United States v. Lanas, Clifford J. ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 01-3248, 01-3491 & 01-3580
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
CLIFFORD J. LANAS, RICHARD A. HENDERSHOT,
and JAMES A. BATTISTA,
Defendants-Appellants.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 CR 529—Rebecca R. Pallmeyer, Judge.
____________
ARGUED DECEMBER 4, 2002—DECIDED APRIL 4, 2003
____________
Before FLAUM, Chief Judge, and COFFEY and DIANE P.
WOOD, Circuit Judges.
FLAUM, Chief Judge. Richard Hendershot, James Battista,
and Clifford Lanas were convicted on mail fraud charges
stemming from a scheme to defraud Hendershot’s former
employer, Alexsis Risk Management, Inc. (“Alexsis”), of
its intangible right to his honest services. See 18 U.S.C.
§§ 1341, 1346. The defendants now challenge their convic-
tions and sentences on numerous grounds. We affirm in all
respects.
2 Nos. 01-3248, 01-3491 & 01-3580
I. BACKGROUND
We provide just a general description of the facts here;
where additional facts are relevant to particular arguments,
we mention them later. Alexsis is engaged in the business
of third-party claims administration, handling mostly
workers’ compensation claims for large corporations.
Defendant Hendershot worked in Alexsis’s Chicago office
from 1988 to 1994 as a claims adjuster. In this capacity he
was responsible for evaluating workers’ compensation
claims filed against Alexsis clients and determining
whether and to what extent the claims were compensable.
This sometimes entailed hiring outside vendors, such as
private investigators, to conduct surveillance on a given
claimant.
The charges in this case stemmed from a scheme made
possible by the free hand Hendershot had in selecting the
vendors to perform Alexsis work. Basically, the scheme
worked like this: Hendershot sent surveillance work to a
number of vendors who in exchange agreed to give him a
cash kickback for each job. Per agreement with Hendershot,
these vendors oftentimes billed for two investigators when
only one was used or billed for services that were never
performed at all. Also, as an additional ploy, Hendershot
frequently hired multiple investigators to perform surveil-
lance on the same claimant. Then, Hendershot approved
the invoices submitted by the vendors and sent the informa-
tion necessary to process payment to Alexsis’s headquarters
in Michigan. Alexsis, totally unaware of the scam, cut and
mailed checks from its headquarters; the vendors then
deposited the checks while withdrawing enough cash to pay
Hendershot the agreed-upon kickback.
According to Count 1 of the three-count indictment, from
1988 to 1994, Hendershot received kickbacks from the
following six private investigation or security firms: John
Herley and Associates, Thomas Herley and Associates,
Nos. 01-3248, 01-3491 & 01-3580 3
Professional Protection Services (“PPS”), Megco, Inc., Three
Star Detective and Security Agency (“Three Star Detective
Agency”), and Park Investigations and Detective Agency
(“Park Investigations”). Count 1 also alleged that Hender-
shot tried to solicit kickbacks from the law firm of Steven-
son, Rusin & Friedman (“the Rusin law firm”), though his
attempts were ultimately unsuccessful. Defendant Battista,
a political associate of Hendershot, was alleged to be the
“bagman”—collecting the kickbacks for Hendershot while
retaining a portion for himself—with respect to all the
named vendors except John and Thomas Herley. Defendant
Lanas was the owner of both Three Star Detective Agency
and Park Investigations.
Counts 2 and 3 incorporated by reference the description
of the scheme in Count 1, but each count listed a different
mailing that was allegedly used to further the scheme.
Count 1, which charged only Hendershot, alleged the
mailing of an Alexsis check to Thomas Herley on July 7,
1994. Count 2 also charged Hendershot alone and claimed
that a second Alexsis check was mailed to Thomas Herley
on July 7, 1994. Finally, Count 3 charged all three defen-
dants and alleged the mailing of an Alexsis check to Park
Investigations on July 22, 1994.
Prior to trial Battista and Lanas moved to sever Counts
1 and 2 from Count 3, claiming that the scheme to defraud
as it pertained to Lanas’s Three Star Detective Agency and
Park Investigations was separate from the scheme as it
pertained to the other vendors named in the indictment. In
addition all three defendants moved to strike as surplusage
any references to transactions not involving Lanas or
Thomas Herley—the vendors alleged to have received the
mailings charged in the respective counts. The district
court, however, agreed with the government that the in-
dictment recited a single overarching scheme to defraud,
which was not limited to the mailings specifically identified
in the indictment, and so denied the motions.
4 Nos. 01-3248, 01-3491 & 01-3580
The case proceeded to a joint trial, after which the jury
found the defendants guilty as charged. Though the trial
concluded in March 2000 and the presentence investigation
reports were filed four months later, the defendants were
not sentenced until August and September 2001. Still, the
district court relied on the 1998 version of the Sentencing
Guidelines, which gives courts discretion “in the atypical
case” to sentence a defendant under a guideline other than
the one referenced in the Statutory Index. Then, after
determining that the commercial bribery and kickbacks
guideline, U.S.S.G. § 2B4.1, was a better fit than the fraud
and deceit guideline, id. § 2F1.1, the court sentenced the
defendants as follows: Hendershot to 48 months’, Battista
to 27 months’, and Lanas to 5 months’ imprisonment.
In addition all three defendants were ordered to serve
36 months of supervised release and to pay $233,720,
$162,300, and $39,900 in restitution, respectively.
II. ANALYSIS
A. Joinder
The defendants claim on appeal that they should not have
been joined in a single indictment because they were not
“alleged to have participated in the same act or transaction
or in the same series of acts or transactions constituting an
offense or offenses.” Fed. R. Crim. P. 8(b). Whether there
was misjoinder under Rule 8 is an issue we review de novo.
United States v. Todosijevic, 161 F.3d 479, 483 (7th Cir.
1998). Further, in assessing whether joinder was proper, we
look solely to the face of the indictment and not to the
evidence adduced later at trial. United States v. Alexander,
135 F.3d 470, 475 (7th Cir. 1998).
We have interpreted the language “same series of acts or
transactions” to mean “acts or transactions that are pur-
suant to a common plan or common scheme.” Todosijevic,
Nos. 01-3248, 01-3491 & 01-3580 5
161 F.3d at 484. The defendants maintain that the transac-
tions involved here were not part of a common plan or
scheme because “the evidence at trial demonstrated the
evidentiary and temporal connections of the various ‘of-
fenses’ listed in the indictment . . . ranged from moderate
to quite slim.” But as we have already said, whether there
was misjoinder under Rule 8 is determined by looking
solely at the allegations in the indictment; it is thus
irrelevant what was shown by the proof at trial. Alexander,
135 F.3d at 475. And the allegations in this indictment
demonstrate that joinder was proper. Each count recites
facts that establish one unified scheme to defraud the same
victim (Alexsis) through (1) the solicitation and receipt of
kickbacks by Hendershot and Battista, (2) fraudulent
tactics on the part of the six vendors named in the indict-
ment, such as over-billing and billing for services that were
never performed, and (3) Hendershot’s hiring of each of the
six vendors to conduct surveillance on the same claimant.
See Todosijevic, 161 F.3d at 484 (joinder proper because
indictment set forth a “joint, systematic, integrated fraud-
ulent venture on the part of each of the defendant[s] de-
signed to defraud creditors”). Hendershot was at the core of
the scheme, and Battista was involved in every transaction
except for those pertaining to John and Thomas Herley.
Lanas’s involvement was more minimal, but this does not,
as the defendants would have us believe, negate the
existence of a single scheme; all it means is that Lanas’s
liability is limited to the extent of his participation in the
scheme. See United States v. Polichemi, 219 F.3d 698, 706
(7th Cir. 2000) (single wire fraud scheme despite fact that
each participant’s role varied from transaction to transac-
tion).
The defendants also contend that Count 3 was misjoined
with Counts 1 and 2 under Fed. R. Crim. P. 8(a), which
permits joinder of offenses if they “are of the same or
similar character or are based . . . on two or more acts or
6 Nos. 01-3248, 01-3491 & 01-3580
transactions connected together or constituting parts of a
common scheme or plan.” This argument is a nonstarter—
one, because the indictment does allege a common scheme
or plan, and two, because the defendants concede in their
appeal brief that all three counts are “the same or similar
in type.” Despite this concession the defendants seem to
believe that the joinder can still be deemed improper be-
cause the “overall temporal proximity between [the of-
fenses] was slight.” But the case the defendants cite in
support of their position, United States v. Coleman, 22 F.3d
126 (7th Cir. 1994), holds precisely the opposite. According
to Coleman, “the similarity of character of different offenses
does not significantly depend on their separation in time,”
id. at 133, so counts of like class may be joined even if they
are not temporally or evidentially related. Id. at 133-34;
accord Alexander, 135 F.3d at 476.
Finally, to the extent the defendants are claiming that
the district court should have severed their trials under
Fed. R. Crim. P. 14, their argument fails. See United States
v. Rollins, 301 F.3d 511, 517 (7th Cir. 2002) (even when
joinder under Rule 8 is proper, Rule 14 authorizes district
court to grant severance when it appears that defendant
will suffer prejudice by joinder of either offenses or de-
fendants). The defendants argue, in a rather conclusory
manner, that they were prejudiced by the “spillover” effect
of having the charges tried together. But the district court
instructed the jury to consider the evidence as to each
defendant and each count separately, and we agree with the
government that this was not such a complicated case that
the jury would have difficulty following the instruction. See
United States v. McClurge, 311 F.3d 866, 873 (7th Cir.
2002) (instruction directing jury to give separate consider-
ation to each defendant was sufficient to cure any possibil-
ity of prejudice). Moreover, the defendants’ claim of preju-
dice is further undercut by the fact that much of the
evidence admitted at their joint trial would have been
Nos. 01-3248, 01-3491 & 01-3580 7
admissible against them in separate trials as well. See
United States v. Adeniji, 221 F.3d 1020, 1027 (7th Cir.
2000) (evidence of one participant’s actions in furtherance
of a mail fraud scheme is admissible against other partici-
pants in that scheme).
B. Evidentiary Issues
Relying on Kotteakos v. United States, 328 U.S. 750(1946), the defendants contend that there was a fatal
variance between the allegations in the indictment “that
there was a single conspiracy and the proof at trial of
multiple schemes/conspiracies with no connection to each
other.” This argument, which we treat as a challenge to
the sufficiency of the evidence, Polichemi, 219 F.3d at 706,
fails for two reasons. First, the defendants were not even
charged with conspiracy, which is a distinct offense, having
distinct elements, from mail fraud. Adeniji, 221 F.3d at
1027; see also United States v. Neely, 980 F.2d 1074, 1089-
90 (7th Cir. 1992) (rejecting claim of prejudicial variance
between indictment’s allegation of a “single conspiracy” and
the proof at trial, which allegedly established “multiple
schemes,” because defendant raising the challenge was
never charged or convicted of conspiracy). Second, the
evidence at trial proved exactly what the indictment
alleged: a single scheme to defraud Alexsis through the
solicitation and receipt of kickbacks by Hendershot and
Battista from vendors such as Lanas. The defendants again
make much of the fact that each participant’s role varied
from transaction to transaction and further assert that
many of the various participants did not even know each
other, but this is all irrelevant so long as the evidence
established each defendant’s own knowing participation in
the scheme, which it did. See Adeniji, 221 F.3d at 1026;
Polichemi, 219 F.3d at 706.
8 Nos. 01-3248, 01-3491 & 01-3580
The defendants also contend that the district court erred
under Fed. R. Evid. 404(b) in admitting “uncharged, other
acts evidence”—specifically, the evidence relating to the
Rusin law firm, PPS, and Megco. Because the defendants
did not raise this issue below, our review is for plain error
only, United States v. Graham, 315 F.3d 777, 782 (7th Cir.
2003), and we find no such error. The defendants’ argument
appears to be based on their belief that the scope of a mail
fraud scheme is limited by the mailings that are specifically
charged in the indictment; so in this case, since the indict-
ment only charged mailings to Thomas Herley and Lanas,
the offense is limited to the portion of the scheme per-
taining to them alone. This is wrong, however, because a
mailing in furtherance of a scheme to defraud is simply the
element that confers federal jurisdiction under the mail
fraud statute; but a fraud scheme can produce proceeds
long before the act that ultimately triggers jurisdiction.
United States v. Mankarious, 151 F.3d 694, 705 (7th Cir.
1998). As we have already said, the indictment in this case
set forth one overarching scheme to defraud. The evidence
relating to the Rusin law firm, PPS, and Megco was not
Rule 404(b) evidence at all but was properly admitted as
proof of that overall scheme.
The defendants’ last challenge to the evidence is that it
was insufficient to prove that the three mailings charged in
the indictment were in furtherance of the scheme to
defraud. First, the defendants claim that the mailings, all
of which occurred in July 1994, could not have been in
furtherance of the scheme because Hendershot had left
Alexsis by that time. It is true that one of the government’s
witnesses testified that Hendershot stopped working for
Alexsis in May 1994. But other evidence showed that
Hendershot’s resignation letter was actually dated July 25,
1994, and his effective termination date was not until
August 5. We will overturn a verdict only if no rational trier
of fact could have found the defendant guilty, Graham, 315
Nos. 01-3248, 01-3491 & 01-3580 9
F.3d at 781, and here, based on the date of Hendershot’s
resignation letter and his effective termination date, the
jury could easily have found that Hendershot was still at
Alexsis (and still soliciting and receiving kickbacks) at the
time of the July 1994 mailings.
The defendants challenge the proof as to Count 3 on an
additional ground—that there was insufficient evidence to
show that the July 22, 1994, mailing to Park Investigations
was in furtherance of the fraud scheme because there was
no proof that Hendershot or Battista received any kickback
out of that mailing. On this point the government offered
the testimony of Richard Lantini, an employee of Lanas’s
Three Star Detective Agency and part-owner of Park In-
vestigations. Lantini introduced Lanas to Battista in 1993,
and later, once Lanas had agreed to participate in the kick-
back scheme, Lantini was the one who went to Battista’s
home to pay him the kickback for each job. Lantini never
paid Hendershot directly, but Hendershot was named as the
claims adjuster on almost all of the invoices. Further,
Lantini testified that Battista told him that half of the
money was going to Hendershot.
In April 1994 Lantini was convicted on a federal drug
charge. According to Lantini’s testimony, before he was
taken into custody, Lanas told him that he would “be taking
care of everything at the business. And any money that
would be coming . . . he would continue to put it in the
bank, and . . . he would take care of the payments to Mr.
Battista.” Then, in July 1994 after Lantini was already in
custody, he and Lanas had a phone conversation during
which Lanas stated that “he was taking care of everything
and he was meeting with Mr. Battista.”
The defendants now claim that Lantini’s testimony was
insufficient to show that the fraud scheme continued after
his incarceration in April 1994, and therefore that there
was no proof that the July 22, 1994, mailing charged in
10 Nos. 01-3248, 01-3491 & 01-3580
Count 3 was in furtherance of the scheme. We disagree
with this characterization of the evidence. The defendants
attempt to portray Lanas’s statements that he was “taking
care of everything” and “was meeting with Mr. Battista” as
innocent remarks having nothing to do with the scheme,
but the jury could have easily inferred from those state-
ments that Lanas was continuing, in Lantini’s place, to pay
kickbacks to Battista in exchange for Alexsis work. And
there was additional evidence to support the jury’s conclu-
sion: Lantini’s testimony that Lanas told him, before he was
imprisoned, that Lanas would be “tak[ing] care of the
payments to Mr. Battista,” and bank records showing that,
after Lantini was imprisoned, Lanas continued to deposit
Alexsis checks while at the same time withdrawing cash in
the exact amount of the kickback owed. Viewing all this
evidence most favorably to the government, as we must, id.,
we conclude that a reasonable jury could have found that
the July 22, 1994, mailing to Lanas resulted in a kickback
to Battista. We likewise conclude that the jury could have
found that the mailing resulted in a kickback to Hender-
shot, based on the fact that he was named as the claims
adjuster on nearly all of Lanas’s invoices and on Lantini’s
testimony that Battista said that half of the kickback
money was going to Hendershot.
In a last-ditch effort, the defendants attack Lantini’s
testimony as “inherently suspect” under the principles of
Lilly v. Virginia, 527 U.S. 116 (1999). The defendants have
come close to waiving this point by failing to develop it in
their appeal brief. Matthews v. Commonwealth Edison Co.,
128 F.3d 1194, 1197-98 (7th Cir. 1997). But even assuming
no waiver, their challenge fails. Lilly, which holds that it is
a violation of the Confrontation Clause to admit the blame-
shifting confession of a non-testifying accomplice, 527 U.S.
at 134, simply has no application here. And finally, to the
extent the defendants are attacking Lantini’s credibility, we
do not find his testimony to be “contrary to the laws of
Nos. 01-3248, 01-3491 & 01-3580 11
nature or unbelievable on its face,” United States v. Scott,
145 F.3d 878, 883 (7th Cir. 1998), and therefore reject their
argument.
C. New Trial Based on Newly Discovered Evidence
At trial the government called Michael Rusin of the Rusin
law firm as one of its main witnesses. Rusin testified on
direct examination that in 1991 Hendershot and Battista
offered his firm the legal work for all of Alexsis’s clients in
exchange for a substantial kickback. At the time Rusin’s
firm was already handling some Alexsis clients, but Rusin
stated that, once he turned down the kickback offer, no new
Alexsis business came the firm’s way. On cross-examina-
tion, however, Rusin was more equivocal, stating that after
the 1991 meeting with Hendershot and Battista his firm
received new cases from Alexsis clients, but they were from
existing clients the firm had been handling since before the
meeting. As to whether the firm received business from new
Alexsis clients, Rusin said, “I can’t honestly say. . . . I know
I didn’t receive any more files from Mr. Hendershot.” Rusin
also testified that he could not produce the billing records
for the firm’s Alexsis clients because those records were not
available.
After trial the defendants learned that the billing records
were in fact available and showed that the Rusin law firm
did receive new Alexsis billings after Rusin turned down the
kickback offer. The defendants moved for a new trial on the
basis of this newly discovered evidence, but the district
court denied their motion. We review that decision for
abuse of discretion. McClurge, 311 F.3d at 874. A new trial
based on newly discovered evidence that discloses false
testimony should only be granted if (1) the court is reason-
ably satisfied that the witness testified falsely, (2) the jury
might have reached a different conclusion without the false
testimony, and (3) the moving party was taken by surprise
12 Nos. 01-3248, 01-3491 & 01-3580
by the false testimony and was unprepared to meet it.
United States v. Reed, 986 F.2d 191, 192-93 (7th Cir. 1993).
The defendants’ challenge fails on a number of grounds.
First, the district court properly found that Rusin’s testi-
mony on cross-examination that he could not recall whether
he obtained new Alexsis business was sufficiently equivocal
to support a finding of no perjury. Also, the defendants fail
to show that the jury might have reached a different verdict
if the newly discovered information had been available at
trial. The defendants maintain that the evidence could have
been used to impeach Rusin’s credibility, asserting that the
government presented Rusin as its “golden” witness—“an
honest lawyer, who rejected kickbacks” and whose “unre-
butted, ‘loss of business’ testimony was compelling evidence
that the kickback offer occurred.” But even assuming that
Rusin’s credibility could have been impeached in this
manner, the government presented so much additional
evidence—such as testimony from several other witnesses,
Alexsis business records, and various bank records—that
the jury could easily have found the defendants guilty even
without Rusin’s testimony. And finally, the defendants
cannot claim surprise because they had subpoenaed the
Rusin law firm’s billing records before trial, knew well in
advance of trial that Rusin did not intend to produce the
information, yet failed to seek judicial enforcement of the
subpoena prior to Rusin’s testifying.
D. Juror Misconduct
Midway through trial the defendants became aware that
a regular spectator, Mr. Bell, had been in daily contact with
a juror, Mrs. Alexander. As a spectator Mr. Bell was privy
to sidebar conversations and other proceedings that were
not intended to be heard by the jury. Thus, at the request
of defense counsel, the district court questioned Mr. Bell to
determine whether he and Mrs. Alexander had ever dis-
Nos. 01-3248, 01-3491 & 01-3580 13
cussed the case. In response Mr. Bell stated that he had
been accompanying Mrs. Alexander to the courthouse each
day but had not discussed the case with her at all: “Not one
single time. I take this very seriously, very serious.” When
the court then asked the defendants whether they had any
further questions, counsel for Hendershot and Battista both
said, “Not at all,” while counsel for Lanas said nothing. At
no time did any of the defendants ask to have Mrs. Alexan-
der questioned, nor did they ever invoke Fed. R. Evid.
606(b), which permits a juror to testify after the verdict
has been rendered “on the question whether extraneous
prejudicial information was improperly brought to the jury’s
attention” and on “whether any outside influence was
improperly brought to bear upon any juror.”
The defendants now claim that the district court erred in
failing to receive assurances from Mrs. Alexander herself
that she and Mr. Bell had not discussed off-the-record
proceedings. We agree with the government, however, that
Hendershot and Battista have waived this point by affirma-
tively representing that they were satisfied, based on the
questioning of Mr. Bell, that Mrs. Alexander had not been
improperly influenced. United States v. Walton, 255 F.3d
437, 441 (7th Cir. 2001). But this sort of affirmative re-
linquishment of rights is missing with regard to Lanas, who
has therefore merely forfeited, not waived, the issue. Id.Accordingly, we review his challenge for plain error, id., and
we find that there was none. The district court is under no
obligation to investigate the possibility of extraneous
influence on a juror unless the defendants have made a
colorable showing of taint. United States v. Davis, 15 F.3d
1393, 1412 (7th Cir. 1994). Here, the court conducted an
adequate inquiry into any potential taint by questioning
Mr. Bell in open court regarding his communications with
Mrs. Alexander. Once Mr. Bell responded that he had not
discussed the case with her at all, there was no reason for
the court to continue to believe that Mrs. Alexander might
14 Nos. 01-3248, 01-3491 & 01-3580
have been improperly influenced. This is especially true
considering that defense counsel expressed satisfaction with
Mr. Bell’s responses and did not raise any further objection
at any other time.
E. Sentencing
We turn finally to the sentencing issues. The defendants
first assert that the district court erred by proceeding under
the commercial bribery and kickbacks guideline, U.S.S.G.
§ 2B4.1, rather than the guideline covering offenses in-
volving fraud or deceit, id. § 2F1.1. This is an issue that we
review de novo. United States v. Serpico, No. 02-1702, 2003
WL 359634, at *5 (7th Cir. Feb. 20, 2003).
As an initial matter, we note that, because the defendants
were not sentenced until August and September 2001, the
district court erred by using the 1998 version of the Guide-
lines, rather than the 2000 version. See U.S.S.G. § 1B1.11
(“The court shall use the Guidelines Manual in effect on the
date that the defendant is sentenced.”). Under § 1B1.2 of
the 1998 Manual, the district court had discretion “in the
atypical case” to sentence a defendant under a guideline
other than the one recommended in the Statutory Index
(Appendix A) for the offense of conviction, provided the
charged conduct fit more closely within the other guideline.
But the 2000 amendments dropped this language in order
“to emphasize that the sentencing court must apply the
offense guideline referenced in the Statutory Index for the
statute of conviction unless the case falls within the limited
‘stipulation’ exception set forth in § 1B1.2(a).” United States
v. Gracia, 272 F.3d 866, 876 (7th Cir. 2001) (quoting
U.S.S.G. App. C Supp., amend. 591, at 32 (2000)). For the
offense of mail fraud, 18 U.S.C. § 1341, the Statutory Index
lists two possible guidelines: §§ 2C1.7 and 2F1.1. Neither
party claims that § 2C1.7 is applicable, which leaves
Nos. 01-3248, 01-3491 & 01-3580 15
§ 2F1.1, the guideline the defendants say the court was
mandated to apply.
But the application notes to § 2F1.1 lead us to a different
conclusion. Application Note 14 explains that “[i]n certain
. . . cases, the mail or wire fraud statutes, or other rela-
tively broad statutes, are used primarily as jurisdictional
bases for the prosecution of other offenses.” U.S.S.G.
§ 2F1.1, comment. (n.14). Thus, in those situations the
court is allowed to use a guideline other than § 2F1.1 so
long as “the indictment or information setting forth the
count of conviction . . . establishes an offense more aptly
covered by another guideline.” Id. Applying the wrong
version of the Guidelines therefore had no practical effect
in this case; under either the 1998 or 2000 version, the
court had the discretion to choose the guideline that best
fit the defendants’ charged conduct. See United States v.
Poirier, No. 01-15989, 2003 WL 302262, at *6, n.8 (11th Cir.
Feb. 13, 2003) (noting that the 2000 amendments left intact
Application Note 14 to § 2F1.1).
The question then is whether the defendants’ conduct is
“more aptly” covered by the commercial bribery and kick-
backs guideline than by the fraud and deceit guideline.
With regard to Hendershot and Battista, we conclude that
the district court made the right choice. As we explained in
United States v. Hauptman, 111 F.3d 48 (7th Cir. 1997), in
the usual case of commercial bribery, “either the person
giving the bribe is being shaken down by a customer’s
purchasing agent, or, if the briber is the one taking the
initiative, his objective is merely to get ‘his share’ of the
customer’s business.” Id. at 50; see also Mantek Div. of NCH
Corp. v. Share Corp., 780 F.2d 702, 705 n.3 (7th Cir. 1986)
(“The essence of commercial bribery is that the seller is
secretly giving a bribe to the customer’s agent to induce the
agent to betray his principal (the customer) by purchasing
the seller’s product even though it is not in the customer’s
16 Nos. 01-3248, 01-3491 & 01-3580
best interest.”). We have the former situation here: the
essence of both Hendershot’s and Battista’s offense is that
they, the purchasing agents, solicited and accepted bribes
from various sellers and by doing so deprived Alexsis, the
customer, of Hendershot’s honest services. Granted, Hen-
dershot and Battista were involved in straight fraud as
well—for instance by ordering multiple investigations on
the same claimant—but we agree with the district court
that the core of their crime more closely resembles fraud
achieved through bribery. We draw support for this conclu-
sion from other cases that have applied bribery guidelines
to fraud convictions. E.g., Serpico, 2003 WL 359634, at
*5-*6; Poirier, 2003 WL 302262, at *6-*7; United States v.
Montani, 204 F.3d 761, 769-71 (7th Cir. 2000).
With regard to Lanas, however, the commercial bribery
and kickbacks guideline is more of an awkward fit. True,
Lanas was one of the people paying bribes to Hendershot
and Battista, but was the paying of bribes the “essence” of
his offense? We believe that it was not. Lanas’s situation is
much like Hauptman, where we found that the bribery was
“the means used to defraud [the customer’s] employer of a
substantial amount of money.” 111 F.3d at 51. So is the
case here. Initially, Lanas refused Battista’s offer of sur-
veillance work in exchange for kickbacks because Lanas
believed the kickback to be too high to make the proposition
worthwhile. Lanas only agreed to the offer once he and
Battista decided that he would bill Alexsis for two investi-
gators on each job even though he was only using one. The
indictment and proof at trial establish that Lanas submit-
ted a number of these “false and fraudulent” invoices and
thereby defrauded Alexsis out of a substantial sum of
money. Thus, as in Hauptman, this was not “merely a case
in which a bribe deprives the bribed employee’s employer of
the employee’s undivided loyalty,” id. at 50-51; it was a case
of straight, substantial fraud made possible by the bribe.
Nos. 01-3248, 01-3491 & 01-3580 17
So we disagree with the district court’s decision to apply
the commercial bribery and kickbacks guideline to Lanas,
but we must of course decide whether the error was harm-
less. The base offense level for § 2B4.1 is two levels higher
than for § 2F1.1, but nonetheless, the government says that
it would not have made a difference which guideline was
used because a two-level enhancement for “more than
minimal planning” would have applied had Lanas been
sentenced under § 2F1.1. See U.S.S.G. § 2F1.1(b)(2)(A). The
defendants respond that this is merely speculation as the
district court did not make any specific findings regarding
such an enhancement. Instead, the court merely noted “its
uncertainty about whether selection of § 2F1.1 would make
a genuine difference in this case, where each Defendant is
likely to face a two-level increase for the specific offense
characteristic of ‘more than minimal planning.’ ”
Despite the lack of specific findings, however, we conclude
that the record itself is sufficient to show that an adjust-
ment for more than minimal planning would have applied
had Lanas been properly sentenced under § 2F1.1. We have
said that the enhancement is appropriate where “criminal
acts, each of which are not purely opportune, are repeated
over a period of time.” United States v. Sonsalla, 241 F.3d
904, 907 (7th Cir. 2001). In this case the district court
found that Lanas was involved in no less than forty-eight
transactions with Hendershot and Battista. This clearly
suffices as more than minimal planning, and so whether
Lanas was sentenced under § 2B4.1 or § 2F1.1, his offense
level would have been the same. Further, we note that
Lanas is by now no longer in prison, and so the only
possible purpose remand would serve would be to give the
district court the opportunity to change his term of super-
18 Nos. 01-3248, 01-3491 & 01-3580
vised release.1 But because the court has already made the
decision to impose the statutory maximum term of three
years applicable to Class D felonies, see 18 U.S.C. § 3583(b),
remand for this purpose would almost certainly be fruitless.
Finally, the defendants claim that their offense level ad-
justment for the amount of loss should have been calculated
according to the loss to Alexsis and not by their gain. But
the defendants do not give any reasoning in support of
this argument (which appears to be totally meritless, see
U.S.S.G. §§ 2B4.1(b)(1), 2F1.1, comment. (n.9)), nor do they
explain what the loss figure should be and how it would
affect their sentences. For these reasons we agree with the
government that this issue has been waived. Matthews, 128
F.3d at 1197-98.
III. CONCLUSION
The judgment of the district court is AFFIRMED in all
respects.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
1
Because Lanas is still serving his term of supervised release, his
appeal is not moot. United States v. Trotter, 270 F.3d 1150, 1152-
53 (7th Cir. 2001).
USCA-02-C-0072—4-4-03