United States v. Hensley

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT



                                                     
                                 ____________________



        No. 96-1110



                              UNITED STATES OF AMERICA,



                                      Appellee,



                                          v.



                                  SCOTT A. HENSLEY,



                                Defendant, Appellant.



                                                     
                                 ____________________


APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                   [Hon. Douglas P. Woodlock, U.S. District Judge]
                                              ___________________



                                                     
                                 ____________________



                                        Before



                               Torruella, Chief Judge,
                                          ___________



                            Cyr and Lynch, Circuit Judges.
                                           ______________


____________________


Miriam Conrad, with whom Federal Defender Office was on brief for
             _____________            _______________________

        appellant.

             Annette Forde, Assistant United States Attorney, with whom Donald
             _____________                                              ______

        K. Stern, United States Attorney, was on brief for appellee.
        ________


____________________



                                    August 5, 1996

                                                     
                                 ____________________



CYR,  Circuit  Judge.   Defendant  Scott  Allen Hensley
                    CYR,  Circuit  Judge
                          ______________



          challenges  the restitutionary sentence  imposed upon him  by the



          district  court, thus presenting this  court with its first occa-



          sion to interpret and apply the 1990 amendments to the Victim and



          Witness Protection  Act ("VWPA"),  18 U.S.C.     3663-64  (1994).



          Finding no error, we affirm the district court judgment. 


I
                                          I



                                      BACKGROUND
                                      BACKGROUND
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                    After  a federal  grand jury  indicted  him for,  among



          other things, devising and executing a  scheme to obtain merchan-



          dise under  false pretenses  from various computer-products  dis-



          tributors across the country, Hensley  pled guilty to all counts,



          thereby conceding  the following facts as alleged  in the indict-



          ment.1  



                    On April  1, 1995,  under the  alias "Robert  Halford,"



          Hensley rented  a box  at Mail Boxes,  Etc. ("MBE"),  510 Common-



          wealth Avenue, Boston, Massachusetts.  On April 14, he telephoned



          companies  in California,  New York,  Texas, and New  Jersey, and



          using the name "Halford," placed orders for computer equipment in



          behalf  of a fictitious company, American Telemark, purportedly a



          division  of AT&T,  for delivery  to the  MBE address  in Boston.



          Hensley  remitted  five  forged checks  via  Federal  Express, in



                              
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               1The  charges included mail fraud, 18  U.S.C.   1341 (1994);

          wire  fraud, id.   1343; making or possessing counterfeit securi-
                       ___

          ties, id.   513; interstate transportation of counterfeit securi-
                ___

          ties,  id.    2314; and  receipt of  stolen goods  transported in
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          interstate commerce, id.   2315. 
                               ___



                                          2



amounts  ranging from  $20,000 to  $31,000 and  bearing the  AT&T



          logo.   Once  the  computer equipment  arrived, Hensley  used the



          alias "William Noonan"  to rent storage space and  a U-Haul truck



          to  transport the  equipment.   On  his next  visit  to the  MBE,



          Hensley was arrested by the FBI.    



                    After Hensley  pled guilty and  before sentencing,  the



          government  learned that  he had committed  additional fraudulent



          acts during  the same time  period.  According to  the undisputed
                                                                 __________



          facts  set forth  in the presentence  report ("PSR"),  see United
                                                                 ___ ______



          States v. Benjamin, 30 F.3d 196,  197 (1st Cir. 1994) (failing to
          ______    ________



          object bars appellate challenge to facts stated in PSR), on March



          30, 1995, Hensley had used  the "William Noonan" alias to  rent a



          second box at another MBE  location, on Newbury Street in Boston.



          On  April  3,  "Noonan" placed  an  $837.86  telephone  order for



          computer software  with Creative Computers, a California company,



          for delivery to the  Newbury Street MBE.  He tendered  a counter-



          feit money order drawn on a Boston Check Cashiers ("BCC") company



          account, which was  dishonored after he  absconded with the  Cre-



          ative  Computers software.  Hensley issued three more counterfeit



          BCC money  orders in payment  for another  computer order  placed



          with  ATS Technologies  ("ATS"), a  credit card  bill, and  a car



          rental.



                    Although  the charged  conduct  resulted  in no  actual



          losses because the  equipment was recovered, the  PSR recommended



          that  Hensley reimburse  the car  rental  company ($500.00),  the



          credit card company ($725.00), Creative Computers  ($837.86), and


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ATS ($1,026.12),  each of  which had  accepted a  counterfeit BCC



          money order.   Hensley objected that the four  companies were not



          victims of  the offense of  conviction as the indictment  did not



          charge him with passing the counterfeit money  orders.  Following



          briefing and oral argument, the district court found that ATS had



          sustained no loss, and that neither the credit card bill nor  the



          car rental  came within the  scope of the offense  of conviction.



          The  court nonetheless ruled that the Creative Computers acquisi-



          tion was within the alleged scheme to defraud.  The court accord-



          ingly directed Hensley to make restitution to Creative Computers,



          and Hensley appealed. 



                                          II
                                          II



                                      DISCUSSION
                                      DISCUSSION
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                    Federal courts possess  no inherent authority  to order



          restitution, and may do so  only as explicitly empowered by stat-



          ute.   United States v. Gilberg, 75 F.3d  15, 22 (1st Cir. 1996).
                 _____________    _______



          The  VWPA authorizes  restitutionary  sentences  by the  district



          courts  for the  benefit  of  victims of  federal  offenses.   As



          Hensley's criminal conduct and conviction occurred after November



          29,  1990, the effective date  of the Crime  Control Act of 1990,



          the 1990 VWPA amendments govern our decision.2     



                    The VWPA provides that "[t]he court . . . may order . .



          . restitution  to any  victim  of such  offense."   18  U.S.C.   
                            ___  ______  __ ____  _______



                              
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               2Gilberg, 75 F.3d at 20-22.  Moreover, the Sentencing Guide-
                _______

          lines  do not purport to  expand the sentencing court's authority

          to order restitution.  U.S.S.G.   5E1.1(a)(1) (1995) (incorporat-

          ing the VWPA). 



                                          4



3663(a)(1) (emphasis added).   Prior to the  1990 amendments, the



          VWPA had been interpreted by the Supreme Court as limiting resti-



          tution to the "loss caused by the specific conduct that [was] the
                                            ________ _______



          basis of  the offense of  conviction."  Hughey v.  United States,
                                                  ______     _____________



          495  U.S. 411,  413 (1990)  (emphasis added).   The  Hughey Court
                                                               ______



          therefore reversed a restitutionary sentence which had been based



          on the  total loss  attributable to all  counts in  an indictment
                                              ___



          charging unauthorized use  of credit cards and theft  by a Postal



          Service employee, rather than on the loss attributable to the one



          count to which Hughey had pled guilty.  Id. at 422.
                                                  ___



                    After Hughey, this court held that the specific conduct
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          underlying a  mail fraud  conviction, which  requires proof of  a



          broader scheme to  defraud, includes only the  particular mailing



          charged and  not the entire mail fraud  scheme.  United States v.
                                                           _____________



          Cronin, 990 F.2d  663, 666 (1st Cir. 1993);  accord United States
          ______                                       ______ _____________



          v. Newman, 49 F.3d 1, 11 (1st Cir. 1995) (wire fraud).   Thus, we
             ______



          adopted  the more  narrow and  lenient majority  view during  the



          interim preceding the  1990 amendments to the VWPA.   Cronin, 990
                                                                ______



          F.2d at 666.  



                    The present controversy requires us to reexamine Cronin
                                                                     ______



          in light  of the 1990  amendments.  Consistent with  the minority



          view we rejected in Cronin, in 1990 Congress amended  the VWPA to
                              ______



          provide that  "a victim of an offense that involves as an element
                         _ ______ __ __ _______ ____ ________ __ __ _______



          a scheme, a  conspiracy, or a pattern of  criminal activity means
          _ ______                                                    _____



          any person directly harmed by the defendant's criminal conduct in
          ___ ______ ________ ______ __ ___ ___________ ________ _______ __



          the course of the scheme, conspiracy,  or pattern."  18 U.S.C.   
          ___ ______ __ ___ ______


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3663(a)(2) (emphasis added).   As Hensley concedes  that a scheme



          to defraud is an element of  the mail and wire fraud offenses  to



          which he  pled guilty, see United States  v. Sawyer, 85 F.3d 713,
                                 ___ ______ ______     ______



          723 (1st Cir. 1996), the  district court correctly applied VWPA  



          3663(a)(2) in this case.  Compare United  States v. Reed, 80 F.3d
                                    _______ ______________    ____



          1419, 1423 (9th  Cir. 1996) ("felon  in possession" offense  does



          not require proof of scheme).



                    Under current VWPA   3663(a)(2), the district court may



          order   restitution  to  every  victim  directly  harmed  by  the



          defendant's conduct "in the course  of the scheme, conspiracy, or



          pattern of criminal  activity" that is an element  of the offense



          of  conviction, without regard to whether the particular criminal
                                                        __________ ________



          conduct  of the defendant  which directly  harmed the  victim was
          _______



          alleged in a  count to which  the defendant pled  guilty, or  was



          even charged in the indictment.  United States v. Henoud, 81 F.3d
                                           _____________    ______



          484, 488  (4th  Cir. 1996)  (unnamed  victim); United  States  v.
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          Kones, 77 F.3d 66, 70  (3d Cir. 1996) (providing example); United
          _____                                                      ______



          States v. Pepper,  51 F.3d 469, 473  (5th Cir. 1995).   Thus, the
          ______    ______



          outer limits of  a VWPA   3663(a)(2)  restitution order encompass



          all direct harm from the  criminal conduct of the defendant which



          was within any  scheme, conspiracy, or  pattern of activity  that



          was an element of any offense of conviction.  See Kones,  77 F.3d
                                                        ___ _____



          at 70 (discussing causation requirement).     



                    Although Hensley acknowledges the  expansiveness of the



          1990 amendments,  he contends  that the  fraudulent order  placed



          with Creative Computers  was not within the  same scheme embraced


6



by the  offense to which he pled guilty.   We approach this claim



          by examining the terms of  the indictment and the plea agreement.



          Henoud, 81 F.3d at  488.  For the most part,  courts require that
          ______



          the  indictment  "specifically"  define the  scheme  in  order to



          ensure that the restitutionary amount not exceed the harm direct-



          ly  caused the victim  of the scheme  embraced by the  offense of



          conviction, id.; see also United States v. Bennett, 943 F.2d 738,
                      ___  ___ ____ _____________    _______



          741 (7th  Cir. 1991)  (noting amorphous  nature of  "scheme" con-



          cept), cert.  denied, 504  U.S.  987 (1992).   Nevertheless,  the
                 _____  ______



          courts of  appeals consistently  have upheld  restitutionary sen-



          tences based simply on evidence sufficient to enable the sentenc-



          ing court to  demarcate the scheme, including its  "mechanics . .



          .[,] the location of the  operation, the duration of the criminal



          activity, [and] the methods used" to effect it.  Henoud,  81 F.3d
                                                           ______



          at 489-90 n.11;  Pepper, 51 F.3d at 473; United States v. Turino,
                           ______                  _____________    ______



          978  F.2d 315, 318-19  (7th Cir. 1992)  (collecting cases), cert.
                                                                      _____



          denied, 508 U.S. 975 (1993).            Hensley concedes that the
          ______



          indictment adequately defined the scheme, but faults the district



          court for  focusing on  the broad  "boilerplate" language  in the



          indictment,  rather than the specific conduct  alleged.  We think



          the 1990  amendments to the  VWPA and the relevant  caselaw, see,
                                                                       ___



          e.g.,  Turino, 978  F.2d at  318-19  (discussing Seventh  Circuit
          ____   ______



          cases), preclude  so narrow a definition of the "scheme" element,



          which amounts to an attempt to revive the Hughey holding discard-
                                                    ______



          ed by Congress in the 1990 VWPA amendments.  See supra pp. 4-5.  
                                                       ___ _____



                    Hensley pled guilty  to an indictment alleging  that he


7



devised and executed a scheme  in Boston to obtain merchandise by



          false  pretenses  from  specific  computer-products  distributors



          around the country, which extended  roughly from April 1 to April



          25, 1995.  Thus, the  indictment adequately detailed the  offense



          of conviction, as well as the underlying scheme to defraud, so as



          to enable the district court reliably to fashion a restitutionary



          sentence  which fairly reimbursed  any victim directly  harmed by



          Hensley's  criminal conduct  during  the  course  of  the  scheme



          involved in the offense of conviction. 



                    As  a fallback position,  Hensley claims that  the Cre-



          ative  Computers software  purchase  was not  part of  the scheme



          underlying  the offense  of  conviction,  even  under  the  broad



          definition  we now adopt.   Restitution  orders normally  are re-



          viewed only  for "abuse of  discretion," Gilberg, 75 F.3d  at 20,
                                                   _______



          and their  subsidiary factual  findings only  for "clear  error."



          United  States v.  Savoie,  985  F.2d 612,  617  (1st Cir.  1993)
          ______________     ______



          (victim loss);  United States v.  Sarno, 73 F.3d 1470,  1503 (9th
                          _____________     _____



          Cir. 1995),  cert. denied, 116  S. Ct. 2553 (1996),  and petition
                       _____ ______                            ___ ________



          for cert. filed,     U.S.L.W.    , (U.S. June 27,  1996) (No. 95-
          ___ _____ _____   __          ___



          9478).



                    At the outset, we note that the cases on restitutionary



          sentences cast  little light  on how the  sentencing court  is to



          determine whether  a criminal defendant's  conduct was part  of a



          unitary scheme.  However, we agree  with the government's sugges-



          tion, to  which Hensley takes no exception,  that it is useful to



          consult the  analogous  caselaw on  duplicitous  indictments  and


8



variance of proof.  See,  e.g., United States v. Morse,  785 F.2d
                              ___   ____  _____________    _____



          771, 774-75 (9th Cir.) (mail  fraud), cert. denied, 476 U.S. 1186
                                                _____ ______



          (1986).  Thus, in determining whether particular criminal conduct



          comprised  part of a  unitary scheme  to defraud,  the sentencing



          court  should consider the totality of the circumstances, includ-



          ing the  nature of the  scheme, the identity of  its participants



          and  victims, and  any commonality  in  timing, goals,  and modus



          operandi.   Id.   Accord United States  v. Morrow,  39 F.3d 1228,
                      ___   ______ _____________     ______



          1233-34 (1st Cir.  1994) (conspiracy), cert.  denied, 115 S.  Ct.
                                                 _____  ______



          1328 (1995).3 



                    We do  not agree that  there were too  many differences



          between  the fraudulent acquisition  from Creative  Computers and



          the conduct  alleged  in the  indictment to  permit the  district



          court to rule that the former acquisition came within any alleged



          unitary  scheme  to  defraud.   The  undisputed  evidence plainly



          supported  the district court  finding that Hensley  launched the



          unitary scheme with  the Creative Computers purchase,  by renting



          the two drop boxes at MBE locations  in Boston within two days of



                              
          ____________________



               3We reject the assertion by Hensley that this interpretation

          permits restitution for  "any loss caused by  defendant's fraudu-

          lent conduct, no  matter how unrelated to the  specific scheme at

          issue."   The district court  finding that the  counterfeit money

          orders Hensley used to "pay" a credit card bill and a  car rental

          bill  were not  part  of  the scheme  underlying  the offense  of

          conviction  illustrates  the  limits upon  a  sentencing  court's

          authority  to order restitution  under the 1990  VWPA amendments.

          Moreover, the criteria we endorse for determining whether various

          conduct comprised a single scheme  serves as a guide to both  the

          initial restitutionary sentencing  decision and appellate review,

          and, in keeping  with the amendatory statute, allows the sentenc-

          ing  court  substantial,  though  not  unbridled,  discretion  to

          reimburse crime victims. 



                                          9



one another,  placing all  the fraudulent  orders for  goods with



          computer-products suppliers  (similar victims)  within less  than



          two weeks, using  interstate wires in each instance, and "paying"



          for  the goods with  counterfeit instruments.   This abundance of



          proof  on  the  commonality of  the  victims,  timing,  and modus



          operandi utterly precludes a finding of clear error.  See Savoie,
                                                                ___ ______



          985 F.2d at 617. 



                                         III
                                         III



                                      CONCLUSION
                                      CONCLUSION
                                      __________



                    As the district court correctly concluded that Creative



          Computers was a victim of  the offense of conviction for purposes



          of  the restitution statute,  its $837.86 restitutionary sentence



          must be affirmed. 



                    AFFIRMED.
                    AFFIRMED
                    ________


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