                                    ___________

                                    No. 95-2432
                                    ___________

United States of America,          *
                                   *
           Appellee,               *
                                   *    Appeal from the United States
      v.                           *    District Court for the
                                   *    Western District of Missouri.
Kanchan Bala Sharma, also          *
known as Kay Bala, also known      *
as Kay Daken, also known as        *
Kanchan B. Daken,                  *
                                   *
           Appellant.              *
                              ___________

                    Submitted:      December 12, 1995

                          Filed:    June 4, 1996
                                    ___________

Before FAGG, HEANEY, and WOLLMAN, Circuit Judges.
                               ___________


WOLLMAN, Circuit Judge.


     Defendant   Kanchan    Bala        Sharma   appeals   from   the   imposition   at
sentencing of a fine of $100,000.            We vacate the district court's fine
assessment and remand for reconsideration of the fine.


                                   I.    Background


     On May 13, 1991, FBI agents received information from the Department
of Housing and Urban Development (HUD) that more than one million dollars
had been skimmed from seven different HUD-insured and/or co-insured multi-
family housing projects that were owned and operated by Sharma and several
of her family members.


     Sharma pleaded guilty to a one-count information charging her with
program fraud in the amount of $101,467.89 in violation of 18 U.S.C. §§
666, and 2.   Her offense level was calculated to be
twelve, with a criminal history category of one, providing for a sentencing
range of ten to sixteen months' imprisonment (part of the term of which may
be satisfied by supervised release) and a fine of $3,000 to $30,000.           See
U.S.S.G. §§ 5C1.1(d) and 5E1.2(c)(3).


     The   district   court   initially   sentenced   Sharma   to    five   months'
imprisonment and three years' supervised release.        It ordered her to pay
$101,467.89 in restitution and assessed a fine of $100,000.            In a motion
for correction of sentence, Sharma contested the $100,000 fine as an
improper departure from the Guidelines.      In response to this motion, the
district court vacated the first sentence and gave the required notice that
the court was considering an upward departure with respect to the fine.
See Burns v. United States, 501 U.S. 129, 138 (1991) (requiring a district
court to give notice of intent to depart from Guidelines).          The court then
entered an order clarifying that the sentence was not an upward departure
under the Guidelines, but again noted that if the fine were construed to
be a departure the order was notice that the court was contemplating such
a departure.   Upon resentencing, in addition to imprisonment, supervised
release, and restitution, a $100,000 fine was again imposed.                 Sharma
appeals that fine, arguing that it falls outside the applicable guidelines
range; that the court failed to adequately justify its upward departure
from that range; and that even if the fine does not constitute an upward
departure, the court failed to consider the required factors set forth in
U.S.S.G. § 5E1.2(d), before setting the amount of the fine.


                                II.   The Fine


     The Guidelines set out a procedure for a district court to follow in
determining the amount, if any, that a defendant should be fined.           Section
5E1.2(a) specifies that "the court shall impose a fine in all cases, except
where the defendant establishes that he




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is unable to pay and is not likely to become able to pay any fine."           If the
district court determines that a fine is appropriate, it must then look to
section 5E1.2(c) for the appropriate fine range.            The Guidelines further
require the court to consider a list of specified factors in determining
the amount of the fine.       See U.S.S.G. § 5E1.2(d).


       The fine imposed must be within the specified range unless:            1) the
defendant establishes an inability to pay; 2) the fine is insufficient to
pay the government's costs in relation to defendant's incarceration; 3) a
statute requires otherwise; or 4) the district court determines that
departure is appropriate.           U.S.S.G. § 5E1.2(b),(f),(i), and application
note 4.


       In addition to the requirement that the district court consider the
section 5E1.2(d) factors -- a prerequisite to the imposition of any fine --
the district court's burden is enhanced when it decides to depart from the
specified guidelines range.            Departure from the applicable range is
permissible only upon a finding that "there exists an aggravating or
mitigating circumstance of a kind, or to a degree, not adequately taken
into   consideration    by   the     Sentencing    Commission   in   formulating   the
guidelines that should result in a sentence different from that described."
18 U.S.C. § 3553(b); see also United States v. Duranseau, 26 F.3d 804, 811
(8th Cir. 1994), cert. denied, 115 S Ct. 341 (1994).                 To aid in this
analysis, the Sentencing Commission has provided a non-restrictive list of
certain   factors    that    were    not   fully   considered   in   formulating   the
Guidelines and would thus serve as an appropriate basis for departure.             See
U.S.S.G. § 5K2.     Departure is appropriate "only in the extraordinary case
-- the case that falls outside the heartland for the offense of the
conviction."      United States v. McFarlane, 64 F.3d 1235, 1239 (8th Cir.
1995) (quoting United States v. Jackson, 30 F.3d 199, 201 (1st Cir. 1994)).
The statutory maximum, which is set out in 18 U.S.C. § 3571(b) for various
categories of offenses, establishes a ceiling




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above which the district court may not depart.


      The district court's imposition of a fine above the applicable $3,000
to $30,000 range constitutes an upward departure.1          Accordingly, we review
the fine using the three-step analysis applicable to an upward departure.
See United States v. Otto, 64 F.3d 367, 371 (8th Cir. 1995), cert. denied,
116 S. Ct. 956 (1996).       We consider:      (1) whether, as a question of law,
the   circumstances    the   district     court    relied   on   for   departure   are
sufficiently unusual in a kind or degree to warrant departure; 2) whether,
as a question of fact, the circumstances justifying departure actually
exist; and 3) whether the sentence is reasonable.            Id.


      With respect to the first two questions, the district court justified
its upward departure on the grounds that "the Guidelines fail in any
measure to reflect the willful, deliberate, and repetitious malfeasance of
defendant in the management of the property and its woefully deplorable
condition when she returned it to HUD."         Articulated as such, the district
court's reason for departure may very well have been appropriate.                  The
record,    however,   is   devoid   of   any   factual   support   for   the   court's
reasoning.


      The government arrived at Sharma's resentencing hearing prepared to
offer the testimony of a witness who would establish the condition of the
property when it was returned to HUD.             At that point, Sharma's counsel
requested a continuance to prepare rebuttal




       1
       We reject the argument that the alternative maximum fine
provision of U.S.S.G. § 5E1.2, application note 2, trumps the
applicable Guidelines range and thus renders the fine of $100,000
not a departure. Although the Guidelines commentary does provide
that a departure may be warranted when two times either the amount
of gain to the defendant or the amount of loss caused by the
defendant exceeds the maximum of the fine guideline range, such a
deviation remains a departure, and as such must be justified under
the provisions of 18 U.S.C. § 3553.        See U.S.S.G. § 5E1.2,
application note 4.

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evidence on the issue.   The request was denied, and the $100,000 fine was
imposed without hearing evidence from either party on the issue.


     Without record support, the district court's conclusory statements
justifying the departure do not afford us an adequate basis to determine
whether an upward departure from the fine range was based on a factor not
adequately considered in the Guidelines.    See United States v. Cammisano,
917 F.2d 1057, 1064 (8th Cir. 1990).   Thus, we vacate the imposition of the
fine and remand the case for the entry of further findings following the
introduction of such evidence as the parties may offer concerning the
appropriateness of an upward departure.    In addition to a consideration of
the factors set forth in section 5E1.2(d) of the Guidelines, any decision
to depart upward from the guideline range will, of course, include an
explanation for both the district court's decision to depart and the extent
of the departure.    Id. at 1064.


     The fine is vacated, and the case is remanded to the district court
for further proceedings consistent with this opinion.


     A true copy.


           Attest:


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




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