background (emphasis added), but gain derived
after the public properly priced the merger news did not accrue to Mooney through
his insider trading. Mooney’s punishment should be based on his crime, not
subsequent economic events over which he had no influence.

       Mooney’s argument that his gain should be calculated the same way it would
be in a civil enforcement action shows, at the very least, that a calculation based on
the gain in market price when the public learned of the merger would not be
impracticable. The civil case upon which Mooney relies, SEC v. McDonald, 699
F.2d 47 (1st Cir. 1983) (en banc), is the only analogous precedent cited for either
side. The majority’s view of how the district court should calculate gain is utterly
unsupported by even a single case.

                                        -27-
       Finally, because this Court holds the Guidelines unconstitutional and directs
the district court to reconsider Mooney’s sentence within its sound discretion, the
district court appears free to consider the above discussion of gain in exercising that
discretion. Accordingly, I respectfully dissent from the majority’s construction of
U.S.S.G. 2B1.4.
                         ______________________________




                                         -28-
