United States v. Webber, Vickie ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 07-2117
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
VICKIE L. WEBBER,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Western Division.
No. 06 CR 50015—Philip G. Reinhard, Judge.
____________
ARGUED NOVEMBER 2, 2007—DECIDED JULY 29, 2008
____________
Before EASTERBROOK, Chief Judge, and POSNER and
RIPPLE, Circuit Judges.
RIPPLE, Circuit Judge. Vickie L. Webber was charged
with seven counts of making false statements to obtain
federal employees’ compensation benefits, in violation of
18 U.S.C. § 1920. A jury convicted her on all seven counts.
The district court then sentenced Ms. Webber to five-
months’ imprisonment followed by three years of super-
vised release, the first five months of which are to be
served under home confinement. The court also ordered
Ms. Webber to pay $62,226.36 in restitution. Ms. Webber
timely appeals her conviction and sentence.
2 No. 07-2117
For the reasons set forth in this opinion, we affirm
Ms. Webber’s conviction; we reverse that portion of the
sentence requiring her to pay restitution in the amount of
$62,226.36 and remand the case to the district court for
further proceedings consistent with this opinion.1
I
BACKGROUND
A. The Facts Presented at Trial and Ms. Webber’s Con-
viction
Ms. Webber began working as a rural letter carrier for
the United States Postal Service (“USPS”) in 1986. In 2000,
Ms. Webber submitted a claim for benefits under the
Federal Employees’ Compensation Act (“FECA”). Her
claim for benefits was based on problems that she began
having with her hands and wrists due to the repetitive
nature of her mail sorting duties prior to beginning her
mail route.
FECA provides compensation to federal employees for
injuries sustained during the performance of their duties.
Under FECA, federal employees who are totally disabled
and have at least one dependent receive 75% of their
federal salary. An employee is totally disabled if she has
no capacity to earn any wages or work in any position.
Partially disabled employees receive 75% of their federal
salaries minus their wage-earning capacity. An employee
is classified as partially disabled if she is unable to return
to the position held at the time of the injury but never-
theless has limited ability to perform other work.
1
The district court exercised jurisdiction under 18 U.S.C. § 3231.
Our jurisdiction is predicated on 28 U.S.C. § 1291.
No. 07-2117 3
FECA claims are administered by the Office of Workers’
Compensation Programs (“OWCP”) in the Department of
Labor. To receive FECA benefits, a disabled federal em-
ployee must submit a “Claim for Compensation,” Form
CA-7, for each period during which the employee seeks
benefits. If OWCP determines that an employee is likely to
remain disabled for a considerable period of time, OWCP
places the person on the “periodic rolls.” Such employees
are relieved of the obligation to file CA-7 forms; however,
they are required to submit Form 1032 on an annual basis.
OWCP uses these forms to determine an employee’s
wage-earning capacity and the amount of benefits to which
an employee is entitled, to reevaluate an employee’s
disability determination and to ascertain whether an
employee would benefit from vocational rehabilitation
counseling.
Form CA-7 contains the following question: “Have you
worked outside your federal job during the period(s)
claimed in Section 2? (Include salaried, self-employed,
commissioned, volunteer, etc.).” R.94, Ex. 1. If an employee
answers “yes” to this question, she is directed to provide
additional information, such as the name and address
of the business at which she was employed, the dates
worked and the type of work performed.
Form 1032 contains the following questions: (1) “Did you
work for any employer during the past 15 months?”;
(2) “Were you self-employed or involved in any business
enterprise in the past 15 months?”; and (3) “If you an-
swered ‘No’ to both questions 1 and 2, state whether you
were unemployed for all periods during the past 15
months?” R.94, Ex. 5. Again, an employee who answered
questions (1) or (2) affirmatively is directed to provide
supplemental information about where she worked and
4 No. 07-2117
what type of work she did. Immediately preceding these
questions is an instructions section, explaining in detail
the type of work that triggers the reporting requirement.
Two paragraphs in this instruction area explain:
Report ALL self-employment or involvement in
business enterprises. These include but are not limited
to: farming, sales work, operating a business, including
a store or a restaurant. . . . Report activities such as
keeping books and records, or managing and/or
overseeing a business of any kind, including a family
business. Even if your activities were part-time or
intermittent, you must report them.
....
Report ANY work or ownership interest in any
business enterprise, even if the business lost money or
if profits or income were reinvested or paid to others.
If you performed any duties in any business enterprise
for which you were not paid, you must show as rate
of pay what it would have cost the employer or organi-
zation to hire someone to perform the work or duties
you did, even if your work was for yourself or a
family member or relative. . . .
R.94, Ex. 5 at 1 (emphasis in original).
On December 14, 2000, OWCP accepted Ms. Webber’s
FECA claim regarding her condition of carpal-tunnel
syndrome. OWCP paid Ms. Webber a total of $12,043.58 in
FECA lost wages benefits from January 17, 2001 through
June 8, 2001. During this period, Ms. Webber submitted to
OWCP eleven CA-7 forms. On each of these eleven forms,
Ms. Webber answered “no” to the question, “Have you
worked outside your federal job during the period(s)
claimed?” R.83 at 81-82. In June 2001, Ms. Webber’s
No. 07-2117 5
physician authorized her to return to work. The USPS
gave her a limited duty assignment to accommodate her
medical condition.
On June 5, 2002, Ms. Webber submitted another claim
for FECA benefits. Ms. Webber stated that she had reflex
sympathetic disorder, as well as carpal-tunnel syndrome;
she further stated that she was unable to perform her
duties without assistance due to extreme pain and limited
ability to move her hands.2 On November 18, 2002, OWCP
again accepted Ms. Webber’s claim and determined that
she was totally disabled. OWCP paid Ms. Webber FECA
lost wages benefits for the periods between June 10, 2002
and June 26, 2002 and between December 6, 2002 and the
start of trial. Ms. Webber received a total of $127,986.78
in benefits. From January 25, 2003 through April 25, 2003,
Ms. Webber submitted to OWCP four CA-7 forms, again
answering “no” to the outside work question. R.94, Ex. 1-4.
On April 20, OWCP placed her on the periodic rolls.
Thereafter, Ms. Webber submitted to OWCP three 1032
forms; Ms. Webber answered “no” to questions (1) and
(2) on each of those forms. R.94, Ex. 5-7.
2
At trial, Ms. Webber introduced testimony about her illness
and medical history. Starting in 2002, she received a series of
injections to treat her pain. When the injections did not work,
she underwent a surgical procedure in which her physician
implanted a spinal cord stimulator in her back. She developed
an infection as a result of the surgery, and the stimulator was
removed. In March 2004, the physician successfully implanted
the device. In December 2004, Ms. Webber underwent another
surgical procedure in which the physician implanted an
intrathecal drug delivery system, which involves the implanta-
tion of a catheter that is attached to an external pump. The
device delivers pain medication.
6 No. 07-2117
On April 17, 2000, about seven months before the OWCP
accepted her claim for FECA benefits for carpal-tunnel
syndrome, Ms. Webber obtained a county business owner-
ship certificate for a business known as Clearview Pond
and Garden (“Clearview”). Clearview was a retail business
that sold plants, pond supplies and Koi fish. The business
was located on a rural, five-acre tract of land in Byron,
Illinois, where Ms. Webber resided with her family. Ms.
Webber also registered Clearview in her own name with
the Illinois Department of Revenue and received a special-
use permit from the Ogle County Zoning Commission
authorizing her to conduct a business on her property.
In 2001, a fifty-foot-long greenhouse was constructed on
Ms. Webber’s property, which was used for Clearview’s
business operations. Plants with price tags were placed in
three long rows running down the middle and sides of the
greenhouse; plants with price tags also were placed on
tables outside of the greenhouse. There was a cash register
inside the greenhouse, and two large tubs of Koi fish were
positioned outside.
On January 29, 2001, Ms. Webber submitted on behalf
of Clearview an application to International Pond Supply,
Inc. (“IPS”), in Sante Fe, New Mexico. The application
was for a contract with IPS to purchase pond supplies at
wholesale prices and then resell those products at retail
prices. On April 2, 2001, Ms. Webber submitted an applica-
tion to the Ogle County Zoning Commission requesting
permission to erect signs for Clearview on two other
properties in Byron, Illinois. A few months later, in June
2001, she purchased ten advertising spots for Clearview
on WFEN radio in Rockford, Illinois. On July 2, 2003, Ms.
Webber submitted to a corporation an application to be
treated as a wholesaler. In that application, Ms. Webber
No. 07-2117 7
stated that Clearview’s sales for 2002 totaled $40,000 and
projected that Clearview’s total sales for 2003 would
reach $50,000.
Ms. Webber had business cards stating that Clearview
was open Tuesday through Saturday from 9:00 a.m. to
5:00 p.m. and Sunday from 9:00 a.m. to 4:00 p.m. The
Government introduced evidence at trial showing that,
during 2003 and 2004, Ms. Webber managed Clearview’s
finances. During the months of May, June and July of 2003,
Ms. Webber wrote and signed all sixty-four checks drawn
on Clearview’s business account; she wrote and signed
all but one of the fifty checks drawn on that account from
April through October of 2004. Also during this period, Ms.
Webber ordered a substantial portion of Clearview’s plant
and Koi fish inventory. IPS records indicate that Ms.
Webber placed fourteen of seventeen orders made by the
business in 2003 and 2004. Ms. Webber also placed several
fish orders with another distributor during the same
period.
In 2003, Ms. Webber met with Linda Rosquist, the owner
of Goldigger Perennials, a plant wholesaler. During this
meeting, Ms. Webber, Rosquist and Julie Keller, a Clear-
view employee, discussed prebooking Clearview’s plant
order for the following year. Ms. Webber made the final
decisions about which plants Clearview would order. Ms.
Webber made seven trips to Arkansas in 2003 and 2004 to
pick up plant and other inventory, as well as several trips
to O’Hare airport in Chicago to pick up fish inventory.
In August 2003, USPS Injury Compensation Specialist Jim
Johnson called Ms. Webber’s telephone number and heard
an answering machine greeting for Clearview. Johnson
informed the USPS Inspection Service and, on August 25,
8 No. 07-2117
2003, Postal Inspector James Husarik went to Clearview.3
Ms. Webber approached Inspector Husarik and asked if
she could help him. He stated that he was interested in
purchasing some plants for his yard. Ms. Webber walked
with Inspector Husarik around Clearview, showed him
various plants and answered his questions. Ms. Webber
told Inspector Husarik, whom she believed was a cus-
tomer, that she was usually at Clearview during its normal
business hours and that she recently had hired a new
employee named Julie Keller. Ms. Webber suggested that
Inspector Husarik give her a diagram of his backyard so
that she could help him with his landscaping. Once the
Inspector agreed to purchase a plant, Ms. Webber picked
up the plant, carried it to the cash register, rang up the
sale, bagged the plant and handed it to him. He explained
that he would return with his cousin, who knew more
about plants.
On August 26, 2003, Inspector Husarik returned with
Inspector Kurt Kamradt. Ms. Webber was not present. The
Inspectors returned later in the day, and, this time, Ms.
Webber and her husband, Tom Webber, were present.
Inspector Husarik gave Ms. Webber the diagram that she
had requested. Ms. Webber took the Inspectors around
Clearview, and she suggested various plants. While she did
so, Ms. Webber told the Inspectors that she handled the
plant portion of the business and that her husband handled
the ponds. Ms. Webber also stated that, in wintertime,
she buys most of the plants that were sold at Clearview,
starts them out as plugs in her basement and then transfers
them to the greenhouse. She mentioned that she frequently
3
All of the undercover visits were video recorded. The videos
were played for the jury during the trial.
No. 07-2117 9
traveled to Arkansas to pick up Koi fish. Ms. Webber and
her husband collected the plants that the Inspectors had
agreed to purchase and brought them back to the cash
register. Ms. Webber rang up the sale.
On October 6, 2004, Postal Inspectors Eileen Roberts and
Alvin Dvorak went to Clearview posing as husband and
wife. Ms. Webber met with them and asked them to return
with a diagram of their property. On October 14, Inspector
Roberts returned, and Ms. Webber directed her to Keller,
the employee Ms. Webber had hired.
On February 17, 2005, Inspectors Kamradt and Husarik
returned to Clearview, identified themselves as Postal
Inspectors and told Ms. Webber that they wanted to
interview her about her injury compensation claim. Ms.
Webber, who did not recognize the Inspectors from their
previous undercover visits, initially told the Inspectors that
she was unable to work at Clearview because of her
condition and that her husband was the sole owner of
Clearview. She explained that her husband ordered all of
the plants and fish sold at Clearview, although she some-
times would offer her opinion as to which flowers he
should purchase. The Inspectors told Ms. Webber that they
thought she was being untruthful about her involvement in
Clearview. As this point, Ms. Webber’s husband, Tom
Webber, walked into the room; the Inspectors asked him
who owned Clearview. Tom said that Ms. Webber owned
the business. Ms. Webber corrected him and told him that
the business was in his name. The Inspectors asked Ms.
Webber what Keller would say if they were to ask her
about Ms. Webber’s involvement in the business; she
conceded that Keller probably would say that Ms. Webber
was active in and ran the business.
At trial, Ms. Webber testified that she believed that she
had answered accurately the questions on the CA-7 and
10 No. 07-2117
1032 forms. She stated that she had not considered her
involvement in Clearview to be self-employment because
no one would have paid her for her work there. Ms.
Webber also testified that, prior to filling out the forms,
she had called Jim Johnson and explained that she had a
family business. According to Ms. Webber, Johnson asked
her whether she received a wage, to which she answered,
“no”; he told her “not to worry about it.” R.87 at 851.
Johnson denied ever saying this.
Ms. Webber testified about her physical condition. She
explained that her pain medication made her drowsy
and prevented her from doing much of anything. Accord-
ing to Ms. Webber, her friend, Julie Keller, volunteered to
run the operation for her. Ms. Webber also testified that
her boss at the Byron Post Office, Jeff Engestrom, and
other USPS employees knew of the existence of Clearview
and that she never had tried to conceal her involvement
in, or the existence of, Clearview. Finally, Ms. Webber’s
daughter and two of her former neighbors testified that,
from their personal observation, Ms. Webber was unable
to perform any physical activity and was often confused
as a result of her illness and medication.
A jury convicted her of seven counts of making false
statements to obtain federal employees’ compensation
benefits in violation of 18 U.S.C. § 1920.
B. Sentencing Proceedings
The district court sentenced Ms. Webber to serve five
months’ imprisonment in the custody of the Bureau of
Prisons and three years of supervised release, the first five
months of which would be served under home confine-
ment. The court further sentenced Ms. Webber to pay
No. 07-2117 11
$62,226.36 in restitution, a fine of $2,000 and a special
assessment. Ms. Webber is appealing her sentence only
with regard to the order of restitution. We therefore
shall focus our discussion of the facts accordingly.
To determine Ms. Webber’s sentence under the advisory
guidelines, the district court had to calculate the total
amount of loss that Ms. Webber’s offense had entailed. This
determination required ascertaining what Ms. Webber’s
wage-earning capacity had been during the period for
which she had received FECA benefits and subtracting
that amount from the total amount of benefits that she
actually had received; the resulting figure was the amount
of benefits that Ms. Webber had obtained as a result of her
fraudulent answers.4 At the first of three sentencing
hearings, the Government indicated to the court that it had
calculated the resulting amount to total $50,632.07. The
Government obtained this figure by conducting a “labor
market survey,” undertaken by the Department of Labor,
in which other businesses were contacted to determine how
much money an individual like Ms. Webber could earn.
Ms. Webber objected to the survey; she claimed that an
investigation had revealed that many of the businesses
included within the survey actually had not been contacted
and that many of the businesses were not comparable to
Clearview. The district court stated that, after having read
4
See U.S.S.G. § 2B1.1(b)(1); id. cmt. 3(F)(ii) (“In a case involving
government benefits . . . loss shall be considered to be not less
than the value of the benefits obtained by unintended recipients
or diverted to unintended uses, as the case may be. For example,
if the defendant was the intended recipient of food stamps
having a value of $100 but fraudulently received food stamps
having a value of $150, loss is $50.”).
12 No. 07-2117
the report, it was inclined to agree with Ms. Webber that
many of the businesses were not sufficiently comparable to
Clearview to be probative of Ms. Webber’s wage-earning
capacity. The district court further indicated its preliminary
belief that the Government would have a difficult time
showing that Ms. Webber’s wage-earning capacity was
between $30,000 and $70,000. The court, however, contin-
ued the hearing until May 3, 2007 to allow Ms. Webber’s
counsel to prepare to cross-examine the author of the
survey.
At the May 3 hearing, the court heard arguments from
both sides as to the labor market survey and as to the
amount of loss. Ultimately, the court determined that the
labor market survey, though relevant, had little probative
value because of the substantial differences between the
businesses surveyed and Clearview. It further found that
Ms. Webber had done valuable work for Clearview and
that the business could not have functioned without her. It
found, however, that Ms. Webber was in pain during this
time, that she had been away from the business frequently
for medical treatment and operations, and that her condi-
tion did limit the amount of work that she could perform.
Recognizing the imprecise nature of the task at hand but
that it nevertheless had to make a reasonable estimate of
the loss amount, the district court calculated the loss to be
$10,400. It reached this figure by assuming that Ms. Webber
had made eight dollars an hour working on a part-time
basis for five hours per day for five days a week, equaling
$200 per week. It multiplied this figure by twenty-six
weeks, and multiplied that by the two year period covered
in the indictment, equaling a total loss of $10,400. The court
recognized that its calculation was “very imprecise” and
that
No. 07-2117 13
[t]he defendant’s services, in my opinion were much
higher than that. I haven’t put a calculation on it, but
certainly for all—she worked in the off season when
they weren’t open, and, therefore, a lot more hours
could be attributed there, and she worked not just as a
clerk. But I’ve used that sort of as a minimum bench-
mark . . . .
R.90 at 45. The court accordingly calculated Ms. Webber’s
advisory guidelines sentence based on a loss amount
between $10,000 and $30,000. It sentenced her to five-
months’ imprisonment and three years of supervised
release, the first five months of which would be served
under home confinement.
The district court then heard arguments on the issue of
restitution. The Government asked the court, pursuant to
20 C.F.R. § 10.529, a federal regulation issued under FECA,
to impose restitution for the entire amount of benefits that
Ms. Webber had received ($62,226.36), rather than just the
amount that she had obtained as a result of her fraudulent
answers. Ms. Webber objected, arguing that restitution
could not be imposed beyond the loss amount to the
victim, here, the Government. After continuing the hearing
until May 9 to consider the issue, the district court, relying
on United States v. Harms, 442 F.3d 367 (5th Cir. 2006),
determined that it would impose restitution in the amount
of $62,226.36, the full amount of benefits paid to Ms.
Webber.
II
DISCUSSION
A. Construction of 18 U.S.C. § 1920Ms. Webber contends that the Government failed to
14 No. 07-2117
establish a felony violation of 18 U.S.C. § 1920 because it
did not allege in the indictment or prove beyond a reason-
able doubt that the benefits that she “falsely obtained”
exceeded $1,000. Because this contention raises a question
of statutory interpretation, our review is plenary. United
States v. Lapi, 458 F.3d 555, 562 (7th Cir. 2006).
Section 1920 of Title 18 provides:
Whoever knowingly and willfully falsifies, conceals, or
covers up a material fact, or makes a false, fictitious, or
fraudulent statement or representation, or makes or
uses a false statement or report knowing the same to
contain any false, fictitious, or fraudulent statement or
entry in connection with the application for or receipt
of compensation or other benefit or payment under
subchapter I or III of chapter 81 of title 5, shall be guilty
of perjury, and on conviction thereof shall be punished
by a fine under this title, or by imprisonment for not
more than 5 years, or both; but if the amount of the
benefits falsely obtained does not exceed $1,000, such
person shall be punished by a fine under this title, or
by imprisonment for not more than 1 year, or both.
Ms. Webber invites our attention to the second clause of
section 1920. In her view, the words “but if the amount of
the benefits falsely obtained does not exceed $1,000” create
an essential element of felony liability. To prove felony
liability, Ms. Webber contends, the Government must
allege in the indictment and prove beyond a reasonable
doubt to the trier of fact that the benefits that the defendant
obtained through the use of false statements exceeded
$1,000. She submits that the Government failed to satisfy
both of these requirements and, consequently, “failed to
prove felony liability.” Appellant’s Br. at 14. Accordingly,
Ms. Webber requests that we vacate her felony convictions
and remand the case for the imposition of a misdemeanor
No. 07-2117 15
sentence. Id.The principles that must guide our inquiry are well
settled but worth repeating. In analyzing the language of
a statute, we give the words their ordinary meaning
unless the context counsels otherwise. McCarthy v. Bronson,
500 U.S. 136, 139 (1991) (explaining that “statutory lan-
guage must always be read in its proper context”). When
the plain wording of the statute is clear, that is the end of
the matter. BedRoc, Ltd. v. United States, 541 U.S. 176, 183
(2004) (noting that the task of statutory interpretation “ends
there [if] the text is unambiguous”). The “plain meaning”
of a statute, however, is often illuminated not only by its
language but also by its structure. Alexander v. Sandoval, 532
U.S. 275, 288 (2001); Marie O. v. Edgar, 131 F.3d 610, 622 (7th
Cir. 1997). “Context, not just literal text, will often lead a
court to Congress’ intent in respect to a particular statute.”
City of Rancho Palos Verdes v. Abrahams, 544 U.S. 113, 127
(2005) (Breyer, J., concurring); Dersch Energies, Inc. v. Shell
Oil Co., 314 F.3d 846, 856 (7th Cir. 2002) (noting that a
statute must be “construed in its proper context”).
Whether it is necessary for the Government to plead and
prove that its loss was in excess of one thousand dollars
is, given the current state of the law, not an easy question.
On the one hand, when section 1920 is read in its entirety,
both the language and the structure of the statute indicate
quite clearly that the overall design and object of the statute
is “to criminalize the making of false statements in the
application for and receipt of government benefits.” United
States v. Tupone, 442 F.3d 145, 151 (3d Cir. 2006). The first
clause of the statute makes it a felony to employ any of the
fraudulent acts enumerated in that clause in order to
obtain from the United States any compensation, other
benefit or payment provided under the provisions set forth
in the statute. The maximum term of imprisonment is five
16 No. 07-2117
years. The second clause of section 1920 seems most easily
read as an exception to the first clause. Set off only by a
semicolon from its predecessor, this second clause point-
edly begins: “but if . . . .” Under its terms, if it is established
that the amount “falsely obtained” from the United States
is less than one thousand dollars, the permissible maxi-
mum term of imprisonment is one year.
To read the statute as creating a misdemeanor with a
narrow exception for felony liability when the amount at
issue is in excess of one thousand dollars requires that,
literally and figuratively, the statute be stood on its head.
As our colleagues in the Third Circuit noted:
An examination of the Federal Criminal Code reveals
such a structure to be highly atypical [sic] among
criminal statutes—especially those dealing with fraud,
theft, or false statements—that provide for both felony
and misdemeanor offenses. In fact, numerous sections
of the criminal code mirror the precise linguistic
pattern found in § 1920. See, e.g., 18 U.S.C. §§ 655, 656,
1003, 1025. The above code sections and those like them
all include the same structural elements: a lengthy
primary clause describing certain illegal conduct and
providing for felony punishment thereof; a semicolon;
and, finally, a second clause—beginning with the word
“but”—which refers back to the illegal conduct de-
scribed in the main clause and provides for misde-
meanor punishment in cases where the dollar value
associated with the aforementioned illegal conduct
does not exceed $1000. See, e.g., id. In other words, the
above statutes are felony criminal statutes that include
a narrow misdemeanor exception in the event that the
illegal conduct results in de minimus gain.
We reject the argument that, unlike all other identi-
cally structured provisions in the Federal Criminal
No. 07-2117 17
Code, § 1920 alone primarily establishes a misde-
meanor and creates a narrow “felony exception” that
turns on an undefined, two-word phrase, and that
requires a calculation nowhere mentioned or implied
in the text. The much more natural and obvious read-
ing of § 1920 is that the main “effect” of the text is to
create the felony of making false statements related to
government benefits, and to carve out a narrow misde-
meanor exception for those defendants whose false
statements relate to applications for or receipt of
de minimus benefits and dollar amounts.
Tupone, 442 F.3d at 152 (footnote omitted) (emphases in
original).5
Given the language and structure of the statute, it is not
surprising that two of our sister circuits have concluded,
albeit without extensive discussion, that the amount of the
benefits falsely obtained is not a substantive element of the
offense but a statutorily mandated punitive sentencing
factor. See United States v. Henry, 164 F.3d 1304, 1307 (10th
Cir. 1999); United States v. Grillo, 160 F.3d 149, 150 (2d Cir.
5
Although we see merit in the general interpretative methodol-
ogy employed by the Third Circuit, we do not want to be
understood as necessarily approving of the intimation that, to
obtain a sentence of imprisonment greater than one year under
Apprendi v. New Jersey, 530 U.S. 466 (2000), the jury must find
only that the entire amount of benefits obtained from the
Government exceeded $1,000, rather than the amount that could
be attributed to the false statement. Compare United States v.
Tupone, 442 F.3d 145, 150 n.3, 151-52 (3d Cir. 2006) (reading the
phrase “benefits falsely obtained” as being synonymous with the
phrase “in connection with”), with id. at 157-58 & n.9 (Stapleton,
J., dissenting).
18 No. 07-2117
1998) (per curiam).6 We think that there is much to recom-
mend this approach. We note that in interpreting a stat-
ute with the same operative language and structure, see 18
U.S.C. § 641,7 we have assumed that there the amount of
loss is not an element of the offense. See United States v.
Howard, 30 F.3d 871, 875 (7th Cir. 1994).8 In the statute
before us, the core prohibited conduct is stated clearly in
the principal clause of the statute: obtaining a government
benefit through a false statement. The second subsidiary
6
No other circuits have ruled definitively on the matter.
7
Section 641 provides:
Whoever embezzles, steals, purloins, or knowingly converts
to his use or the use of another, or without authority, sells,
conveys or disposes of any record, voucher, money, or thing
of value of the United States or of any department or agency
thereof, or any property made or being made under contract
for the United States or any department or agency thereof;
or
Whoever receives, conceals, or retains the same with intent
to convert it to his use or gain, knowing it to have been
embezzled, stolen, purloined or converted—
Shall be fined under this title or imprisoned not more than
ten years, or both; but if the value of such property in the
aggregate, combining amounts from all the counts for which
the defendant is convicted in a single case, does not exceed
the sum of $1,000, he shall be fined under this title or
imprisoned not more than one year, or both.
The word “value” means face, par, or market value, or cost
price, either wholesale or retail, whichever is greater.
18 U.S.C. § 641.
8
As we point out, however, this position is a minority view. See
note, infra, 10.
No. 07-2117 19
clause does not “complete the thought.” Jones v. United
States, 526 U.S. 227, 233 (1999).9 The first clause containing
the prohibition stands on its “own grammatical feet,”
thanks to the phrase “shall be punished.” Id. at 233-34.
Although the language and the structure of the statute
counsel in favor of treating the matter of loss as a sentenc-
ing consideration rather than an element of the offense, we
must acknowledge that a significant body of case law
interpreting other statutes with the same language and
structure, has held that, in order to obtain a felony convic-
tion, it is necessary for the Government to set forth in the
indictment and prove beyond a reasonable doubt that the
amount in question is greater than the amount stated in the
statutory text.10 Indeed, the Third Circuit, whose reading of
section 1920 does not require proof of the amount in order
9
Cf. Carter v. United States, 530 U.S. 255, 272-73 (2000) (holding
that value is an element for purposes of 18 U.S.C. § 2113(b)
because the first paragraph “requires that the property taken
have ‘value exceeding $1,000’ ” and the second paragraph “refers
to property of ‘value not exceeding $1,000,’ ” thus “describ[ing]
[two] distinct offenses”). See generally McMillan v. Pennsylvania,
477 U.S. 79, 91 (1986) (holding “that States may treat ‘visible
possession of a firearm’ as a sentencing consideration rather
than an element of a particular offense”); United States v. Smith,
223 F.3d 554, 562-66 (7th Cir. 2000) (discussing McMillan and its
progeny).
10
United States v. Robie, 166 F.3d 444, 449 (2d Cir. 1999) (inter-
preting 18 U.S.C. § 641) (citing Theriault v. United States, 434 F.2d
212, 214 (5th Cir. 1970)); United States v. Seaman, 18 F.3d 649, 650
(9th Cir. 1994); United States v. Wilson, 284 F.2d 407, 408 (4th Cir.
1960); see also United States v. Sargent, 504 F.3d 767, 771 (9th Cir.
2007) (18 U.S.C. § 1707); United States v. Parisien, 413 F.3d 924,
926 (8th Cir. 2005) (18 U.S.C. § 661).
20 No. 07-2117
to obtain a felony conviction, see Tupone, 442 F.3d at 152,
has taken the opposite position with respect to 18 U.S.C.
§ 659,11 a statute similar in relevant language and struc-
ture. See United States v. Scanzello, 832 F.2d 18, 23 (3d Cir.
1987).
We need not decide this issue definitively in this case.
Harmless error analysis applies when a district court’s jury
instructions omit an element of an offense. See Neder v.
United States, 527 U.S. 1, 9-10 (1999); United States v.
Matthews, 505 F.3d 698, 707 (7th Cir. 2007); see also Chapman
v. California, 386 U.S. 18, 24 (1967) (holding that a federal
11
Section 659 provides, in relevant part:
Whoever embezzles, steals, or unlawfully takes, carries
away, or conceals, or by fraud or deception obtains from
any pipeline system, railroad car, wagon, motortruck,
trailer, or other vehicle, or from any tank or storage facility,
station, station house, platform or depot or from any
steamboat, vessel, or wharf, or from any aircraft, air cargo
container, air terminal, airport, aircraft terminal or air
navigation facility, or from any intermodal container,
trailer, container freight station, warehouse, or freight
consolidation facility, with intent to convert to his own use
any goods or chattels moving as or which are a part of or
which constitute an interstate or foreign shipment of freight,
express, or other property; . . . .
Shall be fined under this title or imprisoned not more than
10 years, or both, but if the amount or value of such money,
baggage, goods, or chattels is less than $1,000, shall be fined
under this title or imprisoned for not more than 3 years, or
both.
18 U.S.C. § 659. We note that section 659 separates the two
permissible punishments with a comma rather than a semicolon.
No. 07-2117 21
constitutional error is harmless if it appears “beyond a
reasonable doubt that the error complained of did not
contribute to the verdict obtained”). There never has been
any serious contention that any of the falsities set forth in
any of the counts resulted in a loss to the United States of
less than one thousand dollars.12 Therefore, each of the
counts clearly resulted in a felony conviction.13
12
Counts one, two and four charged Ms. Webber with submit-
ting false CA-7 forms claiming FECA benefits for four-week
intervals between January 25, 2003, and May 2, 2003; count three
covers a two-week period between March 22, 2003, and April 4,
2003. For the conduct charged in counts one, two and four,
Ms. Webber received benefits in the amount of $2,515.52, and for
the conduct charged in count three she received $1,257.76.
Counts five through seven charged that Ms. Webber submitted
1032 forms on December 8, 2003, March 4, 2003, and December
13, 2004, providing information regarding the previous 15
months; for each of these counts, Ms. Webber received, exclud-
ing the periods previously reported on CA-7 forms, at least
approximately $17,600, $7,545 and $23,000, respectively. The
Government’s evidence at trial establishes beyond a reasonable
doubt that Ms. Webber falsely obtained in excess of $1,000 for
each of these counts. We also note that Ms. Webber did not
dispute these figures at trial.
13
We have determined that Ms. Webber was convicted of a
felony, and, therefore, it is unnecessary to reach her argument
that, although the court sentenced her leniently, she must be re-
sentenced because the district court might have imposed even
less of a sentence if it had known that her crime was a misde-
meanor.
The district court correctly determined that Ms. Webber had
committed felonies, and, consequently, the three-year term of
supervised release was legally permissible. See 18 U.S.C.
(continued...)
22 No. 07-2117
Although the district court, properly exercising its
discretion, determined that the appropriate sentence of
confinement on each count should be less than one year,
the imposition of these lenient sentences did not render
these convictions misdemeanors. Although the sentence for
each count is within the range permitted for a loss of under
one thousand dollars, the plain wording of the statute
makes clear that the applicability of the statutory one-year
limitation is triggered by the amount falsely obtained from
the United States, not by the final sentence imposed. That
limitation on punishment is applicable only when the
amount falsely obtained from the Government “does not
exceed $1,000.” 18 U.S.C. § 1920.
In sum, with respect to each of the counts, Ms. Webber
falsely obtained benefits from the United States that
exceeded one thousand dollars. She was found guilty
under a statute that makes such conduct a felony and sets
the maximum term of imprisonment at five years. The
district court, despite that maximum, chose to impose only
a sentence of five-months’ imprisonment and supervised
release, including a period of home confinement. There-
fore, any error flowing from the failure of the indictment to
allege that the amount of loss was in excess of one thou-
sand dollars or from the omission of an instruction requir-
13
(...continued)
§ 3583(b)(2) (authorizing a term of supervised release of “not
more than three years” for a “Class D felony”); 18 U.S.C.
§ 3559(a)(4) (categorizing crimes for which the authorized
sentence of imprisonment is “less than ten years but five or more
years” as a “Class D felony”); 18 U.S.C. § 1920 (authorizing a
sentence of imprisonment of “not more than 5 years”); see
also U.S.S.G. § 5D1.2(a)(2).
No. 07-2117 23
ing a jury finding on the amount of loss was harmless
beyond a reasonable doubt.
B. Sufficiency of the Evidence as to Willfulness
Ms. Webber submits that the Government did not
introduce sufficient evidence from which a reasonable jury
could conclude that she willfully made false statements to
obtain FECA benefits. A defendant making an insufficiency
of the evidence argument faces a difficult task. See United
States v. Pulido, 69 F.3d 192, 205 (7th Cir. 1995) (characteriz-
ing the burden as a “nearly insurmountable hurdle”). In
reviewing a challenge to the sufficiency of the evidence, we
do not weigh the evidence, United States v. Bowman, 353
F.3d 546, 552 (7th Cir. 2003), make credibility determina-
tions, United States v. Woolfolk, 197 F.3d 900, 904 (7th Cir.
1999), or resolve testimonial inconsistencies, see United
States v. Hodges, 315 F.3d 794, 799 (7th Cir. 2003). The court,
taking the evidence in the light most favorable to the
Government, “will overturn a conviction based on insuffi-
cient evidence only if the record is devoid of evidence from
which a reasonable jury could find guilt beyond a reason-
able doubt.” United States v. Stevens, 453 F.3d 963, 965 (7th
Cir. 2003).
Section 1920 requires proof that the false statement was
made “willfully.” See 18 U.S.C. § 1920. The district court
instructed the jury that “an act is done willfully if done
voluntarily and intentionally and with intent to do some-
thing the law forbids.” R.88 at 1084.14 Absent direct proof
14
See United States v. Markowski, 772 F.2d 358, 364 (7th Cir. 1985);
United States v. Patrick, 542 F.2d 381, 388-89 (7th Cir. 1976); see
(continued...)
24 No. 07-2117
of willfulness, a rare situation, the Government may prove
willfulness through circumstantial evidence. United States
v. Britton, 289 F.3d 976, 981 (7th Cir. 2002).15
Ms. Webber submits that the evidence at trial demon-
strates that, although the business did exist on her premises
and although she participated in some activities with
respect to it, her response to the questions was not willfully
false because she had a solid basis for believing that, given
her medical condition, she was answering the questions
truthfully. She asks us to read the record as demonstrating
that she participated in activities only on very discrete
occasions during a period when her overall medical
condition prevented her from the sort of regular and
sustained activity required to operate such a business. She
notes that, during the period in question, she suffered
from severe medical ailments that her physician described
as debilitating to the point that they rendered her “pretty
much non-functional.” Appellant’s Br. at 16.
It was, of course, the duty of the jury to evaluate this
argument. While the jury had before it Ms. Webber’s view
of the situation, it also had before it the Government’s
evidence that, in spite of her medical illnesses, Ms. Webber
controlled Clearview: She managed Clearview’s finances;
contracted with advertisers; completed and submitted
wholesale and credit applications; ordered plant inventory;
ordered fish inventory; picked up plant and fish inventory,
which required long distance trips; waited on customers;
14
(...continued)
also Pattern Crim. Fed. Jury Instructions for the Seventh Circuit
4.09, available at http://www.ca7.uscourts.gov/pjury.pdf.
15
See also United States v. Frokjer, 415 F.3d 865, 869 (8th Cir. 2005).
No. 07-2117 25
drew up landscape plans for customers; and rang up sales
on the cash register. In light of this evidence, the jury
certainly was entitled to reject the characterization that
Ms. Webber offered of her medical condition. For in-
stance, the jury had every right to reject as biased her
own testimony, and that of her daughter and her neigh-
bors, that she was too sick to work at Clearview.
Indeed, the jury had a solid basis for rejecting Ms.
Webber’s testimony. The jury heard the testimony of Postal
Inspectors Kamradt and Husarik, who explained that Ms.
Webber had provided inconsistent and false answers
when the Inspectors asked her about her involvement
with Clearview. Ms. Webber initially stated that she
was unable to work at Clearview because of her condi-
tion, that Clearview was her husband’s business and that
he was its sole owner. The Inspectors specifically told Ms.
Webber that they thought that she was being untruthful
about her involvement in Clearview. Despite the Inspec-
tors’ warning and her husband’s admission that she owned
the business, Ms. Webber continued to maintain that she
neither owned nor was involved with Clearview. When the
Inspectors subsequently asked Ms. Webber what Julie
Keller, a Clearview employee, would say if they were to
ask her about Ms. Webber’s involvement in the business,
she admitted that Keller would say that Ms. Webber was
active in and ran the business. Ms. Webber’s attempt to
conceal her ownership and management of Clearview is
circumstantial evidence of her consciousness of guilt. See
United States v. Rajewski, 526 F.2d 149, 158 (7th Cir.
1975) (explaining that “[i]t is well settled that untrue
exculpatory statements may be considered as circum-
stantial evidence of the defendant’s consciousness of
guilt”).
26 No. 07-2117
We also must stress that OWCP’s forms unambiguously
explained the information regarding outside work that
Ms. Webber had an obligation to disclose. The form
stated that an applicant must “[r]eport ALL self-employ-
ment or involvement in business enterprises” and
explained that this disclosure must include, although not
be limited to, “sales work, operating a business, including
a store or a restaurant.” R.94, Ex. 5 at 1 (emphasis in
original). The form further provided: “Report activities
such as keeping books and records, or managing and/or
overseeing a business of any kind, including a family
business. Even if your activities were part-time or intermit-
tent, you must report them.” Id.These blunt, pointed statements make Ms. Webber’s
claim that she did not believe that she was “meaningfully
connected” with Clearview and, indeed, had minimal
“involvement in it,” Appellant’s Br. at 17, beside the point.
The language of the OWCP’s forms required specific
information. They did not invite Ms. Webber to engage in
self-evaluation; rather, they presented information for the
Postal Service’s evaluation under its established proce-
dures. Similarly, her reliance on the fact that she had
disclosed freely the existence of Clearview to some of her
coworkers at the Byron, Illinois Post Office does not
excuse her obligations to answer the questions on the
form with complete candor. Her obligation was to be
completely truthful to those officials responsible for
making a decision with respect to her FECA claim.
From the totality of this evidence, the jury was entitled to
conclude, beyond a reasonable doubt, that Ms. Webber
had acted voluntarily, intentionally and with intent to do
something the law forbids when she provided materially
false information to the OWCP.
No. 07-2117 27
C. Improper Jury Instructions
Ms. Webber contends that the district court improperly
instructed the jury to disregard evidence relevant to
whether she acted willfully. We review de novo whether a
district court’s jury instructions “fairly and accurately
summarize[] the law.” United States v. Jefferson, 334 F.3d
670, 672 (7th Cir. 2003). In conducting such a review, we
consider the jury instructions in their entirety, rather than
in “artificial isolation.” United States v. Westmoreland, 122
F.3d 431, 434 (7th Cir. 1997); see also United States v. Collins,
223 F.3d 502, 508 (7th Cir. 2000). The focus of our inquiry
is whether the jury had a “complete understanding of
the issues” and of the law governing those issues. United
States v. Kelly, 167 F.3d 1176, 1179 (7th Cir. 1999). If the
district court gave an erroneous instruction, we shall
reverse “only if the jury’s comprehension of the issues
was so misguided that it prejudiced the complaining
party.” United States v. Smith, 103 F.3d 600, 606 (7th Cir.
1996) (internal quotation marks and citation omitted).
Ms. Webber submits that the district court improperly
instructed the jury to disregard evidence relevant to her
intent when it admonished the jury several times that
evidence that certain Byron postal employees knew of the
existence of Clearview was not a defense in the case. The
district court’s admonishments, according to Ms. Webber,
were too broad. Specifically, during Ms. Webber’s counsel’s
direct examination of Ella Rose, a Byron Post Office
employee, the court instructed the jury: “[J]ust because
[Rose] as a postal employee knew that the defendant was
engaged in this type of business is not a defense to the case.
It may be relevant to other issues, but it’s not a defense.”
R.86 at 543. Similarly, during Ms. Webber’s counsel’s direct
examination of Jeff Engstrom, the postmaster at the Byron
28 No. 07-2117
Post Office, the court stated: “Again, whether this wit-
ness or other witnesses knew that she had this business or
not is not a defense in the case. It may be relevant for other
purposes.” Id. at 654. Counsel explained, “I offer it for her
mental state, Judge, and her intent.” Id. The court re-
sponded, “That we’ll reach. I said maybe for other pur-
poses.” Id. In its final jury instructions, the court explained
that actual knowledge “by the government is not a defense
to the materiality element.”16 R.54 at 3.17
Ms. Webber claims that the two instructions that the
court gave to the jury during the trial were overbroad
because whether Byron postal employees knew about
Clearview was relevant to and probative of her willfulness.
In her view, it is less likely that, knowing that other postal
employees knew about Clearview’s existence, she would lie
willfully about its existence on OWCP forms.
We agree with Ms. Webber that evidence that she had not
concealed Clearview’s existence from Byron postal employ-
16
“A material statement is one that has a natural tendency to
influence, or that is capable of affecting, a government function.”
United States v. Moore, 446 F.3d 671, 681 (7th Cir. 2006); see also
United States v. Henry, 164 F.3d 1304, 1308 & n.2 (10th Cir. 1999)
(defining materiality in the context of 18 U.S.C. § 1920 as a
statement that “has a natural tendency to influence, or was
capable of influencing, the decision of the tribunal in making
the determination required to be made” (quoting United States
v. Parsons, 967 F.2d 452, 455 (10th Cir. 1992)).
17
See also United States v. Johnson, 139 F.3d 1359, 1364 (11th Cir.
1998) (“Actual knowledge by the government is not a defense to
the ‘materiality’ requirement of false statement prosecutions.”);
United States v. Rogers, 118 F.3d 466, 472 (6th Cir. 1997) (same);
United States v. LeMaster, 54 F.3d 1224, 1230-31 (6th Cir. 1995).
No. 07-2117 29
ees was relevant to her intent; we further agree that the
court could have been more specific by instructing that
actual knowledge is not a defense to the materiality element
of the Government’s case. Nevertheless, when considered
in their entirety, the court’s instructions were not legally
erroneous; nor did they misguide the jury so as to prejudice
Ms. Webber. In all of its instructions during the trial, the
court stated that evidence of actual knowledge by the
witnesses would be relevant for “other purposes.” R.86 at
543, 654. Moreover, it allowed Ms. Webber’s counsel to
argue repeatedly, during both opening and closing argu-
ments, that Byron postal employees’ actual knowledge of
Clearview disproved the willfulness element of the Gov-
ernment’s case. See R.83 at 34-35, 38-39; R.88 at 1022, 1032-
33, 1049, 1051, 1056. During closing argument, for example,
counsel stated: “Mr. Engstrom is [Ms. Webber’s] employer.
Don’t you think, ladies and gentlemen, that if Vickie
Webber is acting in a crooked, fraudulent capacity, don’t
you think that she would have hidden all that from her
employer . . . ?” R.88 at 1033. Counsel further pointed out
that Ms. Webber “put the [allegedly fraudulent] informa-
tion on the form . . . kn[owing] full well that Mr. Engstrom
knew otherwise” and asked, “Why in the world if [Ms.
Webber is] a crook would she have done that?” Id. at 1022.
Counsel’s arguments, many of which post-dated the
district court’s allegedly overbroad instructions, made it
clear to the jury that, although Ms. Webber’s failure to
conceal Clearview’s existence from Byron postal employees
was not relevant to the materiality element of the Govern-
ment’s case, it was relevant to her intent.
Finally, the district court instructed the jury on the use of
circumstantial evidence. R.54 at 8 (“Circumstantial evi-
dence is proof of a series of facts which tend to show
30 No. 07-2117
whether a defendant is guilty or not guilty. . . . All the
evidence in the case, including circumstantial evidence,
should be considered by you in reaching your verdict.”).
This instruction permitted the jury to consider Ms.
Webber’s candor about Clearview to Byron postal employ-
ees as relevant and probative of her intent. When consid-
ered in this context, the entirety of the district court’s
instructions fairly and accurately informed the jury of the
governing legal principles.
D. Restitution Order
Ms. Webber next submits that the district court erred in
ordering her to pay $62,226.36 in restitution. R.77 at 6-7
(judgment). The proper measure of loss for purposes of
restitution, she submits, is the difference between the
amount of benefits that she actually was paid and the
amount of benefits to which she would have been entitled
absent the fraud, the same calculation employed by the
sentencing guidelines. See U.S.S.G. § 2B1.1(b)(1) & cmt.
3(F)(ii). Although the district court determined that the
amount of loss for guidelines purposes was $10,400, it
nevertheless sentenced her to pay $62,226.36 in restitution.
Ms. Webber contends that the court erred in importing a
regulation, promulgated by the Secretary of Labor under 5
U.S.C. § 8149, into a criminal proceeding.
The Government concedes that the $62,226.36 restitution
award, which was the total amount of FECA benefits that
Ms. Webber received, exceeded the loss sustained by the
Government as the victim of Ms. Webber’s crime. See
Appellee’s Br. at 44-48. The Government, however, submits
that the district court was authorized to impose such a
restitution order under 5 U.S.C. § 8148 and 20 C.F.R.
No. 07-2117 31
§ 10.529. In support of this argument, the Government
relies on United States v. Harms, 442 F.3d 367, 380-81 (5th
Cir. 2006), although it recognizes that there is conflicting
authority, see Appellee’s Br. at 46 & n.18 (citing United
States v. Dawkins, 202 F.3d 711, 715 (4th Cir. 2000)). Accord-
ing to the Government, “by ordering full restitution of
$62,226.36, the district court did nothing more than enter
the same judgment that the Department of Labor would
have been entitled to in an administrative proceeding.”
Appellee’s Br. at 48.
We review de novo questions of law regarding the
federal courts’ authority to order restitution, see United
States v. Farr, 419 F.3d 621, 623 (7th Cir. 2005); we review
for abuse of discretion a district court’s calculation of
restitution, taking the evidence in the light most favorable
to the Government, see United States v. Segal, 495 F.3d 826,
837 (7th Cir. 2007).
1.
Our cases, as well as those of our sister circuits, set forth
the well-established principle that “[f]ederal courts cannot
order restitution in a criminal case without a statutory
basis.” United States v. Pawlinski, 374 F.3d 536, 540 (7th Cir.
2004); United States v. Randle, 324 F.3d 550, 555 (7th Cir.
2003); see also United States v. Hensley, 91 F.3d 274, 276 (1st
Cir. 1996); United States v. Snider, 957 F.2d 703, 706 (9th Cir.
1992) (per curiam). An order of restitution that is imposed
without a statutory basis is “illegal.” Pawlinski, 374 F.3d at
540.
The statutes authorizing the district court to impose
restitution, the Victim and Witnesses Protection Act
(“VWPA”), 18 U.S.C. § 3663, and the Mandatory Victim
32 No. 07-2117
Restitution Act (“MVRA”), 18 U.S.C. § 3663A, authorize the
imposition of restitution only for losses to the victim, here,
the United States. See also United States v. Frith, 461 F.3d
914, 919 (7th Cir. 2006) (explaining that “[r]estitution orders
are limited to: (1) losses caused by the specific conduct that
is the basis of the offense of conviction; (2) losses caused by
conduct committed during an offense that involves as an
element a scheme, conspiracy, or pattern; and (3) restitu-
tion agreed to in a plea agreement” (internal quotation
marks and citation omitted)). These statutes “require[] that
[a] restitution award be based on the amount of loss
actually caused by the defendant’s offense.” United States v.
Rhodes, 330 F.3d 949, 953 (7th Cir. 2003) (emphasis in
original).18 Accordingly, “an order of restitution that
exceeds the victim’s actual losses or damages is an illegal
sentence.” United States v. Wolf, 90 F.3d 191, 194 n.2 (7th
Cir. 1996); cf. Hughey, 495 U.S. at 413.
As we already have noted, the Government, although
conceding that the $62,226.36 restitution award, the total
amount of FECA benefits that Ms. Webber received,
exceeded the loss sustained by the Government, attempts
to defend the district court’s action as authorized by 5
U.S.C. § 8148 and 20 C.F.R. § 10.529, a federal regulation
implementing section 8148. Therefore, we begin with the
18
See also Virgin Islands v. Davis, 43 F.3d 41, 44-45 (3d Cir. 1994);
United States v. Patty, 992 F.2d 1045, 1049 (10th Cir. 1993); United
States v. Diamond, 969 F.2d 961, 967-68 (10th Cir. 1992); United
States v. Kenney, 789 F.2d 783, 784 (9th Cir. 1986); cf. Hughey v.
United States, 495 U.S. 411, 413 (1990) (holding that the Victim
and Witness Protection Act “authorize[s] an award of restitution
only for the loss caused by the specific conduct that is the basis
of the offense of conviction”).
No. 07-2117 33
language of this statute and regulation. Section 8148(a)
provides:
Any individual convicted of a violation of section 1920
of title 18, or any other Federal or State criminal statute
relating to fraud in the application for or receipt of any
benefit under this subchapter or subchapter III of this
chapter, shall forfeit (as of the date of such conviction)
any entitlement to any benefit such individual would
otherwise be entitled to under this subchapter or
subchapter III for any injury occurring on or before the
date of such conviction. Such forfeiture shall be in
addition to any action the Secretary may take under
section 8106 or 8129.
5 U.S.C. § 8148(a) (emphases added). Federal regulation
section 10.529 provides:
(a) If an employee knowingly omits or understates any
earnings or work activity in making a report, he or she
shall forfeit the right to compensation with respect to
any period for which the report was required. A false
or evasive statement, omission, concealment, or mis-
representation with respect to employment activity or
earnings in a report may also subject an employee to
criminal prosecution.
(b) Where the right to compensation is forfeited, OWCP
shall recover any compensation already paid for the
period of forfeiture pursuant to 5 U.S.C. § 8129 and
other relevant statutes.
20 C.F.R. § 10.529 (emphases added).
The plain language of section 8148(a) and its correspond-
ing regulation establishes two principles. First, any em-
ployee who violates 18 U.S.C. § 1920 (or a similar criminal
34 No. 07-2117
provision) forfeits all of the benefits that he obtained
during the period covered by the fraud. Second, section
8148(a) and its corresponding regulation are forfeiture,
rather than restitution, provisions.
Forfeiture and restitution are distinct remedies. United
States v. Leahy, 464 F.3d 773, 793 n.8 (7th Cir. 2006)
(“[R]estitution and forfeiture serve different goals . . . .”).
Restitution is remedial in nature, and its goal is to restore
the victim’s loss. United States v. Browne, 505 F.3d 1229, 1281
(11th Cir. 2007). Forfeiture, in contrast, is punitive; it seeks
to disgorge any profits that the offender realized from his
illegal activity. Browne, 505 F.3d at 1281. Given their
distinct nature and goals, restitution is calculated based on
the victim’s loss, while forfeiture is based on the offender’s
gain. See United States v. George, 403 F.3d 470, 474 (7th Cir.
2005). Different adjudicatory procedures apply, moreover,
depending on which of these remedies the Government is
seeking. Of particular importance in this case, the Federal
Rules of Criminal Procedure explicitly provide that “[n]o
judgment of forfeiture may be entered in a criminal
proceeding unless the indictment or the information
provides notice that the defendant has an interest in
property that is subject to forfeiture in accordance with the
applicable statute.” Fed. R. Crim. P. 7(c)(2); see also Fed. R.
Crim. P. 32.2(1) (“A court must not enter a judgment of
forfeiture in a criminal proceeding unless the indictment or
information contains notice to the defendant that the
government will seek the forfeiture of property as part of
any sentence in accordance with the applicable statute.”).
Additionally, a defendant, “in a case in which a jury
returns a verdict of guilty,” has a statutory right to have the
jury “determine whether the government has established
the requisite nexus between the property and the offense
No. 07-2117 35
committed by the defendant.” Fed. R. Crim. P. 32.2(b)(4);
Libretti v. United States, 516 U.S. 29 (1995). Restitution,
however, has no comparable requirements. See generally 18
U.S.C. § 3664(c) (discussing the procedures required for the
issuance of an order of restitution).
Despite these differences between forfeiture and restitu-
tion, the Government nevertheless maintains that section
8148 and its corresponding regulation, both of which by
their plain language are forfeiture provisions, gave the
district court the authority to impose on Ms. Webber an
order of restitution that exceeded the actual loss to the
Government. The Government relies on Harms, 442 F.3d at
380-81, a case in which the Fifth Circuit, pursuant to
20 C.F.R. § 10.529, affirmed an order of restitution in excess
of the victim’s losses. In Harms, a federal employee who
had been convicted of violating 18 U.S.C. § 1920 appealed
the district court’s loss calculation under the sentencing
guidelines as well as its restitution order. The district
court had calculated the loss under the guidelines as the
entire amount of benefits that the defendant had received;
it imposed restitution in the same amount. The Fifth Circuit
held that the loss calculation for sentencing guidelines
purposes was the “difference between the amount the
defendant actually received and the amount he would have
received absent the fraud.” Harms, 442 F.3d at 380. Despite
this holding, the court affirmed the restitution order. Id.
The court held:
[W]e reject Harms’s assertion that the district court
erred in ordering restitution of all the benefits Harms
received. The plain language of 20 C.F.R. § 10.529(a)
provides that “[i]f an employee knowingly omits or
understates any earnings or work activity in making a
report, he or she shall forfeit the right to compensation
with respect to any period for which the report is
36 No. 07-2117
required.” See also [United States v.] Brothers, 955 F.2d
[493,] 495 [(7th Cir. 2006)] (“If a claimant submits a
false 1032 statement he forfeits the entire disability
benefit even if he would have been entitled to a re-
duced benefit if he had submitted an accurate 1032
form.”); [United States v.] Dawkins, 202 F.3d [711,] 714-
15 [(4th Cir. 2002)] (distinguishing between amount of
forfeiture for purposes of restitution and amount of
loss for purposes of sentencing). Thus, the district court
did not err in ordering restitution of all the benefits [the
defendant] received.
Id.Respectfully, we cannot agree with the holding of Harms
that 20 C.F.R. § 10.529 authorizes a district court to impose
restitution in an amount that exceeds the victim’s loss.
Notably, the Fifth Circuit in Harms did not take into
account, as far as we can tell from the opinion, the notice
requirements mandated by the Federal Rules of Criminal
Procedure. As we have noted, the authority relied upon by
the court, 20 C.F.R. § 10.529 (along with the corresponding
statute, 5 U.S.C. § 8148(a)) is a forfeiture provision, a
remedy distinct from restitution. Allowing the Government
to use this provision to obtain a forfeiture under the guise
of restitution would allow it improperly to circumvent the
notice requirements of Rule 7(c)(2) and Rule 32.2(1).
Furthermore, as support for its holding that 20 C.F.R.
§ 10.529 authorizes a district court to impose an order of
restitution in an amount that exceeds the victim’s loss,
Harms relied on Dawkins, 202 F.3d at 715, a case that
No. 07-2117 37
reaches a contrary result.19 See Harms, 442 F.3d at 380 (citing
Dawkins, 202 F.3d at 714-15); see also United States v. Petruk,
484 F.3d 1035, 1038 & n.3 (8th Cir. 2007) (noting that Harms
and Dawkins are inconsistent).
In Dawkins, the Fourth Circuit was presented with the
same issue that arose in Harms. A district court had calcu-
lated the loss under the guidelines as the entire amount of
benefits that the defendant had received, and it imposed
restitution in the same amount. Although noting that “the
Government may be entitled to collect [the entire amount
of benefits] via forfeiture, see 20 C.F.R. § 10.529,” the Fourth
Circuit explained that the forfeiture amount was “not
necessarily the measure of loss for sentencing purposes.”
Dawkins, 202 F.3d at 715. It held that, under a conviction for
18 U.S.C. § 1920, the proper measure of loss for guidelines
purposes is “the difference between the amount of benefits
[the defendant] actually received and the amount he would
have received had he truthfully and accurately completed
the 1032 forms.” Id. Notably, the court then vacated the
amount of restitution: “As we have ordered the district
court to recalculate the loss amount on remand, and the
restitution amount depends on the amount of loss, see 18
19
Harms also cited our statement in United States v. Brothers, 955
F.2d 493, 495 (7th Cir. 2006): “If a claimant submits a false 1032
form he forfeits the entire disability benefit even if he could have
been entitled to a reduced benefit if he had submitted an
accurate 1032 form.” Our decision in Brothers is not in conflict
with our holding in this case. The court was not confronted with
the issue of whether 5 U.S.C. § 8148 supports an order of
restitution rather than one of forfeiture; we also note that the
statement cited by Harms appears in the fact section of the
opinion and appears not to have influenced directly the
court’s holding. Brothers, 955 F.2d at 495.
38 No. 07-2117
U.S.C. §§ 3663A(a)(1), (c)(1)(A)(ii), 3664(f)(1)(A), the district
court will necessarily have to reconsider the matter of
restitution.” Dawkins, 202 F.3d at 715. The court thus
declined to allow the Government, under the guise of 5
U.S.C. § 8148 and 20 C.F.R. § 10.529, to recover restitution
in an amount that exceeded the victim’s loss. This position
conflicts with the Fifth Circuit’s holding in Harms.
Therefore, we hold that 5 U.S.C. § 8148(a) and 20 C.F.R.
§ 10.529, being forfeiture provisions, do not provide an
adequate basis to support a district court’s order of restitu-
tion in excess of the victim’s loss.
2.
We note, nevertheless, that the Government generally
may seek a forfeiture order in a criminal proceeding pursu-
ant to these provisions. Under 28 U.S.C. § 2461(c), “[i]f a
person is charged in a criminal case with a violation of an
Act of Congress for which the civil or criminal forfeiture of
property is authorized, the Government may include notice
of the forfeiture in the indictment or information pursuant
to the Federal Rules of Criminal Procedure.” The statute
further provides that, “[i]f the defendant is convicted of the
offense giving rise to the forfeiture, the court shall order
the forfeiture of the property as part of the sentence in the
criminal case.” Id.; see also United States v. Silvious, 512 F.3d
364, 370 (7th Cir. 2007).
In this case, however, the Government may not rely on
this statutory provision because the proper notification
procedures were not followed. Rule 32.2 of the Federal
Rules of Criminal Procedure provides that “[a] court must
not enter a judgment of forfeiture in a criminal proceeding
unless the indictment or information contains notice to the
defendant that the government will seek the forfeiture of
No. 07-2117 39
property as part of any sentence in accordance with the
applicable statute.” See also Fed. R. Crim. P. 7(c)(2). The
indictment filed against Ms. Webber, see R.1, does not
reference 5 U.S.C. § 8148, 20 C.F.R. § 10.529 or, for that
matter, any forfeiture provision.20
Because the amount of restitution that the district court
ordered Ms. Webber to pay exceeds the Government’s
losses, it constitutes an illegal sentence. Pawlinski, 374 F.3d
at 540; Randle, 324 F.3d at 555. We therefore reverse the
district court’s order of restitution and remand the case for
limited resentencing on the issue of restitution.21
20
See United States v. Silvious, 512 F.3d 364, 370 (7th Cir. 2007)
(holding that, although the indictment listed the wrong forfei-
ture statute, sufficient notice had been provided because the
indictment informed the defendant that the Government
intended to seek forfeiture and identified the targeted assets).
21
Nothing in this opinion shall prevent the Department of Labor
from instituting a civil forfeiture action, as permitted by
5 U.S.C. § 8148, 20 C.F.R. § 10.529 and other relevant authority,
against Ms. Webber to recover the $62,226.36 that she ob-
tained in FECA benefits.
40 No. 07-2117
Conclusion
For the foregoing reasons, we affirm Ms. Webber’s
conviction, and we reverse the district court’s restitution
order and remand the case for resentencing proceedings
consistent with this opinion.
AFFIRMED in part;
REVERSED and REMANDED in part
USCA-02-C-0072—7-29-08