United States v. Krilich, Robert ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 00-3971, 00-4066 & 00-4221
United States of America,
Plaintiff-Appellee, Cross-Appellant,
v.
Robert R. Krilich, Sr.,
Defendant-Appellant, Cross-Appellee.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 94 CR 419--David H. Coar, Judge.
Submitted March 10, 2001/*--Decided July 16, 2001
Before Easterbrook, Ripple, and Evans,
Circuit Judges.
Easterbrook, Circuit Judge. Robert
Krilich’s criminal case is on appeal for
a third time. He has been convicted of
racketeering and other offenses related
to a scheme that included bribery of
public officials in order to obtain
assistance in the approval and financing
of construction projects. In 1998 we
affirmed Krilich’s convictions but on the
United States’ cross-appeal remanded for
resentencing. See United States v.
Krilich, 159 F.3d 1020 (7th Cir. 1998).
See also United States v. Krilich, 178
F.3d 859 (7th Cir. 1999) (reversing an
order releasing Krilich on bail).
Krilich’s original sentence was 64
months’ imprisonment. On remand the
district court imposed a sentence of 87
months. Once again, both sides complain.
What occasioned the remand is a dispute
about the application of the table in
U.S.S.G. sec.2F1.1(b)(1) to add levels to
the calculation of Krilich’s offense
severity. One aspect of Krilich’s offense
was co-opting a local government to spon
sor tax-free industrial revenue bonds,
some proceeds of which were used to
finance a project (and other proceeds of
which were diverted to Krilich’s personal
benefit). The prosecutor argued that the
gain to Krilich from this offense should
be measured by the difference between
what he paid in interest on the bonds,
and the higher payments that would have
been necessary had the interest been
taxable to the investors (as it should
have been). The district judge did not
resolve the parties’ dispute about
valuation, ruling instead that no matter
how the matter came out he would allow
only seven levels from this table,
departing on the authority of Application
Note 7(b) to sec.2F1.1. (This has become
Note 8(b) in the latest version of the
Guidelines, but we use the former
numbering for consistency with our prior
opinions.) We held that this procedure
was unauthorized and remanded for the
imposition of a sentence based on the
table in sec.2F1.1(b)(1). 159 F.3d at
1029-31. Although downward departure
could not be excluded as a possibility,
we held, the procedure must start with an
accurate calculation.
A different district judge imposed
sentence on remand. After a hearing that
lasted almost three weeks, the court
concluded that the gain Krilich had
reaped by offering tax-free bonds (and
correspondingly the loss to the Treasury)
was approximately $14 million, which
added 15 offense levels under the table
in sec.2F1.1. This produced a total
offense level of 32 and a presumptive
sentencing range of 135 to 168 months’
imprisonment. The judge concluded that
the offense level of 32 did not
"significantly overstate" the seriousness
of Krilich’s crime, and the court
therefore held that departure under
Application Note 7(b) is unwarranted.
Nonetheless, the court granted Krilich a
significant downward departure of five
offense levels for health reasons. The
level 27 sentencing range is 78-97
months, and the district judge chose a
sentence in the middle of that range.
Krilich contends that his sentence is too
high, the United States that it is too
low.
Krilich contests every aspect of the
district court’s findings. His principal
contention is that the $14 million figure
for his gain (and the Treasury’s loss) is
flawed because it supposes that he would
have raised the same amount of money with
taxable bonds had he lacked access to
tax-free instruments. Higher interest
rates could have led to a change of
plans, for demand curves slope downward
and an increase in the price of one
project leads an entrepreneur like
Krilich to shift to another. That much
cannot be denied, but the Guidelines do
not determine a wrongdoer’s gain based on
what-if scenarios. Imagine a bank robber
who argues that, had he known about the
presence of a guard, he would have robbed
a grocery store instead and thus caused a
lower loss. It is hard enough to tote up
the gains and losses from crimes actually
committed without pursuing second-best
solutions, which are usually
indeterminate. The gain and loss rules in
the Guidelines call for approximations,
not exact figures. See sec.2F1.1
Application Note 8 (now Note 9). Krilich
did get access to tax-free bonds, raising
$135 million that he held for 12 years.
Some of this money he used for
construction or consumption, and the rest
he reinvested at higher interest. A
similar kitty lent by investors who had
to pay taxes on interest would have cost
Krilich much more than what he actually
paid in interest. Under the Guidelines
the buck stops there. The district
court’s finding that the gain was $14
million is supported by the record (which
includes the calculations of an expert in
finance) and cannot be called a clear
error. None of Krilich’s other objections
to the conclusion that his gain exceeds
$10 million is persuasive; we see no need
to add to the district court’s analysis.
And Krilich’s contention that the
district court should have departed under
Application Note 7(b) goes nowhere; the
judge understood the existence of (and
limits on) that authority, and the
decision that this is not an appropriate
occasion for departure cannot be reviewed
by this court. United States v. Franz,
886 F.2d 973 (7th Cir. 1989).
At the time of the resentencing hearing
early in 2000, Krilich was 69 years old
and had age-related medical problems. The
district court concluded, on the basis of
a psychiatrist’s testimony (yes, a
psychiatrist; no cardiologist testified),
that Krilich has four physical
infirmities: chronic cardiovascular
disease, chronic peripheral vascular
disease with hypertension, obstructive
pulmonary disease, and lower back pain of
lumbar and lumbosacral origin. The court
gave Krilich a one-level departure for
each of these four, and a fifth level for
the four in combination.
The United States’ argument that
consideration of this subject was barred
by the terms of our remand is not
correct. The district court found that
Krilich’s medical condition had
deteriorated since his original
sentencing, and changed circumstances are
a standard reason for consideration of
additional issues on a remand. See United
States v. Buckley, No. 00-3845 (7th Cir.
May 24, 2001). It remains necessary,
however, to determine whether the
district judge abused his discretion.
The judge acknowledged that none of the
four physical problems would justify a
departure standing alone but believed
that the combination does so:
I specifically do not find that . . . the
Bureau of Prisons is unable to adequately
treat the defendant’s ailments.
Nevertheless, contrary to the
government’s position, the defendant
presented a medical profile outside the
heartland of people remanded to the
custody of the Bureau of Prisons. . . .
Krilich’s health issues present an
unusual profile. The conditions of
confinement will undoubtedly aggravate
his conditions and make treatment more
difficult. Therefore, a departure is
warranted. . . . [These conditions
create] treatment and quality of life
difficulties that fall outside the
heartland.
The judge reached this conclusion despite
finding that "there is no structural
reason why Krilich cannot receive
adequate care within the [Bureau of
Prisons]". Ten months after announcing
the 87-month sentence, the district court
held another hearing at which Krilich
argued, with the support of two
cardiologists (neither of whom had
examined him or was familiar with the
medical care available in federal
prisons), that an even greater departure
was warranted. This hearing was
unauthorized, because the district judge
no longer had the authority to alter
Krilich’s sentence, see 18 U.S.C.
sec.3582(c) and Fed. R. Crim. P. 35, but
was harmless, for the judge ultimately
concluded that the cardiologists had
added nothing to what was already in the
record.
Relying on U.S.S.G. sec.5H1.4, the
United States contends that an "unusual
[medical] profile" is not a valid ground
for departure. Section 5H1.1 says that
age may not be the basis of departure
unless the defendant is "elderly and
infirm", referring for further guidance
to sec.5H1.4, which provides:
Physical condition or appearance,
including physique, is not ordinarily
relevant in determining whether a
sentence should be outside the applicable
guideline range. However, an
extraordinary physical impairment may be
a reason to impose a sentence below the
applicable guideline range; e.g., in the
case of a seriously infirm defendant,
home detention may be as efficient as,
and less costly than, imprisonment.
Does Krilich have an "extraordinary
physical impairment"? Is he "elderly and
infirm" or "seriously infirm"? The
district court did not find so; instead
the judge apparently believed that any
"unusual" medical condition or
combination of conditions justifies a
departure. That can’t be reconciled with
the first sentence of sec.5H1.4.
"Extraordinary" is a subset of "unusual."
We have held that the limit to
"extraordinary" conditions must be taken
seriously. See United States v. Woody, 55
F.3d 1257, 1275-76 & n.15 (7th Cir.
1995).
Almost everyone is "unusual" in some
respect, and many septuagenarians have
conditions similar to Krilich’s. Yet
sec.5H1.1 and sec.5H1.4 put normal age-
related features off limits as grounds
for reduced sentences. Older criminals do
not receive sentencing discounts. Many
persons in poor health are confined in
federal prisons. If the medical problem
is extraordinary in the sense that prison
medical facilities cannot cope with it,
then a departure may be appropriate. See
United States v. Sherman, 53 F.3d 782,
787 (7th Cir. 1995). To justify such a
conclusion, however, the court "must
ascertain, through competent medical
testimony, that the defendant needs
constant medical care, or that the care
he does need will not be available to him
should he be incarcerated." United States
v. Albarron, 233 F.3d 972, 978 (7th Cir.
2000). Or a bedridden person would be as
effectively imprisoned at home as in a
jail; the physical condition itself does
the imprisoning. But the district court
found that the Bureau of Prisons could
treat Krilich’s conditions, and he is not
bedridden, so these rationales for
departure are missing.
An ailment also might usefully be called
"extraordinary" if it is substantially
more dangerous for prisoners than non-
prisoners. Then imprisonment would
shorten the defendant’s life span, making
a given term a more harsh punishment than
the same term for a healthy person. A
district court properly may reduce the
sentence’s length when necessary to
equalize severity. See United States v.
Gee, 226 F.3d 885, 902 (7th Cir. 2000).
Cf. United States v. Guzman, 236 F.3d 830
(7th Cir. 2001). The district judge not
only did not make such a finding for
Krilich but also believed that this
finding could not be sustained.
Approximately 4,000 persons in federal
custody receive care for cardiovascular
conditions, and no evidence of record
demonstrates that they exhibit greater
mortality than free persons with these
conditions.
The Bureau of Prisons can provide
Krilich with the medical regimen (which
is to say, the drugs and diet) that his
physicians believe to be appropriate.
That the Bureau has not provided (and
does not propose to provide) the quality
of care that top private specialists
provide is neither here nor there;
wealthy defendants can afford exceptional
care, but this does not curtail the
punishment for their crimes. Krilich did
not establish that his condition is
either "debilitating" or "extraordinary,"
and a departure therefore conflicts with
norms established by sec.5H1.1 and
sec.5H1.4. A generic statement that a
defendant’s circumstances are out of the
"heartland" may not be used to override
limitations written into the Guidelines.
See Koon v. United States, 518 U.S. 81,
92-96 (1996); Krilich, 159 F.3d at 1030.
Krilich’s sentence therefore is again
vacated, and the case is remanded with
instructions to impose a sentence in the
range of 135 to 168 months.
FOOTNOTE
/* These cross-appeals have been submitted under
Operating Procedure 6(b) to the panel that decid-
ed prior appeals in the case. The panel has
concluded that additional oral argument is
unnecessary.