United States v. Reardon ( 2024 )

United States Court of Appeals
For the First Circuit
No. 22-1883
UNITED STATES,
Appellee,
v.
NATHAN REARDON,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Lance E. Walker, U.S. District Judge]
Before
Kayatta, Thompson, and Rikelman,
Circuit Judges.
Hunter J. Tzovarras for appellant.
Benjamin M. Block, Assistant United States Attorney, with
whom Darcie N. McElwee, United States Attorney, was on brief, for
appellee.
May 23, 2024
RIKELMAN, Circuit Judge. After pleading guilty to bank
fraud, Nathan Reardon was sentenced to twenty months of
imprisonment followed by three years of supervised release. As
part of its sentence, the district court imposed a special
condition that prohibits Reardon from all forms of self-employment
during his supervised release term. Reardon -- concerned about
how he would support his family given that he was self-employed
for the twenty-four years prior to sentencing -- challenges this
special condition on appeal. Because the district court imposed
this ban without an explanation for why it was the minimum
restriction necessary to protect the public, as required by the
U.S. Sentencing Guidelines, and we cannot infer from the record
that the court engaged in this analysis, we vacate the ban and
remand for reconsideration of the scope of that restriction.
I. BACKGROUND
A. The Paycheck Protection Program
We begin with the critical facts that led to Reardon's
guilty plea. In March 2020, Congress enacted emergency financial
assistance programs to ameliorate the economic fallout of the
COVID-19 pandemic. See Coronavirus Aid, Relief, and Economic
Security Act, Pub. L. No. 116-136, 134 Stat. 281 (2020) (codified
as amended at 15 U.S.C. § 636(a)(36)). One such program, the
Paycheck Protection Program (the "PPP"), facilitated loans to
small businesses so that the businesses could continue to operate
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and pay their workers during the economic downturn. See 15 U.S.C.
§ 636(a)(36)(F)(i). PPP loans could be used only for certain
expenses, such as payroll costs, mortgage or rent payments, and
utility payments. See id. The maximum permitted loan amount could
not exceed 2.5 times a business's average monthly payroll costs.
See id. § 636(a)(36)(E). Although the loans were issued by private
lenders, they were guaranteed by the federal government and could
be forgiven if a business used the funds to cover its payroll costs
and other specified expenses. See id. §§ 636(a)(36)(B), 636m(b).
To obtain a PPP loan, a business was required to make
several good-faith certifications, including that: it "ha[d]
employees for whom [it] paid salaries and payroll taxes"; it would
use the funds "to retain workers and maintain payroll or other
covered expenses," including rent, utility, and mortgage interest
payments; and the information provided in the loan application and
supporting documents was "true and accurate."
B. Reardon's Fraudulent PPP Loan Applications1
Between April and May of 2020, Reardon submitted to TD
Bank four fraudulent PPP loan applications, each seeking $59,145,
on behalf of several of his businesses. Two of the applications
sought loans for Global Disruptive Technologies, Inc. ("GDT"), and
1 Because Reardon pleaded guilty, we draw these facts from
the transcript of the sentencing hearing and undisputed portions
of the revised presentence investigation report. See United States
v. Benoit, 975 F.3d 20, 21 (1st Cir. 2020).
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the other two concerned Choice Auto Sales Group, LLC and Membership
Holdings, Inc. In each company's application, Reardon reported
inflated payroll amounts,2 submitted documentation that
misrepresented the true amounts, and certified that any PPP funds
would be used to retain workers, maintain payroll costs, or cover
other eligible expenses. TD Bank approved the first of the two
GDT applications and denied the remaining applications.
Reardon then spent the GDT loan funds on expenses that
were not permissible under the PPP. In March 2021, he applied for
forgiveness of the GDT loan, falsely certifying that he had used
the funds for permissible purposes and that his initial loan
application was true and accurate. TD Bank denied Reardon's
request for forgiveness of the GDT loan.
C. Procedural History
In May 2021, Reardon was indicted on five counts of bank
fraud, three counts of attempted wire fraud, two counts of making
false statements to a bank, and one count of perjury. He was
released pending trial on certain conditions, one of which
prohibited him from "apply[ing] for any pandemic-related financial
2 Reardon certified $23,658 as each company's average monthly
payroll costs during the first quarter of 2020. (The total he
sought in each loan application, $59,145, is 2.5 times that
amount.) However, GDT employees were actually paid only $1,353.18
over the first three months of 2020, and Choice Auto Sales Group
and Membership Holdings had no payroll costs at all, as they had
no employees at the time.
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assistance without prior approval of the supervising [probation]
officer." In April 2022, the district court revoked Reardon's
pretrial release after it learned that he submitted eleven
unauthorized applications for pandemic-related financial
assistance on behalf of one of his companies. The probation
officer noted that the company in question, Ultimate Property
Holdings, had no authority to do business in Maine at the time but
did not suggest that any other aspect of these applications was
misleading.3 In July 2022, pursuant to a plea agreement, Reardon
pleaded guilty to the five counts of bank fraud.4
Before sentencing, the probation officer prepared a
revised presentence investigation report ("PSR") in which she
detailed Reardon's employment history. The probation officer
noted that Reardon had "been self-employed for 24 years"; had owned
and operated various businesses; and, in 2020, "entered
lease-to-own agreements for three apartment buildings" in Maine
(which, according to Reardon, were his only business ventures
operating at the time).
3The probation officer did state, however, that Reardon had
used $125 of the fraudulently acquired PPP funds to create Ultimate
Property Holdings in April 2020.
4At the sentencing hearing and consistent with the plea
agreement, the government dismissed the remaining charges for
attempted wire fraud, making false statements, and perjury.
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As part of Reardon's term of supervised release, the
probation officer recommended that the district court impose
several special conditions, including the following (special
condition six):
Defendant shall not be self-employed and shall
be continuously employed for compensation by
a disinterested third party. Defendant shall
not open any businesses, sole proprietorships,
partnerships, limited partnerships, or
corporations. Defendant shall dissolve any
corporations and businesses that exist on the
date of sentencing.5
The probation officer offered the following rationale for the self-
employment ban: "[It] is based on the defendant's reported 21-
years of self-employment, during which he accrued extreme debt,
resulting in three separate applications for bankruptcy with a
combined debt of over $1,500,000, and likely led to his committing
the instant offense. Indeed, he used his businesses to commit the
instant offenses."
Reardon filed a written objection to the self-employment
ban, arguing that it was "overly restrictive and unnecessary for
the purposes of sentencing and supervised release." In response,
the probation officer explained that the self-employment ban was
appropriate because:
[Reardon] reported only ever being
self-employed which has resulted in three
applications for bankruptcy associated with
5 Following the parties' lead, we refer to special condition
six as the "self-employment ban."
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businesses established by [him] as detailed in
paragraph 65 [of the PSR] [and] the business
involvement in the instant offense . . . .
[Reardon] owes a significant amount in
restitution. Prohibiting self-employment
reduces the risk of [Reardon] engaging [in]
criminal business practices and increases the
likelihood of the restitution being paid in a
timely fashion.
In November 2022, Reardon appeared before the district
court for sentencing and explained his objection to the proposed
self-employment ban. His counsel argued that it was "overly
restrictive," as "other conditions . . . could be imposed . . .
[to] assure that he is not committing crimes and that he receives
any services or supervision for rehabilitation appropriately."
Defense counsel also noted:
Mr. Reardon's been self-employed almost his
entire career, 24 years . . . . He has a minor
conviction, a misdemeanor . . . back in 2011
for unpaid taxes and other than that and this
current offense that we're here for in court,
that occurred over approximately one month,
Mr. Reardon has no criminal history related to
his self-employment. He has gone years and
years without incurring criminal conduct
because of his self-employment, that's how he
supported himself, that's how he supported his
family6 really since he started working.
And . . . over the last few months, Mr.
Reardon has attempted to run his businesses,
particularly the apartments that he rents in
Dexter and Howland the best he can from jail
6 Reardon has a wife (a homemaker) and five children (four of
which -- according to his counsel at sentencing -- have special
needs).
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and he's done that and [been] able to make and
generate enough income to pay $9,000 towards
restitution . . . .
The fact that Mr. Reardon's been able to use
his business, the apartments, that he's rented
over the last several months to start making
the victim whole in this case, I think is
significant and shows that he should be able
to continue to run these apartments and be
self-employed so he can continue to pay back
the restitution that he's already started to
pay. So for those reasons, Your Honor, we
don't think you should restrict him from being
self-employed during the course of supervised
release.
The government, for its part, acknowledged that there
could be a "middle ground," explaining that "the self-employment
condition at least could be caveated appropriately to make sure
that it's not a writ large prohibition against self-employment,
but that there would be mandatory consultation with the supervising
probation officer." The government also noted that, although the
self-employment restriction was "a very well-founded proposed
condition," it recognized that "an individual should be within
certain . . . boundaries [] entitled to try to make a living."
Finally, the government added that it was in its "best interest
and restitution payee's best interest for Mr. Reardon to make a
living after he serves the term of his sentence so he can pay
restitution."
The district court overruled Reardon's objection to the
self-employment ban, providing the following reasoning:
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I take [the government]'s point [about a
middle ground] . . . but under the
circumstances, both in terms of the underlying
conduct that brings us here today and in terms
of the travel of this case, particularly as it
related to Mr. Reardon's bail being revoked,
I think the more cautious approach would
simply be for me to adopt the proposed
condition as it relates to self-employment and
leave it at that. And to the extent that Mr.
Reardon wishes to present to the Court, at a
later date, a modification of his conditions
of supervised release, whether it relates to
the condition that he not be self-employed or
any other conditions based on his success
while on supervised release, . . . he can
bring that to the Court in a more ordinar[y]
fashion.
Before imposing Reardon's sentence, the court stated that it was
"adopt[ing] the revised presentence investigation report in its
entirety as constituting [the court's] findings." The court then
sentenced Reardon to twenty months of imprisonment and three years
of supervised release and ordered him to pay $60,316.39 in
restitution.
For the supervised release term, the court imposed each
of the special conditions recommended by the probation officer and
explained that such conditions were "based on [its] findings, which
[were] co-extensive with the four corners of the revised . . .
PSR." The seven special conditions included, along with the
self-employment ban, requirements that Reardon "provide the
supervising [probation] officer any requested financial
information" and "participate and comply with the requirements of
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the Computer and Internet Monitoring Program (which may include
partial or full restriction of computer(s), internet/intranet,
and/or internet-capable devices), and . . . submit to periodic or
random announced searches of his . . . computer(s) . . . and/or
other electronic or internet-capable devices(s)."
Reardon timely appealed.
II. DISCUSSION
Reardon challenges the self-employment ban as an
unnecessary and overbroad special condition of supervised release.
Because Reardon preserved his challenge below, we review the
district court's imposition of the ban for abuse of discretion.
See United States v. Windle, 35 F.4th 62, 67 (1st Cir. 2022).
Under this flexible standard, we evaluate "fact findings for clear
error, legal issues de novo . . ., and judgment calls with some
deference." United States v. McCullock, 991 F.3d 313, 317 (1st
Cir. 2021).
A. Special Conditions of Supervised Release
We have not previously analyzed when a court can restrict
self-employment during supervised release. Because there are
specific statutory requirements for imposing occupational
restrictions, we begin with a review of those requirements.
All special conditions of supervised release must meet
a threshold standard. They must be "based on the circumstances of
the offense and the defendant's history" and "'involve[] no greater
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deprivation of liberty than is reasonably necessary' to achieve
the goals of sentencing, such as" protection of the public,
deterrence, and rehabilitation. United States v. Benoit, 975 F.3d
20, 26 (1st Cir. 2020) (quoting 18 U.S.C. § 3583(d)); see U.S.
Sent'g Guidelines Manual ("U.S.S.G.") § 5D1.3(b) (providing that
district court may impose discretionary conditions of supervised
release); 18 U.S.C. § 3553(a)(2) (listing the goals of
sentencing).
Occupational restrictions, however, require even more.
In recognition of the impact such restrictions can have on
individuals' ability to re-enter society after imprisonment,
occupational restrictions are subject to a heightened standard.
See United States v. Vélez-Luciano, 814 F.3d 553, 562 (1st Cir.
2016) (noting that courts must apply "the more-stringent U.S.S.G.
§ 5F1.5 standard" when imposing occupational restrictions); United
States v. Prochner, 417 F.3d 54, 65 (1st Cir. 2005) ("[A]n
occupational restriction [is] subject to the specific limitations
of 18 U.S.C. § 3563(b)(5) and U.S.S.G. § 5F1.5."). Thus, a court
may impose such a restriction "only if" it determines that: "(1)
a reasonably direct relationship existed between the defendant's
occupation, business, or profession and the conduct relevant to
the offense of conviction"; and "(2) . . . such a restriction is
reasonably necessary to protect the public because there is reason
to believe that, absent such restriction, the defendant will
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continue to engage in" similar unlawful conduct. U.S.S.G.
§ 5F1.5(a); see also 18 U.S.C. § 3563(b)(5) (permitting
occupational restrictions to the extent they are reasonably
related to the § 3553(a)(1) and (a)(2) factors and "involve only
such deprivations of liberty or property as are reasonably
necessary for the purposes indicated in section 3553(a)(2)").
Further, if all the requirements for an occupational
restriction are met and the district court decides to impose such
a restriction, the Sentencing Guidelines limit its scope: the court
"shall impose the [restriction] for the minimum time and to the
minimum extent necessary to protect the public." U.S.S.G.
§ 5F1.5(b) (emphases added); see, e.g., United States v. Mills,
959 F.2d 516, 519–20 (5th Cir. 1992) (upholding portion of
condition that prohibited defendant, who was convicted of
manipulating odometers, from participating in sale of cars but
rejecting other portion that required him to sell car dealership
as "not the minimum condition reasonably necessary to protect the
public"). This standard aims to "preclude the [defendant's]
continuation or repetition of illegal activities while avoiding a
bar from employment that exceeds [the scope] needed to achieve
that result." U.S.S.G. § 5F1.5 cmt. background (quoting S. Rep.
No. 225, at 96-97 (1983), as reprinted in 1984 U.S.C.C.A.N. 3182,
3279-80).
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As with any special condition of supervised release, a
sentencing court should provide a "reasoned and case-specific
explanation" for an occupational restriction and its scope. United
States v. Pabon, 819 F.3d 26, 30 (1st Cir. 2016) (citation
omitted); see 18 U.S.C. § 3553(c) ("The court, at the time of
sentencing, shall state in open court the reasons for its
imposition of the particular sentence . . . ."). When a court
does not provide such an explanation, we may infer its reasoning
"by comparing what was argued . . . [or what was] in the
pre-sentence report with what the judge did." United States v.
Colón-Cordero, 91 F.4th 41, 53 (1st Cir. 2024) (quoting United
States v. Carrasquillo-Sánchez, 9 F.4th 56, 62 (1st Cir. 2021)).
Still, "'there are limits' to our willingness to supply our own
justification for a particular [condition]." United States v.
Perazza-Mercado, 553 F.3d 65, 75 (1st Cir. 2009) (quoting United
States v. Gilman, 478 F.3d 440, 446 (1st Cir. 2007)); cf.
Colón-Cordero, 91 F.4th at 54 (acknowledging "different ways a
ghost gun being in the factual mix . . . could affect" sentencing
court's decision to impose a variance but declining to speculate
"which reasons -- if any -- were actually what the sentencing court
had in mind when pronouncing sentence" because "the court didn't
say").
When we cannot readily discern from the record the
district court's reasoning, "'it is incumbent upon us to vacate,
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though not necessarily to reverse' the decision below to provide
the district court an opportunity to explain its reasoning at
resentencing." Gilman, 478 F.3d at 446–47 (citation omitted)
(quoting United States v. Feliz, 453 F.3d 33, 36 (1st Cir. 2006));
see, e.g., Perazza-Mercado, 553 F.3d at 76, 79 (vacating special
condition and remanding where district court did not adequately
explain, and record did not support, the condition). We are
especially inclined to vacate and remand when a district court
does not engage with one of the defendant's primary, nonfrivolous
arguments at sentencing. See Colón-Cordero, 91 F.4th at 55-56;
cf. Rita v. United States, 551 U.S. 338, 357 (2007) ("Where the
defendant or prosecutor presents nonfrivolous reasons for imposing
a . . . sentence [that departs from the Sentencing
Guidelines], . . . the judge will normally go further and explain
why he has rejected those arguments.").
And, depending on the sentencing decision, a court may
need to provide a more robust explanation. See Rita, 551 U.S. at
356 ("The appropriateness of brevity or length, conciseness or
detail, when to write, what to say, depends upon circumstances.").
For example, a sentence that falls outside the range recommended
by the Sentencing Guidelines requires more explanation than a
sentence within the range, and the greater the deviation from that
range, the greater the justification required. See Colón-Cordero,
91 F.4th at 51. Similarly, the more restrictive a special
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condition of supervised release, the greater the justification
required. See, e.g., United States v. Del Valle-Cruz, 785 F.3d
48, 62 (1st Cir. 2015) (explaining that condition impairing
defendant's relationship with his child "require[d] a greater
justification" because it "involve[d] a very significant
deprivation of liberty"); see also United States v. Boyd, 5 F.4th
550, 557 (4th Cir. 2021) ("[A]s a general matter, the more onerous
the term of supervised release -- whether due to its duration or
to the rigor of its conditions -- 'the greater the justification
required.'" (citation omitted)). Given the heightened standard
for occupational restrictions, it is especially important for
district courts to provide sufficient explanation for the scope of
such restrictions.
With this framework in mind, we turn to Reardon's
challenge to the self-employment ban. We address the validity of
such a ban only in the narrow set of circumstances before us.
B. The District Court's Imposition of a Self-Employment Ban
Reardon contends that the self-employment ban is not
reasonably related to his offense conduct because it broadly
prohibits any type of self-employment rather than targeting a
particular occupation, is more restrictive than necessary to
achieve the purposes of supervised release, and is unnecessary to
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protect the public.7 He also argues that the district court
"offered no explanation" suggesting otherwise. The government
disagrees and emphasizes that, even if "the district court's
commentary was deficient," the court's reasoning for the
self-employment ban is evident from the record. Additionally, the
government highlights the possibility that the self-employment ban
could be modified at some point during Reardon's supervised
release, as the district court alluded to at sentencing.
As we noted above, we have not previously considered
when a district court may impose a self-employment ban during
supervised release. And there are few published decisions on point
from our sister circuits. See, e.g., United States v. Ferguson,
537 F. App'x 713, 716 (9th Cir. 2013) (unpublished) (finding no
abuse of discretion where sentencing court imposed self-employment
ban based on "concern that defendant is an economic danger to the
community" and could repeat his fraud scheme if his business
conduct was not supervised); United States v. Heaser, 298 F. App'x
7 Reardon argues in his opening brief that the self-employment
ban is "unnecessary for the purposes of sentencing" but presents
a narrower argument in his reply brief that the ban is "unnecessary
to protect the public." Because he has not developed his argument
as to how the self-employment ban is unnecessary to achieve the
goals of sentencing other than protection of the public, such as
deterrence and rehabilitation, we do not consider here whether the
ban "involves [a] greater deprivation of liberty than is reasonably
necessary" to achieve those other goals. 18 U.S.C. § 3583(d)(2).
Our inquiry instead focuses on whether the imposition of the self-
employment ban satisfies the heightened requirements of U.S.S.G.
§ 5F1.5.
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502, 504-05 (7th Cir. 2008) (unpublished) (upholding on plain error
review "conditions prohibiting [the defendant] from working for
himself or an immediate relative" because he "used his 'self
employment' to conceal from the probation officer purchases with
funds that should have gone to [the] victims [of his mail fraud]
and could easily use a business under the name of his wife or a
close family member to do the same"). Thus, we focus on the plain
text of section 5F1.5 in evaluating the ban.
To review, to impose a restriction on self-employment,
the district court was required to find that: (1) "a reasonably
direct relationship existed between" Reardon's self-employment and
his offense conduct (i.e., his bank fraud); (2) "there [was] reason
to believe that, absent such restriction, [Reardon would] continue
to engage in" similar unlawful conduct, and, therefore, the
"restriction [was] reasonably necessary to protect the public";
and (3) the scope of the restriction was "the minimum extent
necessary to protect the public." U.S.S.G. § 5F1.5(a)-(b). We
consider whether the record allows us to evaluate the district
court's analysis for all three requirements, and, if so, whether
the total ban satisfies all three requirements.
As we explain in greater detail below, the district court
did not discuss section 5F1.5(b) or the "minimum extent necessary"
standard, and there is no mention of section 5F1.5(b) or its
substantive requirements in the PSR. Thus, although we can well
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understand why the district court exercised its discretion to
impose an occupational restriction here, we cannot be sure on this
record that an analysis of whether a complete self-employment ban
was the minimum restriction necessary was ever undertaken.
Instead, the record suggests that the focus below was on crafting
a broad restriction as a precautionary measure. We therefore
vacate and remand for resentencing on this special condition.
1. Whether a "Reasonably Direct Relationship"
Existed Between Reardon's Self-Employment and
Offense Conduct and a Self-Employment Ban
Would Be Reasonably Necessary to Protect the Public
Before imposing the self-employment ban, the district
court was required to evaluate if there was "a reasonably direct
relationship" between Reardon's self-employment and his offense
conduct and, if so, whether the ban was necessary to protect the
public against future unlawful conduct. See id.
§ 5F1.5(a)(1)-(2). We do not dwell on these requirements because
we remand for re-evaluation of the scope of the restriction here.
But we observe that the record certainly would support a finding
that an occupational restriction was warranted. The PSR detailed
how Reardon leveraged three of his businesses to submit four
fraudulent PPP loan applications and, after one application was
approved, misused the loan funds and fraudulently sought
forgiveness on the loan. These facts demonstrate, as the probation
officer concluded in the PSR, that Reardon "used his businesses to
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commit the instant offenses." Because Reardon's fraudulent
conduct was inextricably tied to his ownership of several
businesses, the district court could find that "a reasonably direct
relationship existed between" Reardon's offense conduct and his
occupation as an owner of these businesses. U.S.S.G.
§ 5F1.5(a)(1); see also United States v. Turner, 88 F. App'x 307,
314 (10th Cir. 2004) (unpublished) (finding reasonably direct
relationship between defendant's bank fraud and restricting his
self-employment as a roofer because he used his roofing business
to facilitate the fraud and, after initial sentence, failed to
provide information about his business activities to probation
officer).
Reardon's reliance on United States v. Farmer, 755 F.3d
849 (7th Cir. 2014), where the connection between the occupational
restriction and the offense conduct was far more tenuous, is
therefore misplaced. In Farmer, the district court imposed a
self-employment ban on a defendant who attempted to extort a casino
employee with "information from a golfing and gambling companion."
755 F.3d at 850-51. The U.S. Court of Appeals for the Seventh
Circuit vacated the condition because "[t]he district court did
not determine that [the defendant]'s activities as a self-employed
entrepreneur caused him to attempt to extort [the victim]" and
"focused instead on its belief that [the defendant]'s lack of
success as an entrepreneur was causing him to turn to con
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activities to fund himself." Id. at 855. Here, as we have just
explained, Reardon's status as a business owner was central to and
inseparable from his bank fraud. Thus, the district court could
have found there was "reason to believe" that Reardon would engage
in similar unlawful conduct if he were not subject to some
restriction on his occupation during supervised release. See
U.S.S.G. § 5F1.5(a)(2).
2. Whether the Self-Employment Ban Was the
Minimum Restriction Necessary to Protect the Public
The record is silent, however, as to whether the district
court determined that the ban was the minimum restriction necessary
to protect the public, as section 5F1.5(b) requires. The
government and the dissent suggest that we can infer the analysis
occurred and affirm, but we disagree for three reasons. First,
the district court never mentioned the substantive requirements of
section 5F1.5(b). Second, we cannot infer the court's reasoning
from the parties' arguments at sentencing or the PSR, as the
government conceded that a narrower restriction would be
reasonable and the PSR never cited section 5F1.5(b), discussed the
heightened standard for occupational restrictions, or otherwise
grappled with whether a total self-employment ban was the "minimum"
restriction necessary. To the contrary, the record suggests that
the probation officer urged the broadest possible restriction as
a precautionary measure. Finally, the government points to the
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possibility that the district court may in the future
modify -- and, in doing so, more narrowly tailor -- the
self-employment ban, but that fact has no bearing on the validity
of the ban as it stands now.
To begin, the district court did not discuss section
5F1.5(b) or otherwise analyze why this broad ban was the "minimum"
restriction necessary. Notably, although the court offered some
reasoning for the ban, it did not explain its rationale for
imposing a restriction that prohibited Reardon not only from owning
any business but also from engaging in any form of self-employment.
For instance, Reardon specifically highlighted at the sentencing
hearing his ability to earn rental income from apartments he
managed under a lease-to-own arrangement and how he had used the
income to begin his restitution payments.8 It appears that the
ban would prohibit even this limited form of self-employment. The
only explanation by the court for declining to narrow the ban was
that it believed a complete ban would be "the more cautious
approach," considering Reardon's offense conduct and pretrial
release violation.
But the pretrial release condition that Reardon violated
was not an occupational restriction. Instead, it was a limitation
8 The dissent briefly acknowledges this argument by Reardon
in its discussion of the options proposed to the district court,
see Dissent at 29, but, unlike us, equates this option with no
self-employment restriction at all.
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on applying for pandemic-related aid without prior approval from
the probation office. Although the district court was surely
correct in taking into account Reardon's violation of the pretrial
condition in setting his sentence, a sufficient gap exists between
no occupational restriction and a complete ban on all forms of
self-employment (the only type of work Reardon had engaged in for
more than two decades) to give us pause. Given that the district
court never mentioned the heightened requirements for occupational
restrictions, its statement that this broad ban was the more
"cautious approach" is not enough for us to conclude that it
engaged in the analysis required by section 5F1.5(b) -- whether
the total ban was the minimum restriction necessary.9
Next, having found no discussion by the district court
of section 5F1.5(b)'s requirements, we turn to whether the record
permits us to infer the court's reasoning on this score. The
government, notably, did not argue that the self-employment ban
was necessary and instead suggested a "middle ground" in which the
9 The dissent suggests that, because Reardon used one of his
businesses to skirt the restrictions of his pretrial release, it
was reasonable for the district court to adopt a more cautious
approach going forward. See Dissent at 30-31. We in no way
question the district court's caution and agree that it was
entirely reasonable. But a more cautious approach does not mandate
an all-out ban. The court's well-supported decision to take into
account Reardon's pretrial release violation in crafting his
sentence does not change the fact that there is no consideration
in the record of whether this complete ban was "the minimum
[restriction] necessary to protect the public," as section
5F1.5(b) instructs.
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"condition at least could be caveated appropriately to . . .
[avoid] a writ large prohibition against self-employment." Thus,
the government's statements at the sentencing hearing offer no
support for why the total ban was the minimum restriction
necessary.10 Additionally, the PSR suggested that the restriction
was "appropriate" because "[p]rohibiting self-employment reduces
the risk of [Reardon] engaging [in] criminal business practices
and increases the likelihood of the restitution being paid in a
timely fashion." But this rationale only goes to the point that
the ban would protect the public; it does not support a finding
that the total ban is the minimum restriction necessary to do so.
Those are two entirely separate inquiries, and there is no evidence
the second inquiry was ever conducted here. Indeed, the PSR does
not reference section 5F1.5(b), and there is no other indication
that the probation officer considered its requirements.
The government maintains that the court's reasoning for
the total self-employment ban is evident from the record, as "the
10 The dissent maintains that the district court's decision
to reject the government's alternative cannot be an abuse of
discretion on this record. See Dissent at 30-31. Again, we agree
that the district court was well within its discretion to conclude
that a stricter approach was necessary. But section 5F1.5(b)
requires, without exception or reservation, that the court
restrict a defendant's occupation to the "minimum extent necessary
to protect the public." U.S.S.G. § 5F1.5(b) (emphasis added).
The record only indicates why something more than the pretrial
release conditions was needed here; it does not explain why this
total ban is the minimum restriction that would suffice, which is
a separate inquiry.
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court's sentencing comments as a whole suggest a substantial
concern regarding Reardon's risk of recidivism and the need to
protect the public from that possibility." For example, the
government explains, when the court set forth its "key findings
regarding the nature and circumstances of the offense," it
characterized Reardon's offense as "a fundamental breach of the
public trust at a time of a public emergency." It also expressed
the need for the sentence "to deter [Reardon] from committing
future crimes," suggesting that Reardon's violation of his
pretrial release conditions called into question his ability to
"maintain a law-abiding lifestyle." These statements support a
conclusion that Reardon might reoffend and, therefore, some
occupational restriction would be reasonably necessary to protect
the public. But, again, they do not explain why such a broad ban
was the minimum restriction that would do.
Finally, we cannot conclude, as the government suggests,
that the district court's reminder that Reardon is free to file a
motion to modify the conditions of supervised release after he
finishes his prison term explains this broad ban. "[I]n light of
[Reardon's] offenses," the government adds, "the requirement that
he be subject to oversight in his employment while on supervised
release is proportionate and reasonable." But the self-employment
restriction as it stands now does not provide "oversight" of
Reardon's employment. Unlike those conditions that "simply
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require preapproval from probation" or the court, the restriction
here is "a flat ban." McCullock, 991 F.3d at 322. That the
district court may ultimately modify the ban to permit self-
employment with such oversight has no bearing on whether the
current ban satisfies the statutory requirements. As we have
previously pointed out, "[t]o approve problematic conditions
because a judge or a probation officer might, in her or his
discretion, relax them in the future, undermines the command to
sentencing courts to not deprive offenders of more liberty than is
necessary to carry out the goals of supervised release." United
States v. Ramos, 763 F.3d 45, 61 (1st Cir. 2014).
The government's comparison of this case to United
States v. Carpenter, 280 F. App'x 866 (11th Cir. 2008) is therefore
inapt. The condition in Carpenter permitted the defendant to enter
into self-employment with "prior written permission of the court."
280 F. App'x at 867. The condition did not, as is the case here,
categorically prohibit the defendant from self-employment. See
id. at 870 (concluding that condition requiring defendant to obtain
approval for future self-employment "involve[d] no great
deprivation of liberty because [the defendant could] obtain court
approval for legitimate self-employment"); see also United States
v. Mercado, 777 F.3d 532, 539 (1st Cir. 2015) (finding it
"[i]mportant[]" that a condition was not "an outright ban" and
instead "merely require[d] . . . pre-approv[al] by the probation
- 25 -
officer"). Because the total self-employment ban is not "subject
to supervision by the probation officer," there is no "safeguard"
permitting Reardon to "petition the district court to modify the
condition in the event that approval has been unreasonably
withheld." Pabon, 819 F.3d at 32; see United States v. DaSilva,
844 F.3d 8, 14 (1st Cir. 2016) ("[G]iving the probation officer
some authority to make exceptions as warranted is generally seen
as a benefit of such orders in that it allows for flexibility and
permits personal circumstances to be dealt with as they arise.");
see also United States v. Fey, 834 F.3d 1, 6 (1st Cir. 2016)
(upholding condition imposed without "express explanation" that
required defendant to "seek approval from probation before
accepting a job or volunteer activity that would bring him into
direct contact with minors").
To wrap up our discussion, we briefly address two other
out-of-circuit decisions that the government highlights, one of
which is also cited by the dissent. See United States v. Choate,
101 F.3d 562, 566-67 (8th Cir. 1996) (upholding self-employment
ban); United States v. Turner, 88 F. App'x 307, 314-15 (10th Cir.
2004) (unpublished) (same). Critically, although Choate and
Turner involved analogous facts, neither addressed whether the
self-employment ban imposed was the minimum restriction necessary
to protect the public under section 5F1.5(b). We are therefore
not persuaded that these two cases are instructive here.
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"A district court's duty to specifically find that [an
occupational] restriction is minimally restrictive is
'mandatory.'" United States v. Butler, 694 F.3d 1177, 1184 (10th
Cir. 2012) (citation omitted); see U.S.S.G. § 5F1.5(b) ("[T]he
court shall impose the condition for the minimum time and to the
minimum extent necessary to protect the public." (emphasis
added)). Further, we are obligated to evaluate if the occupational
restriction here satisfies the statutory requirements. See
Benoit, 975 F.3d at 26. Based on this record, we cannot be certain
that the district court considered whether the total self-
employment ban was the minimum restriction necessary and thus
cannot evaluate its analysis for imposing the ban.
We therefore vacate the self-employment ban and remand
to the district court for resentencing limited to a reexamination
of the scope of that restriction. See Perazza-Mercado, 553 F.3d
at 75 ("[W]here we are unable, through our own examination of the
record, to discern the court's reasoning, 'it is incumbent upon us
to vacate . . . .'" (citation omitted)). To be clear, nothing in
our decision prohibits the re-imposition of an occupational
restriction on remand that satisfies section 5F1.5's requirements.
- 27 -
III. CONCLUSION
For these reasons, we vacate the self-employment ban
(special condition six) and remand for resentencing limited to a
re-examination of that condition.
-Dissenting Opinion Follows-
- 28 -
KAYATTA, Circuit Judge, dissenting. I respectfully
dissent. I would find that the district court did not abuse its
ample discretion in adopting a supervised release condition that
closely corresponded to the nature of Reardon's crime -- repeated
fraud motivated by a history of failed business ventures.
The majority five-times stresses that the district court
neither cited nor expressly applied U.S.S.G. § 5F1.5(b)'s
requirement that an occupational restriction be minimally
necessary to protect the public. But the majority concedes that
we may infer the district court's reasoning "by comparing what was
argued . . . [or what was] in the pre-sentence report with what
the judge did." United States v. Colón-Cordero, 91 F.4th 41, 53
(1st Cir. 2024). And on this record, we can easily infer that the
district court concluded that the self-employment restriction was
minimally necessary to protect the public.
The parties presented the district court with three
alternatives: no occupational restriction at all (Reardon's
proposal); a self-employment restriction that the Probation Office
could modify on an ad hoc basis (the government's middle-ground
suggestion); and a complete self-employment restriction (the
Probation Office's proposal). As an example of potential
self-employment in the absence of any restriction, Reardon pointed
to managing apartment buildings that he owned. The court asked
counsel to address these alternatives. After hearing out counsel,
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the court found that some form of occupational restriction was
necessary, adopting the reasoning set forth in the pre-sentence
report ("PSR"). Even the majority concedes that the record
supported this conclusion. So, Reardon's proposed "no
restriction" alternative was out.
The court also explained why a middle-ground
alternative, such as the one proposed by the government, was also
out. First, as the PSR noted, Reardon's self-employment risked
the type of financial losses that had, in the past, motivated his
fraud. A middle-ground approach that still allowed some
self-employment would not alleviate this concern at all. Second,
the district court noted that the "travel" of the case counseled
against a middle-ground approach. After his first indictment,
Reardon convinced the court to release him on bail, subject to a
condition barring him from seeking further pandemic-related
assistance without Probation Office approval. He then promptly
violated that condition. He used the proceeds of his prior fraud
to establish a Florida-based limited liability company -- which
had no authority to conduct business in Maine -- to apply for
pandemic-related rental assistance. Thus, the court reasonably
concluded that giving Reardon similar leeway the second time around
would likely endanger the public.
My colleagues appear bothered by the court's caution.
But the district court's point was simple and obvious: Given
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Reardon's remarkable post-arraignment record of skirting court
supervision and filing dubious applications for government
assistance, a more cautious approach was necessary to protect the
public during Reardon's supervised release. I cannot see how this
approach was an abuse of discretion, especially when crafting a
sentence that would have Reardon back on the street within two
years.11
In short, the district court's reasoning justified
rejecting the alternatives proposed by the government and by
Reardon. That left only the self-employment ban proposed by the
Probation Office. The district court had no obligation to consider
additional alternatives that no one proposed. See United States
v. Choate, 101 F.3d 562, 566 (8th Cir. 1996) (affirming a broad
ban on self-employment, while stating that "[t]he district court
is not required to pit its imagination against [the defendant's]
to anticipate what sort of business [the defendant] could put to
fraudulent use"). Therefore, the Probation Office's alternative
was -- among the options proposed -- the one that was minimally
necessary to protect the public.
11The majority's rejoinder that Reardon's pre-trial release
condition was "not an occupational restriction" misses the point.
What matters is that Reardon had a track record of flouting
supervision while on release. Given this past behavior, the court
reasonably found that the government's middle-ground alternative
-- which provided no standards for assessing Reardon's proposed
exceptions to the self-employment ban -- would not sufficiently
protect the public.
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And even if further justification for the complete
self-employment ban were required, the district court also
defended the ban against Reardon's objections. For instance,
Reardon noted that a complete self-employment ban would bar him
from managing his apartment buildings and generating funds for
restitution. But the PSR reasonably concluded that Reardon --
whose entrepreneurial track record was spotty at best -- was more
likely to pay restitution in a "timely fashion" if he worked for
a third party and earned a steady wage.
Reardon clearly had difficulties working for himself
without a reliable wage. And he had difficulty avoiding the
temptation to use his businesses to perpetuate fraud. So, on this
record, the district court did not abuse its considerable
discretion in deciding that Reardon's post-imprisonment transition
to civil society should begin with a reliable and steady
wage-paying job, which he would find harder to turn into an
incentive or a vehicle for further fraud. Because the majority
gives too little deference to the district court's reasoned
justification for the self-employment ban, I respectfully dissent.
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