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United States v. Vucko, Susan M. ( 2007 )


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  •                             In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________
    No. 05-4182
    UNITED STATES OF AMERICA,
    Plaintiff-Appellee,
    v.
    SUSAN M. VUCKO,
    Defendant-Appellant.
    ____________
    Appeal from the United States District Court
    for the Northern District of Illinois, Eastern Division.
    No. 03 CR 261—Ronald A. Guzmán, Judge.
    ____________
    ARGUED JUNE 7, 2006—DECIDED JANUARY 12, 2007
    ____________
    Before BAUER, RIPPLE, and WOOD, Circuit Judges.
    WOOD, Circuit Judge. For many years, Susan Vucko
    was employed by the Northwest Building Materials and
    Supply Company, where she both worked at the retail
    sales counter and performed various bookkeeping tasks. In
    the mid-1990s Vucko began to help herself to Northwest’s
    money, eventually pilfering more than $700,000. Mean-
    while, Vucko also defrauded the United States by falsely
    reporting her income on her tax returns for five years.
    After she was caught, she pleaded guilty without a plea
    agreement to wire fraud in violation of 18 U.S.C. § 1343
    and to making a false statement in a tax return in viola-
    tion of 26 U.S.C. § 7206(1). The court imposed concur-
    rent sentences of two years’ imprisonment for each offense
    2                                               No. 05-4182
    and three years of supervised release and ordered restitu-
    tion in the amount of $720,662. Vucko now appeals from
    her sentence, claiming that the district court erred by
    failing to group the charges under § 3D1.2(c) or (d) of the
    U.S. Sentencing Guidelines. Although her argument
    might have some force if one were to view those provi-
    sions of the Guidelines in isolation, we conclude that the
    district court properly found that grouping was inappro-
    priate. We therefore affirm the sentence.
    I
    There is little that we need to add to the facts underlying
    Vucko’s convictions. At Northwest, Vucko was responsible
    for reconciling credit card sales with merchant banks that
    processed credit transactions for the company. In addition,
    as part of her duties at the retail counter, she processed
    cash and credit card transactions. In 1992 or 1993, North-
    west gave her the additional job of closing out the retail
    sales counter at the end of each business day. This in-
    volved balancing the cash drawer, ensuring that the
    cash register and credit card swipe machine were prop-
    erly closed, and recording gross sales. Vucko also had to
    prepare weekly and monthly reports totaling all retail
    sales.
    Beginning around February 1995, Vucko succumbed to
    the temptation to help herself to some of the money she
    was handling. She started to use Northwest’s credit
    card swipe machine to process unauthorized credits or
    refunds for banking and credit card accounts belonging to
    her or to members of her family. Normally she did this
    at the end of the business day, before closing out the
    cash register and credit card machine. These “refunds”
    were typically between $2,000 and $9,000. Because no
    one was around to supervise Vucko’s work at closing
    time, she was able to conceal her actions when she “zeroed
    No. 05-4182                                               3
    out” the two machines after processing her fraudulent
    transactions. From 1995 to 1999, when she was caught,
    she accumulated at least $720,662 in unauthorized credits,
    which she distributed among five accounts held either
    in her name or the name of her husband or one of her sons.
    Vucko took a number of steps to keep Northwest from
    discovering her scheme. First, she destroyed the tapes
    from the cash register and credit card machines at the
    end of each business day. Second, she falsified various
    sales reports by under-reporting the amount of actual
    credit card purchases at Northwest. Third, she destroyed
    the monthly statements that Northwest received from
    its merchant banks.
    At the same time, Vucko was concealing the true amount
    of her annual income on the federal tax returns she
    prepared for herself and her husband each year from 1995
    through 1999. She under-reported her gross income by
    at least $111,802 in 1995; by $129,298 in 1996; by
    $272,162 in 1997; by $156,601 in 1998; and by $31,017 in
    1999. In the aggregate, the underreported income was
    almost $701,000, just short of the amount Vucko embez-
    zled. She filed her final fraudulent return, covering tax
    year 1999, in April 2000, nearly a year after her thefts had
    been discovered.
    II
    At sentencing, the primary issue that Vucko raised was
    whether her wire fraud and tax fraud counts had to be
    grouped under the provisions of § 3D1.2(c) or (d). Vucko
    argued before the district court that the wire fraud
    guideline, then § 2F1.1, relied on the same offense charac-
    teristic as the tax fraud guideline, § 2T4.1—namely, the
    amount of loss. She also argued that the two charges
    essentially reflected the loss of the same money, even
    4                                                No. 05-4182
    though the victims were different. The district court
    rejected this position, with the following explanation:
    I’m satisfied that this is not double counting in any
    meaningful sense. I think we have two separate and
    distinct acts, either one of which could have been
    done without the other. Tax evasion can be done
    without fraud and fraud can be done without tax
    evasion. It takes a specific independent thought
    process to do each. They’re different in kind and
    they’re different in time and they’re different in
    execution, so I’ll deny the objection to and the request
    to modify on that basis.
    After hearing argument on the factors identified in 18
    U.S.C. § 3553(a), the court imposed its sentence.
    III
    On appeal, Vucko continues to urge that the district
    court should have grouped her two offenses for sentenc-
    ing purposes. In order to decide whether grouping was
    required, we first must settle on the applicable guideline
    for each offense. For this purpose, it is undisputed that
    the 1998 version of the Guidelines Manual applies. The
    first offense to which Vucko pleaded guilty was wire fraud.
    In the 1998 manual, Guideline § 2F1.1 provides the offense
    level for fraud, starting with a base offense level of six. See
    § 2F1.1(a). (Amendment 617 to the Guidelines, effective
    November 1, 2001, deleted § 2F1.1 and moved a great
    number of economic offenses, including wire fraud, to
    § 2B1.1; this change has no effect on Vucko’s case.) There
    is a laundry list of specific offense characteristics in the
    fraud guideline, starting with progressive increases for
    the amount of monetary loss if that loss is over $2,000. See
    § 2F1.1(b)(1). Other relevant characteristics include the
    level of planning, the number of victims, the use of mass
    No. 05-4182                                                  5
    marketing to commit the fraud, a misrepresentation that
    one was acting on behalf of a charitable or similar organi-
    zation, the violation of a judicial decree, the relocation of
    the fraud to another jurisdiction to evade law enforcement,
    the commission of a substantial part of the fraudulent
    scheme from outside the United States, the use of sophisti-
    cated means, the conscious or reckless risk of serious
    bodily injury, the possession of a dangerous weapon, and
    acts that jeopardize the soundness of a financial institu-
    tion or affect it while deriving more than $1 million in
    gross receipts from the scheme. See § 2F1.1(b)(2)-(7). This
    is a lengthy list, but it is noteworthy for two reasons. First,
    the failure to report income from the fraud to the Internal
    Revenue Service (IRS) is not a specific offense characteris-
    tic under this guideline, though it is foreseeable that
    in many cases of fraud the perpetrator also will fail to
    report her income to the federal government on her tax
    return. Second, each of these offense characteristics is
    defined both in the text of the guideline and in the Ap-
    plication Notes following the guideline.
    The other offense to which Vucko pleaded guilty was her
    failure to report her ill-gotten gains on her tax returns.
    Guideline § 2T1.1 applies to a number of tax offenses,
    including the filing of a false or fraudulent tax return.
    Section 2T1.1(a) offers two options for computing the base
    offense level: either the level from § 2T4.1 (the tax table)
    corresponding to the tax loss, or level 6, if there is no tax
    loss. Section 2T1.1(b), in contrast to the fraud guideline,
    identifies only two specific offense characteristics, which
    are brief enough to set out in full:
    (1) If the defendant failed to report or to correctly
    identify the source of income exceeding $10,000 in
    any year from criminal activity, increase by 2
    levels. If the resulting offense level is less than
    level 12, increase to level 12.
    6                                             No. 05-4182
    (2) If the offense involved sophisticated concealment,
    increase by 2 levels.
    The first of those is the one that Vucko believes requires
    grouping of her two offenses.
    It is true, as Vucko argues, that the criminal conduct
    covered by the wire fraud was the same as the conduct
    that gave her enough illegally derived income to trigger
    § 2T1.1(b)(1). Before jumping to Vucko’s desired conclu-
    sion that grouping is required under § 3D1.2(c), however,
    we must ensure that this was the result the Sentenc-
    ing Commission intended and that this is the proper way
    to read the relevant guidelines. The first step in this
    process is to see what the Commission had to say. The
    Introductory Commentary to Part T of the Guidelines
    (Offenses Involving Taxation) reads as follows:
    The criminal tax laws are designed to protect the
    public interest in preserving the integrity of the na-
    tion’s tax system. Criminal tax prosecutions serve to
    punish the violator and promote respect for the tax
    laws. Because of the limited number of criminal tax
    prosecutions relative to the estimated incidence of
    such violations, deterring others from violating the
    tax laws is a primary consideration underlying these
    guidelines. Recognition that the sentence for a crimi-
    nal tax case will be commensurate with the gravity
    of the offense should act as a deterrent to would-be
    violators.
    The commentary also elaborates on the specific offense
    characteristic in § 2T1.1(b)(1). Application Note 3 defines
    the term “criminal activity” in § 2T1.1 to mean “any
    conduct constituting a criminal offense under federal,
    state, local, or foreign law.” The Background Note ex-
    plains further that:
    [f]ailure to report criminally derived income is in-
    cluded as a factor for deterrence purposes. Criminally
    No. 05-4182                                              7
    derived income is generally difficult to establish, so
    that the tax loss in such cases will tend to be sub-
    stantially understated. An enhancement for offenders
    who violate the tax laws as part of a pattern of crimi-
    nal activity from which they derive a substantial
    portion of their income also serves to implement the
    mandate of 28 U.S.C. § 994(i)(2).
    The latter statute is the one that spells out the duties of
    the Sentencing Commission. Subpart (i)(2) directs the
    Commission to “assure that the guidelines specify a
    sentence to a substantial term of imprisonment for catego-
    ries of defendants in which the defendant . . . committed
    the offense as part of a pattern of criminal conduct from
    which the defendant derived a substantial portion of the
    defendant’s income.”
    The harms caused by tax offenses and the need for
    deterrence that the Commission emphasized both inform
    the proper application of the grouping guideline. Section
    3D1.2 provides, in pertinent part:
    All counts involving substantially the same harm shall
    be grouped together into a single Group. Counts
    involve substantially the same harm within the
    meaning of this rule: . . .
    (c) When one of the counts embodies conduct
    that is treated as a specific offense charac-
    teristic in, or other adjustment to, the guide-
    line applicable to another of the counts.
    (d) When the offense level is determined largely
    on the basis of the total amount of harm or
    loss, the quantity of a substance involved, or
    some other measure of aggregate harm, or if
    the offense behavior is ongoing or continu-
    ous in nature and the offense guideline is
    written to cover such behavior.
    8                                              No. 05-4182
    According to the Introductory Commentary for this part
    of the Guidelines Manual (entitled “Multiple Counts”),
    “[t]he rules in this Part seek to provide incremental
    punishment for significant additional criminal conduct.”
    (Emphasis added.) Application Note 5 to § 3D1.2 advises
    that “when conduct that represents a separate count, e.g.,
    bodily injury or obstruction of justice, is also a specific
    offense characteristic in or other adjustment to another
    count, the count represented by that conduct is to be
    grouped with the count to which it constitutes an aggra-
    vating factor.” This is to prevent “double counting”—
    exactly the concern that the district court recognized was
    implicated. The Application Note also indicates, however,
    that “this rule applies only if the offenses are closely
    related.” It gives examples of what kind of offenses would
    satisfy that criterion. For instance, grouping is not
    proper for a bank robbery committed on one occasion and
    an assault on a separate occasion, because the harm from
    the assault is not a specific offense characteristic under
    the bank robbery guideline and represents a different
    harm. In contrast, the use of a firearm in a bank robbery
    and unlawful possession of that firearm should be grouped.
    See § 2B3.1(b)(2) (possession of a firearm is a specific
    offense characteristic for robbery). Obstruction of justice,
    which is handled as a separate adjustment under § 3C1.1
    and thus is not technically a “specific offense characteris-
    tic,” nevertheless is covered by § 3D1.2(c) for grouping
    purposes.
    The Background Note acknowledges that this is a
    difficult area. It states, however, that offenses involving
    different victims (or societal harms) “are grouped together
    only as provided in subsection (c) or (d).” Conceding that
    it is not always “clear cut” whether or not to group, the
    Note concludes with an appeal to broad principles: “In
    interpreting this Part and resolving ambiguities, the
    No. 05-4182                                               9
    court should look to the underlying policy of this Part as
    stated in the Introductory Commentary.”
    Vucko is not the first person who initially committed
    fraud and then failed to report her income from that fraud.
    We are therefore not the first court to face the question
    whether these offenses should be grouped under
    § 3D1.2(c). The issue is difficult enough that it has
    caused a split among our sister circuits.
    The Fifth Circuit encountered this problem in United
    States v. Haltom, 
    113 F.3d 43
    (5th Cir. 1997). Haltom
    pleaded guilty to one count of mail fraud and four counts
    of tax evasion. The district court found that grouping
    was inappropriate, but the court of appeals reversed.
    Noting that the Introductory Commentary explained that
    grouping provides for “incremental punishment for sig-
    nificant additional criminal conduct,” the court thought
    that the key word there was “significant.” “Sometimes,” it
    commented, “an additional count does not represent
    significant additional criminal conduct, and does not lead
    to an increased sentence.” 
    Id. at 45.
    Turning specifically
    to § 3D1.2(c), the court reasoned, “Convictions on multiple
    counts do not result in a sentence enhancement unless
    they represent additional conduct that is not otherwise
    accounted for by the guidelines.” 
    Id. at 45-46
    (emphasis in
    original). The defendant’s offense level under the tax
    guideline was increased by two, because the source of the
    unreported income was criminal activity. The court
    described as “indisputable” the fact that the mail fraud
    count covered conduct that was being treated as a specific
    offense characteristic for the tax count. 
    Id. at 46.
    Immedi-
    ately after so concluding, however, the court went on to
    concede:
    As a matter of common parlance, Haltom’s mail fraud
    and tax evasion convictions cannot readily be said
    to have caused “substantially the same harm.” See
    10                                              No. 05-4182
    U.S.S.G. § 3D1.2. The mail fraud damaged the private
    financial interests of Haltom’s corporate clients; the
    tax offenses harmed the government. Absent a con-
    trary directive in the guidelines themselves, we
    might have considered these harms quite distinct and
    concluded that Haltom’s offenses were not 
    groupable. 113 F.3d at 46
    . It nonetheless thought that grouping
    was compelled by the guidelines.
    The First Circuit took a different approach in United
    States v. Martin, 
    363 F.3d 25
    (1st Cir. 2004). There the
    defendant also pleaded guilty to fraud and tax evasion,
    and the district court decided that grouping was required.
    It computed an offense level of 20 for the fraud counts
    and 18 for the tax evasion counts, the latter including
    the two extra points for income derived from criminal
    activity that exceeds $10,000. Following an analysis
    similar to that in Haltom, it grouped based on § 3D1.2(c).
    Reversing, the First Circuit noted that the Guidelines “do
    not require that all of the conduct be ‘fully accounted for’;
    rather, it is enough that conduct ‘embodied’ in the
    second offense is ‘treated as an adjustment’ to the other
    offense.” 
    Id. at 41
    (quoting United States v. Sedoma, 
    332 F.3d 20
    , 27 (1st Cir. 2003) (internal quotation marks
    omitted) (quoting U.S.S.G. § 3D1.2(c))). As a practical
    matter, the decision to group the tax and fraud offenses
    meant that the final offense level was two notches lower
    than it would have been without grouping, just as in
    Vucko’s case. The First Circuit acknowledged that “[t]he
    text of § 3D1.2(c), taken alone, appears to support group-
    ing in this case.” 
    Martin, 363 F.3d at 42
    . Nevertheless, the
    court pointed out, the Guidelines must be interpreted
    in light of the Commentary, which is “authoritative un-
    less it violates the Constitution or a federal statute, or is
    inconsistent with, or a plainly erroneous reading of, that
    guideline.” 
    Id. (quoting Stinson
    v. United States, 
    508 U.S. 36
    , 38 (1993)). Thus, “even when one count embodies
    No. 05-4182                                             11
    conduct treated as an adjustment to a second count, the
    counts cannot be properly grouped under § 3D1.2(c) unless
    they are ‘closely related.’” 
    Martin, 363 F.3d at 42
    . The
    First Circuit held that the fraud and tax evasion counts
    are not “closely related” because they involve “different
    victims,” cause “different harms,” and required “different
    conduct.” 
    Id. at 42-43.
      The court observed that if the two offenses were grouped,
    “there would be no punishment consequences for the tax
    evasion conduct.” 
    Id. at 43.
    This was because the offense
    level for the fraud was 20, and that for the tax evasion
    was 18; with grouping, “the offense level for the group is
    set, pursuant to § 3D1.3, at the highest AOL [adjusted
    offense level] of the offenses in the group.” 
    Id. at 41
    . In
    contrast, if the two counts were not grouped, then § 3D1.4
    would require the addition of two more levels for the two
    counts. (This is because each count would be its own
    group, and the Guidelines instruct that the group with the
    highest offense level counts as one “unit”; an additional
    unit is added for each group that is either equally serious
    or from one to four levels less serious. See § 3D1.4(a). If
    there are two units, as here, an additional two levels
    must be added to the offense level.) Only by refusing to
    group, the court said, could it achieve an “outcome [that]
    is consistent with an important but simple proposition:
    one who receives stolen money and fails to report that
    income in a tax return is generally more culpable than
    one who merely receives stolen money.” 
    Id. at 43.
    Thus,
    the court concluded, the decision not to group comports
    both with the underlying purpose of § 2T1.1(b)(1), which
    increases the offense level for failing to report criminal
    proceeds in part because the tax losses tend to be under-
    stated, and with 28 U.S.C. § 994(i)(2), which is the statu-
    tory mandate “to punish with a term of imprisonment
    those defendants who derive a substantial part of their
    income from criminal 
    activity.” 363 F.3d at 44
    .
    12                                              No. 05-4182
    The Third and Tenth Circuits take the same approach as
    the First. In United States v. Astorri, 
    923 F.2d 1052
    (3d
    Cir. 1991), the Third Circuit held under an earlier ver-
    sion of the Guidelines that neither specific offense charac-
    teristic applicable to tax offenses (failing to report income
    exceeding $10,000 per year from criminal activity or
    concealing criminal activity from which the defendant
    derived a substantial portion of the income) “constitute[d]
    conduct embodied in the fraud count.” 
    Id. at 1056.
    It thus
    concluded that grouping under § 3D1.2(c) was inappro-
    priate. Similarly, in United States v. Peterson, 
    312 F.3d 1300
    , 1302-04 (10th Cir. 2002), the Tenth Circuit found
    that the offenses were not closely related and “the specific
    offense characteristic for failure to report criminally-
    derived income is not sufficiently based here on conduct
    embodied in the mail fraud count as to warrant grouping.”
    See also Weinberger v. United States, 
    268 F.3d 346
    , 353-54
    (6th Cir. 2001) (rejecting grouping under § 3D1.2(c)
    because the harms were not closely related and finding
    it did not need to reach the double counting issue be-
    cause the offense level would be the same “regardless of
    whether the court applied the two-level statutory enhance-
    ment under U.S.S.G. § 2T1.1(b)(1)”); United States v.
    Vitale, 
    159 F.3d 810
    , 813-15 (3d Cir. 1998) (reaffirming
    Astorri and rejecting Haltom, leaving open a little
    wiggle room for situations in which the adjustment by
    the tax evasion enhancement actually alters the final
    offense level).
    IV
    Several reasons persuade us to reject grouping in these
    circumstances. First, looking at § 3D1.2(c), we agree
    with the First and Tenth Circuits that the “specific offense
    characteristic” in the tax guideline is too broad to re-
    quire the conclusion that it encompasses wire fraud in
    No. 05-4182                                              13
    particular. Wire fraud is just one of countless ways to
    obtain income from criminal activity. To suggest that
    any criminal offense that produces income is subsumed
    into the tax guideline calculation with a two-level enhance-
    ment is to create a category without limits. This is differ-
    ent from possessing a gun during a bank offense, where
    precisely that conduct is identified as a specific offense
    characteristic, or obstruction of justice, which is a
    specific adjustment under § 3C1.1. There is a distinction
    between saying that any underlying criminal act in-
    creases the offense level and that a specific underlying
    act increases the offense level. Furthermore, the Com-
    mentary indicates that the enhancement is not supposed
    to account for the underlying crime, but rather for the
    presumption that officials will not be able to calculate
    the full extent of the ill-gotten gains that a defendant
    failed to report. Indeed, in this case, as we noted earlier,
    Vucko went to great lengths to cover up her fraud and
    thus disguise the amount of her illegal income. The
    purpose of the enhancement suggests that it does not
    and was not intended to add additional punishment to
    take the wire fraud into account, but rather that it was
    intended to recognize that Vucko may have underreported
    more income than the IRS detected.
    Second, even if the wire fraud were encompassed by
    the tax enhancement, the crimes still must be “closely
    related” to be grouped under § 3D1.2(c) according to the
    commentary. These two counts fail that basic test. Vucko
    committed two different crimes, causing two different
    harms and harming two different victims. She did so at
    different times through different actions. This is enough to
    dispose of her argument that grouping was required
    under § 3D1.2(d). As we observed in United States v.
    Brisson, in which the defendant also was convicted of
    fraud and tax offenses but made a grouping argument
    under § 3D1.2(d) rather than (c):
    14                                              No. 05-4182
    There was no necessary connection between Brisson’s
    fraud on his bank and his bilking of the government.
    Brisson argues his three counts should go together
    because they were all “economic offenses arising out
    of the failed ownership of the hotel.” But that is both
    too high a level of generality and a disingenuous spin
    on the facts. Brisson’s false tax claims were filed
    after he lost the hotel and was desperate for money.
    But his diversion of the hotel’s room receipts in viola-
    tion of his bank’s security agreement helped bring
    about the failure of his ownership; it did not “aris[e]
    out of” that failure. Moreover, Brisson’s conduct
    involved different victims . . . . In short, the bank
    fraud and tax fraud did not represent “substantially
    the same harm,” U.S.S.G. § 3D1.2, so [the district
    judge] did not err in refusing to group them.
    
    448 F.3d 989
    , 992 (7th Cir. 2006) (emphasis omitted). The
    fact that Vucko’s crimes are generally related, in that
    her initial wire fraud scheme produced the funds she failed
    to report, is insufficient to make the crimes “closely re-
    lated.”
    Although Vucko argues that United States v. Wilson, 
    98 F.3d 281
    (7th Cir. 1996), compels a ruling in her favor, we
    find that case distinguishable. There we found that cer-
    tain fraud and money laundering charges were closely
    related and subject to grouping under § 3D1.2(d), because
    “[w]ithout the fraud there would have been no funds to
    launder.” 
    Id. at 282-83
    (quoting United States v. Mullens,
    
    65 F.3d 1560
    , 1564 (11th Cir. 1995)). Wilson’s money
    laundering provided the mechanism for perpetuating his
    Ponzi scheme, and both of his crimes targeted the same
    set of victims. Vucko’s crimes, in contrast, separately
    targeted Northwest and the United States. Vucko also
    urges that grouping is consistent with two cases from
    the Second Circuit, United States v. Petrillo, 
    237 F.3d 119
    (2d Cir. 2000), and United States v. Fitzgerald, 232 F.3d
    No. 05-4182                                              15
    315 (2d Cir. 2000), both of which hold that tax and fraud
    offenses that are part of a common criminal scheme
    should be grouped under § 3D1.2(d). As we have already
    noted, however, the scheme must be something more
    than a plan to become rich. There is no evidence of such
    a common scheme in Vucko’s case. To the extent that
    the Second Circuit cases might be read to support a
    broader rule covering all fraud and tax offenses, we note
    only that we have already found in Brisson, United States
    v. Chavin, 
    316 F.3d 666
    , 673-76 (7th Cir. 2002), and
    United States v. Johnson, 
    117 F.3d 1010
    , 1014 (7th Cir.
    1997), that mail or wire fraud and tax evasion normally
    involve different harms and thus should not be grouped
    under § 3D1.2(d). We see no reason to revisit those hold-
    ings.
    Although double counting certainly should be avoided,
    there is no risk of it here. According to the Pre-Sentence
    Report, the adjusted offense level for Vucko’s fraud was 18.
    The adjusted offense level for her tax offense was also 18,
    including the two-level increase called for by § 2T1.1(b)(1)
    for the income she derived from her wire fraud. Because
    her offenses were not grouped, she earned one unit for
    each offense. See § 3D1.4. With two “units,” her overall
    offense level was increased by two, bringing it up to 20.
    
    Id. Had she
    not been given the two extra levels provided
    by § 2T1.1(b), her tax offense level would have been 16.
    Under § 3D1.4, Vucko still would have received one unit
    for the fraud and one unit for the tax offense, because the
    tax offense level (16) would have been just two levels less
    serious than the fraud level (18). The extra two levels
    required because she had two units would have been
    added to the higher offense level, § 3D1.4, and thus she
    would have wound up with an adjusted level of 20. In other
    words, Vucko’s final offense level was the same with or
    without the extra two levels attributable to § 2T1.1(b).
    16                                             No. 05-4182
    This, in fact, suggests a possible solution to the hypo-
    thetical problem Vucko’s case suggests, even apart from
    the sentencing flexibility inherent in the system of advi-
    sory guidelines. In cases where a defendant faces separate
    counts for the criminal activity that produced the unre-
    ported income and for the tax crime, and double-counting
    is possible (unlike Vucko’s case), the court can simply
    refrain from adding the § 2T1.1(b)(1) two-level enhance-
    ment to the tax offense. Cf. United States v. White, 
    222 F.3d 363
    , 373-76 (7th Cir. 2000) (holding that a court
    may not both convict under 18 U.S.C. § 924(c) for use of
    weapon and impose the guidelines enhancement under
    U.S.S.G. § 2B3.1(b)(2) for use of the same weapon in the
    same crime). This approach is preferable to a refusal to
    group. Without grouping, where the tax offense is minor
    enough to lead to an offense level more than four less than
    the principal offense, the defendant would earn only one-
    half unit, or in the extreme case no extra units at all. See
    § 3D1.4(b) (one-half unit for groups 5 to 8 levels less
    serious than the group with the highest offense level);
    § 3D1.4(c) (disregard groups that are 9 levels less serious
    than the one with the highest score). In this way, the
    Guidelines produce a final offense level that reflects the
    seriousness of the underlying conduct.
    We note, moreover, that even where both the tax-
    specific offense characteristic and grouping affect the
    final sentence, the Tenth Circuit suggested in Peterson
    there is still no problem with double counting. As it saw
    matters, there is no double counting because “the specific
    offense characteristic for the tax evasion count relates to
    the defendant’s subsequent decision and conduct regard-
    ing the tax treatment of those monies he embezzled from
    the companies, and this conduct is not embodied within
    the defendant’s use of the mail to conceal the embezzle-
    
    ment.” 312 F.3d at 1304
    (adopting the district court’s
    reasoning).
    No. 05-4182                                             17
    Grouping under the circumstances of Vucko’s case
    would seriously undercut the concept of “incremental
    punishment” that underlies both the grouping rules and
    the Guidelines as a whole. The effect of grouping Vucko’s
    offenses would be to eliminate the marginal punishment
    for her second offense, because she would have only one
    group with an offense level of 18 (the level of each one of
    her offenses). There would thus be no increase at all for
    her additional crime (again, apart from any adjustment
    the district court might make after calculating the advi-
    sory guideline range).
    V
    We conclude that the district court came to the correct
    result when it rejected grouping. Vucko’s two offenses
    were not closely enough related to justify grouping under
    § 3D1.2(d), nor does one contribute a specific offense
    characteristic to the other such that § 3D1.2(c) should
    apply. We therefore AFFIRM the judgment of the district
    court.
    A true Copy:
    Teste:
    ________________________________
    Clerk of the United States Court of
    Appeals for the Seventh Circuit
    USCA-02-C-0072—1-12-07