USCA1 Opinion

UNITES STATES COURT OF APPEALS

____________________

No. 95-1051

UNITED STATES OF AMERICA,

Appellant,

v.

GEORGE S. BENNETT, JR.,

Defendant, Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Edward F. Harrington, U.S. District Judge]

____________________

Selya, Cyr and Boudin,

Circuit Judges.
______________

____________________

William P. Stimson, Assistant United States

Attorney, with w

Donald K. Stern, United States Attorney, was on brief for appellant

John F. Aylmer, Jr. and Mahon

Hawkes & Goldings were on brief for appellee.

_________________

____________________

July 31, 1995

CYR, Circuit Judge.

tencing in United States

Following our remand

for resen-

v. Bennett, 37 F.3d 687 (1st Cir. 1994)

("Bennett I"), which vacated a downward adjustment for acceptance

of responsibility, the district

dant's restitutionary effort

ward

adjustment
__________

departure
_________

("GSR").

from

ruling

its

court determined that the defen-

an

element in its initial

nonetheless

recalculated

The government again

warranted

guideline

I
I

BACKGROUND
BACKGROUND
__________

downward

sentencing

appealed, and we

resentencing within the recalculated GSR.

down-

range

now remand for

We relate only the

of the instant appeal.

facts essential to an understanding

For further detail, the reader is invited

to see Bennett I, 37 F.3d at 689-92.

A.
A.

Factual Background and Initial Sentencing

Appellee Bennett abused positions of

Webster

more

Mortgage Company, Inc.

than ten

Webster's

("Plymouth

lines of

credit

Federal") and

which Bennett

held

fraudulent

in trust

real

("Daniel Webster"), by obtaining

estate

loans based

with Plymouth

New Bedford

benefit of

fraudulent borrowing scheme

on

Federal Savings

Institution

applied toward the development

for the

trust with Daniel

Bank

for Savings,

of real properties

himself and

involved aliases,

Daniel

his wife.

false loan

The

docu-

ments and concealment.

Deposit Insurance

Following its

discovery by the

Corporation during the spring

Federal

of 1990, Daniel

Webster

the

and Plymouth Federal sued Bennett.

parties

Bennett

entered

into

to turn over cash and

settlement

On February 1, 1991,

agreement,

requiring

other property, including certain

improved properties which remained in his possession.

In

counts for

late

1991, Bennett

fraudulently

institution,

see
___

was

obtaining

18 U.S.C.

indicted

$900,000

20

on nine

from

(1988) (defining

institution"),

between August

U.S.C.

Following his trial and conviction on

1344.

es, the district

Bennett

at

1988 and

court calculated the

$900,000, see
___

government's contention

October

financial

"financial

1989.

See 18
___

all charg-

total loss occasioned

by

2F1.1(b), rejecting

the

U.S.S.G.

total loss should

include, as

relevant conduct, amounts

fraudulently borrowed but

not charged

in

district court

the indictment.

$589,000

then deducted

(1) the

Bennett had repaid on the indictment loans prior to the

discovery of his

"at least

The

that the

felony

crimes, and (2) the value to

$660,000"

of the civil

Daniel Webster

suit settlement

agreement

entered into after Bennett's crimes had been discovered.

Having determined

that no loss had

Bennett's fraud, the district court

two-level downward

tance

loans in full.

ruled that Bennett merited a

adjustment, see U.S.S.G.

of responsibility

by

been occasioned by

agreeing to

3E1.1, for accep-

settle the

indictment

The resulting Total Offense Level ("TOL") of

8,1

____________________

1The

TOL

calculations

at

the first

sentencing

were

follows:

2F1.1 (base offense level)

2F1.1(b)(1) (zero loss)

as

together with a Criminal History Category of I, produced a GSR of

from 2 to

release,

8 months'

and a

imprisonment, 24 to

$5,000

sentenced Bennett to

to $50,000

fine.

24 months' probation

36 months'

The

supervised

district

and six months'

court

home

detention, special assessments totaling $450, and no fine.

B.
B.

Bennett I
Bennett I
_________

On

had

erred in

U.S.S.G.

appeal in Bennett I we held that the district court

excluding from

the total

loss

calculation under

2F1.1(b)(1), as relevant conduct, the losses resulting

from fraudulent borrowings not charged in the indictment, Bennett

I,
_

37 F.3d

$660,000"

crimes had

at

694, and

for the civil

in

crediting Bennett

suit settlement entered

been discovered.

Id.
___

at 695

with "at

into after his

("'[T]he loss

amount of the loan not repaid at the time the

least

is the

offense is discov-

ered, reduced by the amount the lending institution has recovered

(or can expect to recover) from any

assets pledged to secure the

loan.'")

n. 7(b)).2

(citing U.S.S.G.

2F1.1,

Finally, Bennett
_______

____________________

2F1.1(b)(2) (more than minimal planning)

3B1.3 (abuse of position of trust)

3E1.1 (acceptance of responsibility)

(2)
_______

TOL

2Bennett I established the following formula for calculating

1(a) the

total

dollar

involved in the

2F1.1 on remand:

amount

of

the

fraudulent

nine counts of conviction

loans

($900,000);

and
___

(b) the total dollar amount of all loans coming

conduct"

guideline calculation

within the

($526,000);

less
____

I held

that the two-level downward adjustment

for acceptance of

__________

responsibility was clear error,

strated

settling

genuine

contrition nor

the civil suit, nor

indictment, but instead denied

the

since Bennett had neither demon-

charges throughout

made

voluntary
_________

pled guilty to

the charges in the

the essential factual elements of

trial and

at sentencing

that he had never intended to defraud the banks.

98.

We

therefore vacated

resentencing.

C.
C.

the first sentence

by maintaining

See id. at 696___ ___

and remanded

for

Id. at 700.
___

Resentencing
Resentencing
____________

On

loss

restitution by

remand the

at $837,000, after

district court

recalculated the

including the losses

total

occasioned by the

fraudulent borrowings for which Bennett was not indicted, result-

ing in a TOL of 18.3

Following Bennett's request

departure, see 18 U.S.C.

for a downward

3553(b), the district court identified

____________________

2(a) the

total dollar

defendant

amount of

prior to

May 3,

all

loans repaid
______

1990 ($589,000),

by the

the date

Bennett's unlawful activities were discovered; and

(b) the

total recoveries

expected

from all

realized

collateral

fraudulent loans involved

encompassed within

and reasonably
pledged

to secure

in all counts
the relevant

to

be

the

of conviction

conduct calcula-

tion.

See Bennett I, 37 F.3d at 695.

3The recalculated TOL is comprised as follows:

2F1.1(a) (base offense level)

2F1.1(b)(1) (total loss of $837,000)

2F1.1(b)(2) (more than minimal planning)

3B1.3 (abuse of position of trust)

2
______

TOL

18

two

factors

First,

ostensibly warranting

Bennett had

sentence, including

Second,

already

served a

departure

portion

the entire six months'

the civil suit

from the

of the

GSR.

original

home detention term.

settlement constituted "an extraordinary

act that seldom occurs in the criminal courts. . . ."

According-

ly,

the district

from

the

months'

a six-month

recalculated 27-month

home

detention term

further 15-month

of

court granted

entering into

$694,000.4

The

downward departure

GSR minimum,

already

served,

downward departure for the

the civil suit

based on

combined with

"extraordinary act"

settlement agreement

district court

the six

then imposed

to repay

the minimum

six-

month prison term now under challenge on appeal.

II
II

DISCUSSION
DISCUSSION
__________

The United

both a

States contends that

downward adjustment and

tance of responsibility

Bennett I
_________

foreclosed

a downward departure

for accep-

based on the

civil settlement and

Ben-

nett's

belated

expression of

contrition

Bennett I, 37 F.3d at 696-98; see also

at

sentencing.

U.S.S.G.

See
___

3E1.1 (permit-

____________________

4As the
departure,
Zackular,
________

government has not appealed

945

not

address it.

F.2d 423,

confinement as "official

425

(1st Cir.

severely curtailed

cf.
___

United States
_____________

1991)

by

18 U.S.C.

"While a defendant's
. .

. home

v.

(rejecting home

detention" for purposes of

3585 (Credit for Prior Custody):

But
___

the six-month downward

confinement,

movement
. .

confinement to the comfort of one's own home is not the function-

al equivalent of incarceration in either a practical or a psychological sense."); see also Reno v. Koray, 115
___ ____ ____
_____

S. Ct. 2021 (1995)

(construing phrase "official detention," see 18 U.S.C.

light of Bail Reform

Act of 1984,

sions and Bureau of Prisons guidelines).

3585(b),

related sentencing provi-

ting

two-level downward

adjustment for
__________

clear demonstration

of

acceptance of responsibility).

A.
A.

Downward Departure
Downward Departure
__________________

A sentencing court may depart from the GSR "only in the

extraordinary case

-- the case that falls

for the offense of conviction . . . ."

30

F.3d 199,

201 (1st

Cir. 1994);

outside the heartland

United States v. Jackson,

see also
___ ____

United States v.
______________

Rivera,
______

994 F.2d

942, 947-49

(1st Cir.

1993).

decision is subject to bifurcated review.

13 F.3d 447, 450

legal" rulings

the guideline

(1st Cir. 1994).

The departure

United States v. Fahm,

First,

all "quintessentially

underlying the decision to

depart (viz., whether

language encourages, permits or

forbids departure

for the kinds of reasons relied upon by the sentencing court) are
_____ __ _______

reviewed de novo.
__ ____

Second,

Id. at 450 (quoting Rivera, 994

the "heartland"

determination

itself is

"full awareness of, and respect for, the trier's

for the case."

Rivera, 994 F.2d at

also Fahm, 13 F.3d at 450.

1.
1.

Extraordinary Act
Extraordinary Act
_________________

F.2d at 951).

reviewed with

superior 'feel'

952 (citation omitted); see

Following Bennett I, the

$660,000

settlement agreement constituted

that seldom

occurs in

"should be

rewarded .

avoided

explicit

the criminal

. ."

reliance

apparently in deference to

that

district court found that the

restitution

must

"an extraordinary act

courts," for

The district

on

"acceptance

court

carefully

of responsibility,"

Bennett I, 37 F.3d at
_________

be "'genuinely

which Bennett

voluntary,

698 (stressing

rather

than

motivated

primarily

desire to settle

by a

collateral

consideration

the civil lawsuit'") (quoting

Miller, 991 F.2d 552, 553 (9th Cir. 1993));

such as

United States v.
_____________

cf. United States v.

Hendrickson, 22 F.3d 170, 176 (7th Cir.) (rejecting civil forfei___________

ture, in light of its involuntary nature, as basis for finding of

"extraordinary acceptance of

S. Ct. 209 (1994).

suit

and

responsibility"), cert. denied, 115

Bennett I also held, however,

settlement was not

"genuinely voluntary," 37

that the civil

F.3d at 698,

that "'restitution is relevant to the extent it shows accep__ ___ ______ __ _____ ______

tance of responsibility.'"
_____ __ ______________

Id. (quoting Miller, 991 F.2d at 553)

(emphasis added).

Consequently, whether

settlement constituted an "extraordinary

showing that it

adjustment or

formed a

a downward

or not the

act," there has been no

material basis for

either a

departure, let alone

restitutionary conduct outside the

civil suit

downward

for establishing

"heartland."

See Rivera, 994

F.2d at 947.

As the

ture

only ground for the

had been foreclosed by

the civil

suit settlement

the meaning of U.S.S.G.

and

could not

acceptance

basis

form

challenged downward depar-

Bennett I, which
_________

was not genuinely

plainly held that

"voluntary" within

3E1.1, see Bennett I, 37 F.3d

the basis

of responsibility,

for

it

a downward

could

for the 15-month downward departure.

at 698,

adjustment
__________

afford no

for

permissible

See Miller, 991 F.2d

at 553 (sentencing court may depart downward on basis of restitu-

tionary conduct only if it evinces an acceptance of responsibili-

ty

substantially

greater

adjustment under U.S.S.G.

than

that required

3E1.1).

for

downward

2.
2.

Overstated Loss and "Multiple Loss Causation"

On

appeal, Bennett

broaches

for the

first time

the

alternative arguments that the 15-month downward departure should

be upheld

either because

significantly

U.S.S.G.

overstates

the $837,000 total

the

seriousness of

2F1.1, n. 7(b) (1994),

loss causation.

See, e.g.,
___ ____

loss recalculation

his

conduct, see
___

or on the ground

United States v.
_____________

of multiple

Rostoff, 53
_______

F.3d

398, 405 (1st Cir. 1995) (acknowledging that a downward departure

may be

warranted in the "few instances" where ". . . a misrepre-

sentation

. .

(citing U.S.S.G.

. is

not the

sole cause

of the

loss. .

. .")

2F1.1, n.11 (1987)); see also United States v.

Gregorio, 956 F.2d 341, 345 (1st Cir. 1992).

Although

overstated

as

Bennett

contends

consequence of

an

that

the

economic

total

loss

downturn in

is

the

regional economy, insofar as the record on appeal permits assess-

ment it undermines Bennett's claim.

The valuation of the proper-

ty Bennett agreed to surrender under

the terms of the civil suit

settlement

was disputed

at

the initial

sentencing; viz.,

government contending for $431,024.16, Bennett $684,000.

the

At that

time, Bennett maintained

that a slumping economy had reduced the

value

after the banks

of the settlement

proved properties

and other

took title to

assets tendered

by

the im-

Bennett.

The

district court accordingly rejected the lower valuation propound-

ed

by the government, and

found the settlement

worth "at least

$660,000."

Subsequently, at resentencing, it placed the value of

Bennett's "extraordinary act" at $694,000.

Thus, not only did

of a

sudden, unforeseen

significantly lowered

his

illegal

proceedings he

Bennett not proffer record evidence

downturn in

the value of the

borrowings, but

maintained that

these properties.

the regional economy

throughout

that

properties financed with

both prior

market factors had

sentencing

not affected

We therefore hold both that the "multiple loss

causation" claim

Dietz, 950 F.2d

sentencing

has not

50, 55

been preserved,

(1st Cir. 1991)

as in other contexts

. . .

see United States v.

("[I]n connection

with

arguments not seasonably

addressed to the trial court may not be raised for the first time

in

an appellate venue."), and

contradicted

that it is

unsupported

indeed

by the record.

III
III

CONCLUSION
CONCLUSION
__________

As all available avenues

been

foreclosed, we vacate

district court

for a downward departure have

the second

sentence imposed

and remand for resentencing

by the

within the guideline

sentencing range

prescribed by the total

offense level recalcu-

lated by the district court at the first resentencing.

SO ORDERED.
SO ORDERED.
__ _______

10