
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 95-1143                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                  C. WILLIAM WESTER,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Nathaniel M. Gorton, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                Selya, Cyr and Boudin,                                   Circuit Judges.                                   ______________                                 ____________________            Rhea P. Grossman, P.A. for appellant.            ______________________            Ellen  R.  Meltzer,  Special   Counsel,  Fraud  Section,  Criminal            __________________        Division, Department of  Justice, with  whom Donald  K. Stern,  United                                                     ________________        States  Attorney, and  Pamela  Merchant, New  England Bank  Fraud Task                               ________________        Force, were on brief for the United States.                                 ____________________                                    July 22, 1996                                 ____________________                 BOUDIN,  Circuit  Judge.    Clary   William  Wester  was                          ______________            formerly   president,  chairman  of   the  board,  and  chief            executive officer  of First Service Bank  for Savings ("First            Service"),   a  federally   insured   bank   in   Leominster,            Massachusetts.   In the  late 1980s, Wester  arranged various            transactions at First Service, including a series of loans by            First Service to Webster's partners in a separate real estate            venture, made with the  understanding that the partners would            use  the loaned  funds to  buy out  Wester's interest  in the            partnership.  At  trial, Wester  was convicted by  a jury  of            several  different  crimes.    He  now  challenges  the  jury            instructions and two adjustments to his sentence.                 Although   Wester  does   not   directly   dispute   the            sufficiency of the  evidence, one  of his claims  as to  jury            instructions  can be taken to raise  the issue of sufficiency            indirectly.  For that reason, we begin by describing what the            evidence would have permitted the  jury to find. A  reviewing            court's perspective on the  evidence depends on the claim  of            error being considered, and for a  sufficiency claim, we take            the evidence  most favorable  to the verdict.   E.g.,  United                                                            ____   ______            States v. Dodd, 43 F.3d 759, 760-61 (1st Cir. 1995).              ______    ____                 In  June 1986,  Wester formed  a partnership  with three            other men  to construct a condominium  project in Manchester,            New Hampshire.   The three  others were Robert  Fredo, senior            vice president at First  Service, Robert George, a developer,                                         -2-                                         -2-            and  Charles  Morgan, a  broker.   Wester and  Fredo supplied            start-up  money, and  Wester helped  arrange a  $12.4 million            loan  organized  by  New  England  Financial  Resources, Inc.            ("NEFR"), a commercial real estate lender not affiliated with            First  Service.   The  loan was  secured  by land  and future            improvements and a personal guaranty of the debt from each of            the partners.                 Since  Morgan  had been  a  frequent  borrower at  First            Service,  NEFR  was  concerned  that  Wester's   and  Fredo's            participation in  the partnership might  create conflicts  of            interest.    As  a condition  of  the  loan  NEFR required  a            certificate from  First Service acknowledging that Wester and            Fredo had  disclosed their  interest  in the  project to  the            board of directors of First  Service.  The certificate issued            by First Service stated,  inter alia, that the bank  "was not                                      _____ ____            involved  in the  financing of  this project  and  would not,            without specific  prior approval, grant  any additional loans            to Messrs. Morgan or George."                   In the fall of 1986, Morgan  and George proposed another            condominium  project,  this  one in  Massachusetts.    Wester            suggested that First Service participate  in the project as a            joint  venturer, but  said that  he and  Fredo would  need to            divest their interests in the  earlier partnership.  The four            men  agreed that Wester and Fredo  would sell their interests            to George and Morgan for $425,000 each, and be reimbursed for                                         -3-                                         -3-            additional start-up money they  had provided, all to  be paid            from future profits  from the New Hampshire project.   Before            the  details of  the  buyout plan  had  been resolved,  First            Service (through  a subsidiary)  joined the new  project with            Morgan and George, and the bank provided a $5 million loan to            the venture.                 By June 1987, the New Hampshire project had yet to begin            earning profits.  Wester grew  impatient and told George  and            Morgan  that he wanted his buyout payments.  When George said            this was not feasible  because of cash flow  problems, Wester            offered to provide  First Service loans to George  and Morgan            to  fund the buyout payments.  These loans, and the resulting            buyout  payments,  became the  basis  for most  of  the later            charges against Wester.                   On June 12, 1987, George signed two promissory notes for            unsecured loans  by First  Service totalling $200,000.   That            same day, George paid Wester and Fredo $100,000 each.  Morgan            received  a $300,000  loan  from First  Service  on June  12;            several days later he paid Wester and Fredo $25,000 each, and            George and  Morgan (through the partnership)  gave Wester and            Fredo $250,000 for the start-up money previously contributed.                 Neither Wester  nor Fredo disclosed the  true purpose of            these  loans  to  First  Service's  loan  review   committee,                                         -4-                                         -4-            executive committee, or  board of  directors.1   Nor did  the            supporting  documentation reveal that  the loaned  funds were            being used  to fund the  buyout.   In one instance,  the loan            set-up  sheets stated  that the  purpose of  the loan  was to            "finance acquisition of real property"; in other instances no            purpose for the loan was provided.  The jury could have found            that the failure to disclose the purpose of the loans to  the            loan  review   committee   was  material,   deliberate,   and            dishonest.                   This  process was  repeated  several times  over in  the            following months,  with Wester  and Fredo arranging  loans or            letters  of  credit  to   Morgan,  George  or  entities  they            controlled--and   in   one  instance   George's  father--with            portions  of the  proceeds returned  to Wester  and Fredo  to            satisfy the buyout.  The last  such loan was made on March 9,            1988.   On March 10, 1988, the buyout agreement was executed,            and Wester's  and Fredo's  interests in the  partnership were            terminated "retroactive" to January 1, 1987.                      There was one more  wrinkle of considerable  importance.            The  buyout  agreement  included a  provision  for  releasing            Wester  and  Fredo  from  their personal  guaranties  on  the                                            ____________________                 1Under the bank's rules, all insider loans and all loans            of over  $5 million had  to be  approved by the  board.   The            executive committee  had to approve loans  between $1 million            and  $5 million;  and  the loan  review  committee, on  which            Wester and Fredo sat with other officers, could approve loans            up to $1 million.                                         -5-                                         -5-            earlier $12.4 million  loan from  NEFR.   NEFR, however,  was            concerned  about the  financial health  of the  New Hampshire            condominium  project.   It  made  clear  that it  would  only            consent  to the  release if the  partnership obtained  a $2.3            million bank  loan or  line of  credit to  provide additional            security for the $12.4 million loan.                 Ultimately,  Wester and  Fredo arranged  a $2.3  million            loan  by  First  Service  for the  partnership,  without  any            disclosure to other bank  officials of the connection to  the            proposed  release and  without  approval by  First  Service's            executive  committee or board of directors.  Under the bank's            rules, approval by the  former was evidently required because            of the size of the loan.  This loan and  the promised release            were each specified as offenses in the subsequent indictment.                 After a portion of the $2.3 million was disbursed to the            partnership, and  before NEFR formally  executed Wester's and            Fredo's  releases  from   the  guaranties,  the   FDIC  began            investigating  the goings-on  at First  Service.   Wester and            Fredo  were subsequently  fired.   First Service  honored its            commitment to the partnership and released the balance of the            $2.3  million  loan  proceeds.     NEFR  never  executed  the            releases, but neither did it call upon Wester or Fredo to pay            based on their guaranties.                                           -6-                                         -6-                 On August 11, 1990, Wester and Fredo were named in a 22-            count   federal  indictment  charging   them  primarily  with            conspiracy, 18 U.S.C.   371, misapplication of bank funds, 18            U.S.C.     656, and  bank  bribery, i.e.,  the  soliciting or                                                ____            receiving of bribes or  rewards for the making of  the loans,            18 U.S.C.    215.  The loans for the  buyout payments and for            the  release were  charged as  misapplications under  section            656; the payments and promised release were charged as bribes            or rewards under section 215.                 Fredo  pled  guilty before  trial to  one count  each of            conspiracy,  misapplication, and bank  bribery, and testified            for  the government at Wester's  trial.  After  a 13-day jury            trial  in July  1994, Wester  was convicted  of one  count of            conspiracy, five counts of  misapplication, and six counts of            bank  bribery.   He  was  acquitted  of  one  count  each  of            misapplication and bank bribery,  and two tax evasion counts.            In  December  1994,  Wester  was sentenced  to  46  months in            prison.   This appeal followed.  For the reasons that follow,            we affirm the convictions but remand for resentencing.                   1.   Wester's  main challenge  to the  trial proceedings            concerns  the  district  court's  jury  instructions  on  the            misapplication  counts.   In  relevant part, 18  U.S.C.   656            provides criminal penalties for "an officer, director, agent,            or employee  of .  . . national  bank or insured  bank .  . .            [who]  willfully  misapplies  any  of the  moneys,  funds  or                                         -7-                                         -7-            credits  of  such bank."    Formally, the  dispute  on appeal            centers around the phrase "willfully misapplies"; in reality,            Wester's  argument also  presents  the question  whether  the            evidence was adequate.                 The problem that has confronted and perplexed the courts            is that  there  is  no  statutory definition  or  common  law            heritage  that   gives  content  to  the   phrase  "willfully            misapplies."  United States  v. Gens, 493 F.2d 216,  221 (1st                          _____________     ____            Cir.  1974).   And  to focus  simply  on the  deprivation  of            property is hardly much  help since it is a  purpose of banks            to lend money.   In response, the case law  has developed two            notions  that help  to clarify  and delimit  the statute--one            relating primarily to conduct and the other to intent.                 First, "misapplication" has been taken by most courts to            mean "wrongful" use  of the bank's  moneys.  See  1 Sand,  et                                                         ___           __            al.,  Modern Federal Jury Instructions    24.01 (1995).  And,            __    ________________________________            second, the courts have uniformly read back  into the statute            an earlier  requirement, removed by a  careless revisor, that            the defendant have intended "to injure  or defraud" the bank.            E.g., United States v.  Angelos, 763 F.2d 859, 861  (7th Cir.            ____  _____________     _______            1985).  Of course, the same facts can easily be the basis for            deeming the conduct to be wrongful and the intent fraudulent;            but both misapplication and scienter are required.                 In this  case, the district  court's affirmative  charge            describing  the offense  of misapplication  was for  the most                                         -8-                                         -8-            part conventional.  What  Wester objects to on appeal  is the            court's  refusal   to   give  certain   additional   language                     _______            specifically requested by Wester.  The language--which Wester            believes to  have been  required  by our  decision in  Gens--                                                                   ____            appears  at   two  different  points  in  Wester's  requested            instruction no. 37:                      I  instruct   you  that   a  loan   to  a                      financially  capable   person  who  fully                      understands that it is his responsibility                      to  repay  the loan  does  not constitute                      misapplication, even if the  bank officer                      involved with the loan  receives proceeds                      of  the  loan,  or  some  other  benefit.                      Thus, in  this case, with respect  to the                      loans  charged,  if   the  debtors   were                      financially capable of repaying the loans                      and  that [sic]  they understood  that it                      was  their  responsibility  to repay  the                      loans,  Mr. Wester  must be  acquitted on                      those counts irrespective  of whether  or                      not  he received  proceeds, or  any other                      benefit, from those loans. . . .                                           . . .                         Therefore, in this case, for each loan                      alleged   in   the   Indictment    as   a                      misapplication  of  bank  funds,  if  the                      named debtor was  financially capable  of                      repaying  the  loan  and  recognized  his                      responsibility to repay  the loan,  there                      is no misapplication as a matter  of law,                      even if  proceeds of those loans  or some                      other  benefits  were  received   by  Mr.                      Wester.                 Needless  to say,  such  language would  have been  very            useful to Wester.  The government, it appears, did not try to            show   that  any   of   the  designated   borrowers  in   the            misapplication   counts  (E.g.,   George  and   Morgan)  were                                      ____                                         -9-                                         -9-            fictitious or financially irresponsible or  had never assumed            liability for the loan.   Wester suggests that for  bona fide            loans  to  financially  responsible  borrowers,  there  is no            serious  risk of harm to  the bank and  therefore, even apart            from the authority of Gens, no reason to apply the statute.                                  ____                 Wester's position is far  from absurd, cf. United States                                                        ___ _____________            v.  Dochtery, 468 F.2d 989 (2d Cir.  1972), but in the end it                ________            reads  the statute too narrowly.  There is no indication that            insider loans  are inflexibly  forbidden by federal  law, but            they obviously create a special set of dangers.  At least one            danger--quis  custodiet ipsos  custodes--is that  the insider                    _______________________________            who approves or fosters the loan  may do so too readily if he            himself benefits by  it.  Controls  on such loans,  including            authorizations  and disclosures,  are therefore  pertinent to            the safety of the bank.                   Further, financial  responsibility  on the  part of  the            borrower is not an absolute  but a matter of degree.   To say            that  the  nominal  borrower  is at  the  outset  financially            capable of repayment hardly  proves that the bank  would have            made the  loan if it had been fully apprised of the risks and            circumstances.     Here,  two  members  of   First  Service's            executive  committee  testified  that  they  would  not  have            approved the loans if Wester  had disclosed that the proceeds            were  going  to  fund  the  buyout  of  Wester   and  Fredo's            interests.                                         -10-                                         -10-                 In this  instance, the jury could  reasonably have found            that Wester caused the loans  to be made for his  own benefit            without obtaining  approvals from the  executive committee or            board of directors required under the bank's own rules (as to            the largest $2.3  million loan) and (as to it and all others)            because  he deliberately  suppressed or  withheld information            that the purpose of the loans was one that the bank would not            have approved.2  This wrongful conduct permitted  the jury in            turn to  find that Wester had engaged in the "misapplication"            of bank funds.  All that remained was to find scienter.                 The   scienter  requirement--an  intent   to  injure  or            defraud--is  stated  in  the  alternative.   In  the  Supreme            Court's  classic summary,  "the words  `to defraud'  commonly            refer `to  wronging one in  his property rights  by dishonest            means or  schemes,' and  `usually signify the  deprivation of            something   of   value   by   trick,   deceit,   chicane   or            overreaching.'"  McNally v. United States, 483  U.S. 350, 358                             _______    _____________            (1987) (citation omitted).  Whether or not Wester intended to            injure  the bank, a jury could properly find that he intended            to  "defraud"  the bank  by  causing  it through  consciously            dishonest  means  to  part  with its  property  for  his  own            benefit.                                                ____________________                 2The government's  brief conveys the impression that, as            to  all of the  loans there was a  failure to obtain required                ___                                              ________            approvals by a  bank board or  committee.  On our  reading of            the transcript pages  cited by the government, this  is clear            only as to the $2.3 million loan.                                         -11-                                         -11-                 This brings us  to Gens.   In that  case, the  defendant                                    ____            Gens, a director of the bank, had persuaded others (e.g., one                                                                ____            of his friends)  to borrow from the bank and  to transfer the            funds  to  him;  and  bank  officers  working  with  Gens had            approved  the loans knowing that  he would obtain  use of the            funds.  As this court read the  trial court's charge, it told            the jury that  misapplication had occurred  "if it was  found            that [the officers] granted  loans to the [nominal borrowers]            knowing that the proceeds would be turned over to Gens."  493            F.2d at 221.  The jury convicted Gens and he appealed.                 On appeal in Gens,  this court rejected the government's                              ____            broad  notion that  "willful  misapplication occurs  whenever                                                                 ________            bank officials grant loans to parties with the knowledge that            the proceeds  will go to  a third  party."  492  F.2d at  223            (emphasis added).  Our  opinion pointed out that most  of the            pertinent  cases  under the  misapplication  statute involved            loans   to   borrowers   who   were   fictitious,  unwitting,            irresponsible or had not assumed liability.  The contrary was            so in Gens, except arguably as to one borrower; and the count                  ____            as  to that borrower  was remanded for a  new trial under new            instructions.                 Gens held that  the government's  "whenever" theory  was                 ____            overbroad but  Gens did  not bar  a misapplication  charge in                           ____      ___            every  case where  the  straw happened  to  be a  financially            responsible borrower.    We  so noted  in  United  States  v.                                                       ______________                                         -12-                                         -12-            Brennan, 994 F.2d 918 (1st Cir. 1993).  There we  said that a            _______            misapplication  charge could be made out where a bank officer            made loans to  named debtors knowing that  the proceeds would            go to  a third party and where  the surrounding circumstances                                 ___            involved  dishonesty  (e.g.,  false  entries  in  the  bank's                                   ____            records).  Id. at 923-24.                       ___                 Wester's requested instruction 37 was thus not warranted            by  Gens because it  would have  converted a  circumstance in                ____            Gens--financial  responsibility  of  the   borrower--into  an            ____            automatic  defense  requiring acquittal  regardless  of other            evidence of dishonesty.  Misapplication and intent to defraud            turn  largely on  the facts;  the facts  here were  enough to            convict; and the requested  instruction was overbroad and was            properly denied.                 2.   Wester's  other  complaint  about the  jury  charge            concerns the district court's instruction based  on Pinkerton                                                                _________            v. United States, 328 U.S. 640 (1946), that a conspirator may               _____________            be    accountable for  actions  of  co-conspirators taken  in            furtherance of the  conspiracy.   Wester was  charged with  a            conspiracy that  had as  its objects misapplication  and bank            bribery.   Wester claims that the  district court's Pinkerton                                                                _________            instruction was mistaken in two respects.                  First,  Wester  argues  that  the  Pinkerton instruction                                                    _________            allowed  the jury  to  find him  vicariously  liable for  the            substantive crimes  of a co-conspirator even  if those crimes                                         -13-                                         -13-            were  not the object of  the conspiracy or  in furtherance of            it.  For example, he says that the jury could have found that            Wester was  guilty of the  substantive crime of  bank bribery            because  one of  his co-conspirators committed  that offense;            yet the  jury could have  found that the  conspiracy's object            was limited to misapplication.                  One wonders  if Wester carefully read  the transcript of            the jury charge before making this argument.  After correctly            describing the other elements  of the Pinkerton doctrine, the                                                  _________            district  court  stated that  the  jury must  find  "that the            substantive  crime (attributed to  the defendant vicariously)            was committed  pursuant to the common  plan and understanding            you  found to  exist among the  conspirators," and  that "the            defendant could have reasonably foreseen that the substantive            crime  might be committed by his  co-conspirator."  In short,            the instruction itself answers Wester's hypothetical.                    Second, Wester argues that  it was inappropriate to give            a  Pinkerton  instruction at  all,  because  "where there  is               _________            evidence  of various substantive offenses . . . it raises the            risk  that the jury will  resort to the  inverse of Pinkerton                                                                _________            and  infer the existence of the conspiracy from the series of            substantive  criminal  offenses."    He says  this  risk  was            especially high here because the government  concentrated its            efforts on  proving only the  substantive charges.   We agree            neither with the premise nor the conclusion.                                         -14-                                         -14-                 In  a  case like  this one,  some interplay  between the            jury's  assessment of guilt on the substantive counts and the            conspiracy charge  is both natural and  appropriate.  Indeed,            the fact  that substantive  crimes  were carried  out by  the            defendants, following discussions between them, may well make            the  fact of agreement more  likely.  Rossetti  v. Curran, 80                                                  ________     ______            F.3d 1,  5 (1st  Cir. 1996).   This  is so  whether or not  a            Pinkerton charge is  given; the  charge is at  most an  added            _________            complication for the jury but one well within its ken.                 Here,   the   government  offered   ample   evidence  of            discussions between  the four  partners that provided  a firm            basis  for  the  conspiracy  charge.   There  were  pages  of            testimony concerning the meetings among Wester, Fredo, George            and  Morgan, that led to  the various loans  and the payments            back to Wester.  This testimony provided grounds for the jury            to find  that Wester participated in  the charged conspiracy.            And, because Wester argued  that he was unaware of  many acts            undertaken by his co-conspirators  (i.e, the false entries on                                                ___            loan  documents   by  Fredo),  a  Pinkerton  instruction  was                                              _________            especially apt.                 3.   Wester's  challenges  to  his  sentence  have  more            merit.  One  argument is that  the district court  improperly            calculated  the  victim loss  figures  for  one of  the  bank            bribery counts.  The other concerns an adjustment for role in            the offense.  We address the claims in that order, describing                                         -15-                                         -15-            at the outset the calculation of the sentence.  Citations are            to  the 1987 edition of  the guidelines which  was applied in            this case.                  At  sentencing,  the  misapplication  and  bank  bribery            counts were grouped as  closely related counts under U.S.S.G.               3D1.2(d); and the bribery guideline  was used to determine            the base offense level because its level is the higher of the            two.    Id.    3D1.3(b).   The  base offense  level  for bank                    ___            bribery is eight, id.    2B4.1, to be increased based on  the                              ___            greater of the  value of  the bribe or  the improper  benefit            conferred  in return, according to the table at section 2F1.1            (fraud).  In this case, the figure employed was  the value of            the bribe.                 At the sentencing hearing, the district court found that            Wester  received,  or intended  to receive,  bribes totalling            $12,650,000.   From the  presentence report, it  appears that            this total reflected Wester's release from personal liability            on the $12.4 million NEFR loan (in exchange for arranging the            $2.3  million loan to Morgan and George), and the $250,000 in            buyout payments  he received  from Morgan and  George.   This            $12,650,000 figure  subjected Wester to the  maximum 11-level            increase. U.S.S.G.   2F1.1.                 The  resulting  offense level  of  19  (8 plus  11)  was            further  adjusted  upward  by  4  levels  to  23,  reflecting            Wester's role  as an  organizer or  leader (a separate  issue                                         -16-                                         -16-            addressed below).  There  was no reduction for  acceptance of            responsibility.    The  resulting  range, for  a  first  time            offender, is  46 to  57 months'  imprisonment.   The district            court sentenced Wester,  at the  bottom of the  range, to  46            months.                 On  appeal, Wester  first  maintains  that the  district            court should not  have included the  $12.4 million figure  as            any part  of the value of  the bribes.  He  contends that the            release from  his personal guaranty on the $12.4 million loan            should  not  count because  NEFR  did not  consider  the $2.3            million loan a quid pro quo for the release, an argument that            he supports by pointing out that NEFR never formally executed            the release.  He also asserts that First Service would likely            have  made  the  $2.3  million  loan  to  Morgan  and  George            regardless whether  NEFR offered to release  Wester and Fredo            from personal liability.                 18 U.S.C.   215 makes it criminal  corruptly to solicit,            accept or agree to  accept anything of value intending  to be            influenced or rewarded in connection with a bank transaction.            The jury was entitled to find that Wester did foster the $2.3            million  loan to NEFR on  the understanding that  he would be            relieved of his  personal guaranty.   Whether the bank  would            have  made  the  loan  anyway, and  whether  Wester  actually            received the  promised benefit, are  of no  moment under  the                                         -17-                                         -17-            statute; and the guidelines apply to a promised payment quite            as much as to payment actually received.3                 Wester  is on  more solid  ground when  he argues  that,            assuming that  the promised release of  his personal guaranty            could be counted for  sentencing purposes, the district court            incorrectly valued  the release at the  $12.4 million figure,            which  represented the full  amount of the  loan.  It  is far            from clear that this issue was properly preserved, a point to            which we will  return; but  the issue was  discussed in  oral            argument in this court,  and the government has  furnished us            with the  Eighth Circuit's helpful decision  in United States                                                            _____________            v. Fitzhugh, 78 F.3d 1326, 1331 (8th Cir. 1996).               ________                 In Fitzhugh,  the court  was concerned with  valuing the                    ________            improper benefit conferred on the borrower by a loan obtained            by bank bribery.  The trial  court had taken this value to be            simply the face amount of the loan; but as the Eighth Circuit            explained, citing  authority and examples, "[t]he  value of a            transaction is  often quite different than the face amount of            that transaction."   78 F.3d  at 1331.   Indeed, the  current            guideline  commentary  makes  clear that  (depending  on  the            facts) the value of a loan might be no more than the value of            a lower interest rate procured through the bribe.  Id.                                                               ___                                            ____________________                 3The statute  by its own terms  applies to solicitations            and  agreements to accept as well as to bribes actually paid.            As to the guidelines, see, e.g., United States v. Gillis, 951                                  ___  ____  _____________    ______            F.2d  580, 585 (4th Cir. 1991), cert. denied, 112 S. Ct. 3030                                            ____________            (1992); U.S.S.G.   2C1.1 (lack of completion irrelevant).                                         -18-                                         -18-                 Obviously, if  Wester had been bribed  with a one-dollar            lottery ticket for a million dollar prize, no one would claim            that  the  ticket should  be  valued  at the  full  potential            winnings.  So,  too, if  he had been  given a  million-dollar            term  life  insurance policy.    Here,  the actual  value  of            Wester's promised release from  his personal guaranty for the            $12.4 million loan  depends on such factors as the likelihood            of default and the worth of the collateral securing the loan.            It is unlikely that  the economic value of the  release comes            close to $12.4 million.                 At sentencing,  neither the  parties  nor the  probation            officer made any attempt to develop the information necessary            to  estimate reasonably the value of the release.  It appears            that in  the district court  Wester's primary concern  was to            exclude any consideration of the release (on grounds  we have                    ___            already rejected); and neither  the probation officer nor the            government seems to have  noticed the underlying problem with            using face  value when  the presentence report  was prepared.            Thus, the district court was not fairly alerted to the issue.                 Nevertheless, we think that the miscalculation should be            noticed as plain error.  United States v. Olano, 507 U.S. 725                                     _____________    _____            (1993).  Prejudice exists since it is almost certain that the            misevaluation affected the guideline range, quite possibly to            a  significant extent;  for  example, eliminating  the  $12.4            million figure entirely  would lower  the range to  30 to  37                                         -19-                                         -19-            months.  And while an appeals court is not required to notice            every such  unpreserved error in sentencing,  Olano, 507 U.S.                                                          _____            at 736, we think  that this is a proper case for us to notice            a  significant mistake.   United States  v. Whiting,  28 F.3d                                      _____________     _______            1296, 1312 (1st  Cir.), cert. denied, 115 S. Ct. 378 (1994).                                     _____ ______                 Wester's other main claim as to his sentence is that the            district court erred in adjusting  his offense level up  four            levels for his role in the offense, under U.S.S.G   3B1.1(a).            This provision  provides for a four-level  enhancement if the            court finds that "the defendant was an organizer or leader of            a criminal activity which  included five or more participants            or  was  otherwise  extensive."   On  appeal,  Wester's  only            developed  challenge is  to the  latter requirement  that the            activity include  five or more participants  or be "otherwise            extensive."                 At the sentencing hearing, the district judge found that            Wester was an organizer or leader, based on his capacity as a            top official at First  Service and because the  scheme likely            could not have taken place without Wester's leadership.  From            this the court concluded  that the enhancement was warranted,            without making  any additional  record finding as  to whether            the  enterprise involved  five  or more  participants or  was            "otherwise extensive."                                            -20-                                         -20-                 The court  did adopt the presentence  report by checking            the appropriate box,  but the  report is itself  a source  of            uncertainty.  The initial report appears to rely on the "five            or  more participants"  prong,  stating that  Wester was  the            organizer  of  criminal  activity  involving  himself, Fredo,            George,  Morgan, and  then naming  several other  individuals            such as  Morgan's accountant,  George's lawyer,  officials at            NEFR,  and employees of First Service.  There was no reliance            on other variables such  as duration, number of episodes,  or            amount.                   Before  sentencing, Wester  objected to this  finding on            the grounds that the necessary five participants must each be            criminally  responsible,  not  merely  involved,  see  United            __________                                        ___  ______            States v. Graciani, 61 F.3d 70,  75 (1st Cir. 1995), and that            ______    ________            none of the persons named in the report beyond the  four main            actors were criminally responsible for the  relevant actions.            In response, the probation officer prepared an amended report            that  took  the   position  that  Wester's   activities  were            "otherwise extensive"  because of  the number of  individuals            directly involved  and the  necessary use of  other unknowing            employees of First Service in order to effect the scheme.                   But  the  amended report  did  not  clearly abandon  the            earlier  position   that  there   were  also  five   or  more            participants, and the district judge did not make clear which            of the report's two alternative grounds he was adopting.  The                                         -21-                                         -21-            problem  is not  that  independent detailed  findings by  the            district court  are required;  rather, it is  that we  cannot            effectively  review the  decision  to impose  the  four-level            increase  without  knowing  the  ground on  which  it  rests.            United States v.  Anh Van, 1996 WL  324615 at *3-4  (1st Cir.            _____________     _______            June 18, 1996).                 None  of  this  would  matter if  the  undisputed  facts            required   a   finding  that   there  were   five  criminally            ________            responsible  participants or that  the activity was otherwise            extensive.   But that is not  the case here.   On appeal, the            government concedes  that  the five  participant  requirement            cannot  be met, and, in our  view, the district court was not            compelled   to  find   that  the   activity  was   "otherwise            extensive," a  label that incorporates a  number of variables            primarily within the  ken of  the district court.   Anh  Van,                                                                ________            1996 WL 324615 at *4.                 On  remand,  the  district  court  should  address   the            "otherwise  extensive" issue  in the course  of resentencing.            The court  is free  to make  new findings  in support of  its            earlier   determination  or  to   reconsider  the  adjustment            entirely,  as it sees fit.  Since resentencing will likely be            required based  on the re-valuation of the  bribes, we affirm                                                                   ______            the convictions  but vacate the existing  sentence and remand                                 ______                            ______            for resentencing.                 It is so ordered.                 _________________                                         -22-                                         -22-
