United States v. Evans

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
9-3-1998
United States v. Evans
Precedential or Non-Precedential:
Docket 97-3445
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Filed September 3, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 97-3445
UNITED STATES OF AMERICA,
v.
CURTIS EVANS
Appellant
On Appeal From the United States District Court
For the Western District of Pennsylvania
(D.C. Crim. No. 96-cr-0167-5)
Argued June 12, 1998
Before: BECKER, Chief Judge, WEIS, Circuit Judge,
and DOWD, District Judge.*
(Filed September 3, 1998)
SHELLEY STARK, ESQUIRE
Federal Public Defender
KAREN S. GERLACH, ESQUIRE
(ARGUED)
Assistant Federal Public Defender
415 Convention Tower
960 Penn Avenue
Pittsburgh, Pennsylvania 15222
Attorneys for Appellant, Curtis Evans
_________________________________________________________________
*Honorable David D. Dowd, Jr., United States District Judge for the
Northern District of Ohio, sitting by designation.
LINDA L. KELLY, ESQUIRE
United States Attorney
BONNIE R. SCHLUETER, ESQUIRE
(ARGUED)
Assistant United States Attorney
633 United States Post Office &
Courthouse
Pittsburgh, Pennsylvania 15219
Attorneys for Appellee United States
OPINION OF THE COURT
BECKER, Chief Judge.
Curtis Evans appeals from his conviction on various
fraud-related charges. The primary question presented,
which arises out of Evans' judgment of sentence, is whether
the district court erred in conditioning his supervised
release on reimbursement of the cost of court-appointed
counsel. See 18 U.S.C. S 3583(d). We conclude that it did,
and therefore vacate that portion of the judgment. We also
remand for further sentencing proceedings because of the
inadequacy of the district court's findings supporting its
determination of the amount of loss from fraudulent
conduct. See U.S.S.G. S 2F1.1(b)(1) (1997).1
I.
A federal grand jury returned a forty-six count indictment
against Evans and eleven other individuals. Evans was
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1. Additionally, Evans submits that plain error was committed by the
seating of a juror who purportedly expressed an inability to be fair, and
the wasting of a peremptory challenge on another juror who also
purportedly expressed an inability to be fair. These contentions are
unfounded. Alternatively, Evans contends that trial counsel's failure to
move to strike either of these jurors constituted ineffective assistance
of
counsel. We will not address this claim on direct appeal. See United
States v. Cocivera, 104 F.3d 566, 570 (3d Cir. 1996) (recognizing that
claims of ineffective assistance of counsel are"ordinarily more
appropriate for collateral attack").
2
convicted by a jury of nineteen counts of mail fraud in
violation of 18 U.S.C. S 1341; two counts of use of a
fictitious name to commit mail fraud in violation of 18
U.S.C. S 1342; three counts of wire fraud in violation of 18
U.S.C. S 1343; and one count of conspiracy in violation of
18 U.S.C. S 371. The fraud inhered in a scheme of staging
automobile accidents and then submitting insurance claims
for non-existent medical treatment. The scheme, which
operated in New York, Pennsylvania, and New Jersey, was
masterminded by Alexander Grichener, but Evans played
an apparently significant role in its Pittsburgh,
Pennsylvania operations, particularly those involving the
Keystone Medical clinic. Evans was sentenced to forty-two
(42) months imprisonment and three (3) years supervised
release for each count, to run concurrently; a $1250 special
assessment; and payment of $2500 in restitution. The
supervised release was conditioned upon the
reimbursement of the costs of Evans' court-appointed
counsel, in a monthly amount of not less than ten percent
of his gross monthly income.
During the trial it was revealed that Evans' financial
affidavit, submitted as part of his application for court-
appointed counsel, inaccurately represented Evans' and his
wife's annual joint income as $48,000, when their actual
joint income was $104,000. Evans testified that the court
clerk filling out the affidavit had asked about joint take-
home pay ($48,000), not gross pay ($104,000). At the
sentencing hearing the court found that Evans had made
"material misstatements" in his affidavit, and ordered
Evans to repay the cost of his attorney as a condition of
supervised release. Upon further questioning by Evans'
counsel, the court explained that the condition was
imposed because Evans "had enough income that he was
not entitled to a Public Defender," and that the condition
was not punishment for the misrepresentation.
The presentence investigation report stated that the
amount of loss incurred by the insurance companies was
$2,851,872.42, and thus exceeded $2.5 million for
sentencing guideline purposes. A government agent testified
at the sentencing hearing that he had calculated the
amount of loss based on insurance company
3
reimbursement checks deposited to the bank accounts of
the eleven medical clinics and supply companies involved in
the scheme. On cross-examination, the agent indicated that
he did not know whether every deposit was associated with
a staged accident. The district court then found"from the
preponderance of the evidence [at the sentencing hearing]
and the trial . . . that the amount of loss as a result of the
conspiracy for which defendant knowingly took part and
was expected and foreseeable exceed[ed] 2.5 million
dollars." Accordingly, Evans' base offense level of six was
increased thirteen levels pursuant to U.S.S.G. S 2F1.1(b)(1).2
Evans filed this timely appeal.3
II.
Evans contends that the conditioning of his supervised
release on the reimbursement of counsel fees is violative of
the supervised release statute, 18 U.S.C. S 3583. This
contention was not raised in the district court, and thus we
review it under the familiar plain error standard set forth
infra in Part II.D. For the reasons that follow, we find that
the district court committed plain error requiring the
exercise of our discretion to vacate the judgment.
The supervised release statute is not open-textured. An
order may be a condition of supervised release only to the
extent that it:
(1) is reasonably related to the factors set forth in
S 3553(a)(1), (a)(2)(B), (a)(2)(C), and (a)(2)(D);
(2) involves no greater deprivation of liberty than is
reasonably necessary for the purposes set forth in
S 3553(a)(2)(B), (a)(2)(C), and (a)(2)(D); and
(3) is consistent with any pertinent policy statements
issued by the Sentencing Commission pursuant to
28 U.S.C. S 994(a).
_________________________________________________________________
2. Evans' offense level was further increased two levels, pursuant to
U.S.S.G. S 2F1.1(b)(2), to a final level of twenty-one because the scheme
involved multiple victims.
3. The district court had jurisdiction pursuant to 18 U.S.C. S 3231. We
exercise appellate jurisdiction under 28 U.S.C.S 1291.
4
18 U.S.C. S 3583(d). Section 3553(a), referenced in
paragraphs (1) and (2) above, provides for consideration of:
(1) the nature and circumstances of the offense and
the history and characteristics of the defendant;
[and]
(2) the need for the sentence imposed --
. . .
(B) to afford adequate deterrence to criminal
conduct;
(C) to protect the public from further crimes of t he
defendant; and
(D) to provide the defendant with needed education al
or vocational training, medical care, or other
correctional treatment in the most effective manner.
The question before us is whether a reimbursement order
authorized by the Criminal Justice Act ("CJA"), 18 U.S.C.
S 3006A, which permits a court to order repayment of fees
for appointed counsel whenever it finds that funds are
available,4 satisfies the requirements of the supervised
release statute. This is a question of first impression for us.
The only other court of appeals to have addressed this
issue in a published opinion was the Ninth Circuit in
United States v. Eyler, 67 F.3d 1386 (9th Cir. 1995). The
Eyler court concluded that a condition requiring
reimbursement of attorney fees violated the supervised
release statute because it was not related to the defendant's
underlying criminal conduct of unlawful possession of
firearms and "simply bears no relationship" to the pertinent
statutory goals. See 67 F.3d at 1394; see also United States
v. Lorenzini, 71 F.3d 1489, 1492-93 (9th Cir. 1995) (relying
_________________________________________________________________
4. Section 3006A(f) provides in part:
Whenever . . . the court finds that funds are available for payment
from or on behalf of a person furnished representation, it may
authorize or direct that such funds be paid to the appointed
attorney, to the bar association or legal aid agency or community
defender organization which provided the appointed attorney, . . .
or
to the court for deposit in the Treasury as a reimbursement to the
appropriation. . . .
5
on Eyler to conclude without discussion that
reimbursement of counsel fees is not related to offense of
bank fraud). Evans contends that his reimbursement
condition violates the first prong of the supervised release
statute because it is not "reasonably related" to the nature
and circumstances of his insurance fraud or to his history
and characteristics, and does not further the statutory
goals of deterrence, protection, and rehabilitation. See 18
U.S.C. S 3583(d)(1); 18 U.S.C. S 3553(a)(1), (a)(2)(B)-(D).
A.
As to the factors identified in S 3553(a)(1), we considered
a cognate question in United States v. Spiropoulos, 976 F.3d
155, 165 (3d Cir. 1992), where we held that "[r]ecouping
the costs of imprisonment has nothing to do with the
nature or the seriousness of the offense, and hence is not
authorized under S 3553(a)(1)." In the same vein,
reimbursement of counsel fees is not related in any tangible
way to insurance fraud. Furthermore, the reason for
imposing the condition -- Evans' financial ability to obtain
a private attorney -- is not a relevant "nature and
circumstance" of insurance fraud nor, in our view, is it a
"history and characteristic" of Evans himself. Even if Evans
had the finances to afford an attorney because of profits
attained from the fraudulent insurance scheme in which he
was involved, we do not believe that the profitable nature of
an offense alone is sufficient to establish a reasonable
relationship between a reimbursement condition of
supervised release and the offense of the defendant.
Otherwise, any financially profitable crime, such as robbery
or drug dealing, would necessarily be related to the
repayment of counsel fees (or any other financial condition)
merely because of the likely financial gain from the crime
and regardless of the specific "nature and circumstances" of
the offense, resulting in a defendant's "ability to pay"
overriding all other relevant considerations.
The government submits that Evans' material
misstatements on his financial affidavit, which qualified
him for appointment of counsel, are directly related to his
filing of fraudulent insurance claims because they represent
a continuation of the same criminal conduct. It is possible
6
that without the misstatements Evans may not have been
eligible for court-appointed counsel, 18 U.S.C.S 3006A(b),
or would have otherwise been subject to a reimbursement
order, see discussion infra. Furthermore, making
misstatements on an affidavit is similar in nature and
character to making fraudulent insurance claims in that
both acts involve deception and lying. However, as we have
explained, the district court made it quite clear that the
reimbursement condition was not imposed because of
Evans' misstatements, but rather because of hisfinancial
ability.
Moreover, even if the district court had imposed the
reimbursement condition because of Evans' misstatements,
the condition is nonetheless not reasonably related to the
statutory goals of S 3553(a)(2)(B)-(D). As in Spiropoulos,
where we found no "reason to believe" that assessing the
costs of imprisonment acts as a deterrent, protects the
public, or rehabilitates the defendant, see 976 F.2d at 165-
66, the government has presented no evidence (nor made
any argument) that the reimbursement condition would
serve any of these purposes. We conclude that requiring the
repayment of counsel fees incurred in defending a
prosecution would not likely deter crime, protect the public,
or serve any rehabilitative function. See 18 U.S.C.
S 3553(a)(2)(B)-(D); Eyler, 67 F.3d at 1394. But cf. United
States v. Turner, 998 F.2d 534, 536-37 (7th Cir. 1993)
(concluding that assessment of imprisonment costs deters
criminal conduct).
B.
The government also relies on cases under the old
Federal Probation Act, 18 U.S.C. S 3651 (repealed 1984),5 in
which courts upheld the imposition of repayment of
_________________________________________________________________
5. Section 3651 provided in part:
[W]hen satisfied that the ends of justice and the best interest of
the
public as well as the defendant will be served thereby, [the court]
may suspend the imposition or execution of sentence and place the
defendant on probation for such period and upon such terms and
conditions as the court deems best.
7
attorney fees as a condition of probation, for its contention
that the reimbursement condition satisfies the supervised
release statute. The cases are inapposite becauseS 3651 is
materially different from the supervised release statute. The
language of S 3651 was "broad and inclusive" and provided
the sentencing court with an "exceptional degree of
flexibility." United States v. Gurtunca, 836 F.2d 283, 288
(7th Cir. 1987) (quoting United States v. Missouri Valley
Constr. Co., 741 F.2d 1542, 1552 (8th Cir. 1984) (Gibson,
John R., J., concurring and dissenting), and United States
v. Alexander, 743 F.2d 472, 479 (7th Cir. 1984)). See also
United States v. Beros, 833 F.2d 455, 467 (3d Cir. 1987)
(recognizing that S 3651 grants broad discretion to district
courts). The only limitation on this power was the court-
developed "reasonable relationship to the treatment of the
accused and the protection of the public." United States v.
Santarpio, 560 F.2d 448, 455 (1st Cir. 1977) (quoting
United States v. Alarik, 439 F.2d 1349, 1351 (8th Cir.
1971)).
In contrast, the supervised release statute is limited by
the statutory requirements of S 3553(a)(1) and (a)(2)(B)-(D),
see 18 U.S.C. S 3583(d), and thus the imposition of
conditions on supervised release must satisfy a more
exacting standard. To the extent that the broad language of
S 3651 may have been constrained by the same factors
identified in S 3553(a)(2)(B)-(D), see Beros, 833 F.2d at 467
(interpreting S 3651 as granting discretion to impose
conditions reasonably related to rehabilitation of defendant
and protection of public), the supervised release statute is
nonetheless further restricted by S 3553(a)(1). See supra
Part II.A. Consistent with these observations, we note
support for our position in the Guide to Judiciary Policies
and Procedures, promulgated by the Administrative Office of
the United States Courts, which states:
Subsection (f) of [the CJA] does not authorize a judicial
officer to require reimbursement as a condition of
probation, and the Judicial Conference believes that
reimbursement of the cost of representation under the
Act should not be made a condition of probation under
any other authority.
8
VII Guide to Judiciary Polices and Procedures: Appointment
and Payment of Counsel P 2.22E (1997). In the context of
the judiciary guidelines, we believe there is no difference
between probation and supervised release because
conditions of probation are now statutorily restricted in the
same manner as conditions of supervised release. Compare
18 U.S.C. S 3563(b) (probation statute) with 18 U.S.C.
S 3583(d) (supervised release statute).6
C.
For the foregoing reasons, the district court clearly
violated the first requirement of the supervised release
statute when it imposed a condition that had no reasonable
relationship to the factors identified in #8E8E # 3553(a)(1) and
(a)(2)(B)-(D). This, of course, is not to suggest that the
district court lacks power to order the reimbursement of the
cost of counsel fees, because the CJA provides for such an
order. District courts frequently impose such orders at the
time counsel is appointed, and can in fact do so at any
time. Furthermore, if a defendant fails to satisfy such an
order, the district court can seek enforcement by instituting
contempt proceedings, or by entering a judgment against
the defendant which will act as a lien against his property.
See Lorenzini, 71 F.3d at 1493. All we hold is that
reimbursement of counsel fees could not be effected in this
case by making it a condition of supervised release. 7
_________________________________________________________________
6. Although not at issue in this case, the imposition of conditions under
the current probation statute likely also necessitates a more restrictive
analysis than was required under the old statute. See 18 U.S.C.
S 3563(b) (requiring discretionary conditions to be reasonably related to
factors set forth in S 3553(a)(1), (2)); Lorenzini, 71 F.3d at 1493-94
(considering S 3553(a)(1) and (2) factors in rejecting reimbursement of
counsel fees as condition of probation).
7. Evans has also relied on United States v. Cottman, 142 F.3d 160 (3d
Cir. 1998), where we addressed the question whether the repayment of
"buy-money" to the FBI as a condition of supervised release was
authorized by the supervised release statute. We determined that the
condition was "restitution," and as such was governed by S 3563(b)(2)
permitting "restitution to the victim," but concluded that the definition
of
"victim" under S 3563(b) was parallel to the definition under the Victim
9
D.
We must still decide whether the district court's mistake
amounts to a plain error that warrants the exercise of our
discretion to correct. We believe that it does. As noted
above, we review for plain error. See Fed. R. Crim. P. 52( b);
United States v. Olano, 507 U.S. 725, 731-32 (1993). "There
must be an `error' that is `plain' and that`affect[s]
substantial rights.' " Olano, 507 U.S. at 732 (quoting United
States v. Young, 470 U.S. 1, 15 (1985) (in turn quoting
United States v. Atkinson, 297 U.S. 157, 160 (1936))). The
deviation from a legal rule is "error," and an error is "plain"
if it is "clear" or "obvious." Id . at 732-34. In most cases, an
error affects substantial rights if it is prejudicial, i.e.,
"affected the outcome of the district court proceedings." Id.
at 734. When such an error exists, "the Court of Appeals
has authority to order correction, but is not required to do
so." Id. at 735. We will exercise our discretion and vacate
the sentence if the plain error affecting substantial rights
also "seriously affect[s] the fairness, integrity, or public
reputation of judicial proceedings." United States v. Retos,
25 F.3d 1220, 1229 (3d Cir. 1994) (alteration in original)
(quoting Olano, 507 U.S. at 732).
First, the district court clearly violated the supervised
release statute, and thus committed error. See Olano, 507
U.S. at 732-34. The government argues that any purported
error was not plain because we had not yet addressed the
propriety of a reimbursement order as a condition of
supervised release, and because in United States v.
Chorney, 63 F.3d 78, 83 (1st Cir. 1995), the First Circuit
_________________________________________________________________
Witness Protection Act, which precluded the government as "victims." Id.
Accordingly, we held that the repayment condition was unlawful. Id.
Evans seeks aid from Cottman by arguing that since there is no
authorization for the reimbursement condition underS 3553, the only
possible authorization would be from S 3563(b), but that the only
possibly applicable S 3563(b) provision is paragraph (b)(2) permitting
"restitution to the victim," which Cottman held did not apply to the
government. The government responds that Cottman is inapplicable to
the case at bar because it involved restitution, whereas this case
involves
reimbursement. We agree with the government, and accordingly do not
rest our judgment on Cottman.
10
reviewed a similar reimbursement order for compliance with
the CJA, but did not address the restrictions of the
supervised release statute. These contentions are without
merit. Neither the absence of circuit precedent nor the lack
of consideration of the issue by another court prevents the
clearly erroneous application of statutory law from being
plain error.
This error affects substantial rights because, if Evans
fails to reimburse the cost of his attorney, he would be
subject to possible incarceration for all or part of the term
of supervised release. See 18 U.S.C. S 3583(e)(3); United
States v. Dozier, 119 F.3d 239, 244 (3d Cir. 1997) (error
affects substantial right to liberty when it extends period of
restriction on liberty and of governmental supervision).
Furthermore, imposing a sentence not authorized by law
seriously affects the fairness, integrity, and reputation of
the proceedings. Dozier, 119 F.3d at 244-45. Because the
plain error standard is met, we will exercise our discretion
and direct that the district court vacate the portion of the
sentence conditioning Evans' supervised release on the
repayment of counsel fees.8
_________________________________________________________________
8. The district court may, as we mentioned above, impose a
reimbursement order independent of supervised release if it "finds that
the person is financially able to obtain counsel or to make partial
payment for the representation" or "finds that funds are available for
payment from or on behalf of a person furnished representation." 18
U.S.C. S 3006A(c), (f). The focus is on the defendant's present ability to
pay for his representation. See 18 U.S.C.S 3006A(c) (referring to person
that "is" financially able to obtain counsel); 18 U.S.C. S 3006A(f)
(referring to funds that "are" available); United States v. Jimenez, 600
F.2d 1172, 1174 (5th Cir. 1979) (recognizing that statute is written in
present tense).
The burden is on the defendant to prove by a preponderance of the
evidence that he is financially unable to reimburse the cost of
representation. United States v. Lefkowitz, 125 F.3d 608, 621 (8th Cir.
1997), cert. denied, 118 S. Ct. 1527 (1998); United States v. Harris, 707
F.2d 653, 660 (2d Cir. 1983). Cf. United States v. Gravatt, 868 F.2d 585,
588 (3d Cir. 1989) (defendant has burden of establishing financial
eligibility for appointed counsel). However, this does not relieve the
district court of its responsibility to inquire into the defendant's
current
financial status, see United States v. Fraza , 106 F.3d 1050, 1056 (1st
11
III.
Evans also contends that the district court erred in
determining that the amount of loss from fraudulent
conduct, for purposes of S 2F1.1 of the sentencing
guidelines, exceeded $2.5 million. Evans presented this
objection in the district court. Therefore our review of the
district court's interpretation of "loss" under S 2F1.1 is
plenary, and our review of the district court's application of
the guidelines is governed by the clearly erroneous
standard. See United States v. Collado, 975 F.2d 985, 990
(3d Cir. 1992). Pursuant to S 2F1.1(b), the specific offense
characteristics provision for fraud-related crimes, a
defendant's base offense level is increased by thirteen levels
when the amount of loss resulting from the fraudulent
conduct exceeds $2.5 million. The "loss" is the "value of the
money, property, or services unlawfully taken." U.S.S.G.
S 2F1.1, application note 7. Although "the loss need not be
determined with precision," the court must make a
"reasonable estimate of the loss, given the available
information." U.S.S.G. S 2F1.1, application note 8.
A.
Evans first submits that the court improperly considered
funds obtained from legitimate insurance claims submitted
_________________________________________________________________
Cir. 1997) (remanding for hearing or findings as to defendant's financial
ability despite government's evidence of defendant's misrepresentations
on CJA application), taking into account the defendant's personal and
family needs and the liquidity of his finances, Museitef v. United States,
131 F.3d 714, 716 (8th Cir. 1997); United States v. Bracewell, 569 F.2d
1194, 1199 (2d Cir. 1978). See generally VII Guide to Judiciary Policies
and Procedures P 2.04.
The district court ordered the reimbursement of Evans' counsel fees
because it found that Evans had been ineligible for court-appointed
counsel at the time of his CJA application. Thisfinding focused on
Evans' prior ability to afford counsel, and therefore was inadequate to
support a reimbursement order. We do not condone Evans' deception,
intentional or otherwise, and his misstatements clearly raise doubts as
to his purported inability to afford counsel. Thus, if the district court
on
remand wishes to consider imposing a reimbursement order
(independent of the supervised release sentence), it should conduct an
appropriate inquiry into Evans' current financial ability to pay for all
or
part of his representation.
12
on behalf of legitimate accident victims. We addressed a
similar issue in United States v. Maurello, 76 F.3d 1304 (3d
Cir. 1996), where the defendant was convicted of mail fraud
in connection with the unauthorized practice of law. We
considered the question whether money paid for
satisfactory legal services performed by an unlicensed
attorney should be considered "loss" for purposes of
S 2F1.1. Id. at 1308. We opined that a proper measurement
of actual loss must take into account the "nature and
degree of the harm caused by the offense," and that the
degree of harm, in turn, depends on the quality of services
rendered. Id. at 1311-12 (quoting 28 U.S.C.S 994(c)(3)).
Accordingly, we wrote:
[t]o the extent that the unauthorized services provided
by [the] defendant have not harmed their recipients,
but to the contrary have benefitted them, we conclude
that [the] defendant's base offense level should not be
enhanced.
Id. at 1312.
Thus, the actual loss determination must be predicated
upon the harm caused by Evans' offenses. Evans was
convicted of fraud and conspiracy in connection with the
unauthorized and fraudulent submission of insurance
claims. To the extent that this activity harmed the
insurance companies, Evans' sentence should be
augmented. However, to the extent that any claims were
legitimate and insurance companies were properly obligated
to pay them, there was no harm and Evans' sentence
should not be augmented.
The government contends that Evans presented no
evidence of legitimate patients at the time of his
involvement in the scheme, and that to the extent there
were any legitimate accidents, the claims were inflated. The
burden, however, is on the government to prove by a
preponderance of the evidence the facts in support of a
sentence enhancement; the defendant does not have to
"prove the negative" to avoid the enhanced sentence. United
States v. McDowell, 888 F.2d 285, 291 (3d Cir. 1989).
Although the burden of production shifts to the defendant
once the government has made out a prima facie case, the
13
ultimate burden of persuasion rests with the government.
Fed. R. Crim. P. 32(c); United States v. Raven , 39 F.3d 428,
434-35 (3d Cir. 1994). Accordingly, the burden was on the
government to prove that bank deposits sufficient to
establish the basis for the loss calculation were for
illegitimate or inflated claims. Only when the government
had made such a prima facie showing was Evans required
to come forward with evidence tending to cast doubt on the
government's evidence. See Raven, 39 F.3d at 434-35.
The evidence of fraudulent claims was considerable, and
it may be that the government made a sufficient showing
that there were no legitimate claims, or that the fraudulent
claims alone exceeded $2.5 million.9 However, despite the
extensive record, the district court did not make any
findings on the record as to the basis for its conclusion that
the loss exceeded $2.5 million. The district court only made
a conclusory one sentence statement regarding its loss
determination. Although the district court's determination
need not be exact and can be based on the trial record as
well as the sentencing record, see Fed. R. Crim. P. 32(c), we
should not be asked to rummage through the entire record
without guidance from the district court as to the legal and
factual basis for its determination. In light of our remand
on the supervised release issue, we direct the district court
to make findings on the record as to the actual loss
incurred from fraudulent claims.10
B.
Evans also claims that since his activity was limited to a
single clinic, the losses from the other ten clinics were not
foreseeable and should not be attributed to him. The
district court, in making adjustments based on specific
_________________________________________________________________
9. The government contends that the $2,851,872.42 amount is a gross
underestimation of the actual amount of loss, and thus even if there
were legitimate claims included, the loss still exceeded $2.5 million.
10. We note that if the district court finds that the properly calculated
loss "does not fully capture the harmfulness and seriousness of the
conduct," the court may depart upwards from the normal sentencing
range. U.S.S.G. S 2F1.1, application note 10; United States v. Kopp, 951
F.2d 521, 536 (3d Cir. 1991).
14
offense characteristics, must take into account all conduct
relevant to the offense. See U.S.S.G. S 1B1.3(a). This
includes "all reasonably foreseeable acts and omissions of
others in furtherance of [a] jointly undertaken criminal
activity." U.S.S.G. S 1B1.3(a)(1)(B). In making the
accomplice attribution assessment, the court must consider
whether the loss resulting from the actions of co-
conspirators was (1) "in furtherance of the jointly
undertaken criminal activity," (2) within "the scope of the
criminal activity the . . . defendant agreed to jointly
undertake," and (3) "reasonably foreseeable in connection
with that criminal activity." U.S.S.G. S 1B1.3, application
note 2. In explaining the operation of S 1B1.3 in Collado, we
stated that "it is not enough to merely determine that the
defendant's criminal activity was substantial." 975 F.2d at
995. The sentencing court must conduct "a searching and
individualized inquiry into the circumstances surrounding
each defendant's involvement in the conspiracy" in order to
"ensure that the defendant's sentence accurately reflects
his or her role" and agreement. Id.
The district court concluded, without making any
references on the record to specific evidence, that the losses
caused by the eleven clinics were "a result of the conspiracy
. . . and foreseeable" to Evans. This finding is inadequate to
support the sentence because it appears to focus on the
scope of the conspiracy as a whole, rather than on the
scope of Evans' undertaking and involvement as required.
See id. at 991. The conspiracy, which involved eleven
medical clinics and supply companies owned and operated
by Alexander Grichener and Vladimir Shats, was quite
extensive. There is evidence that clearly indicates that
Evans was involved with Keystone Medical, and which also
suggests that Evans was involved with other clinics. 11 But,
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11. Evans acted on behalf of Keystone Medical in Pittsburgh by opening
a bank account and being the signatory on the account, leasing office
space, and representing the clinic at a zoning board hearing. Evans was
a participant in a staged accident in Solebury, Pennsylvania in May
1993, and submitted fraudulent claims for the accident to an insurance
company. He also purchased car insurance and recruited participants
for a November 1993 accident in Brooklyn, New York, and posed as a
claimant in a subsequent meeting with an insurance adjuster
15
there is no indication that the district court made a
"searching and individualized inquiry" into the extent of
Evans' involvement, or the extent to which the co-
conspirators' conduct was in furtherance of and foreseeable
from Evans' undertaking. Consequently, on remand, the
district court should conduct further individualized fact
finding as to the accomplice conduct attributable to Evans.
IV.
For the foregoing reasons, we will vacate the judgment
and remand for further sentencing proceedings consistent
with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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investigating the accident. Evans also received various payments during
the course of the conspiracy from clinics other than Keystone Medical,
and he met with Grichener on various occasions at a New York clinic.
However, while the indictment cited twenty staged accidents, there does
not appear to be evidence of Evans' involvement in more than two.
16