United States v. Lilly

• Court: Court of Appeals for the First Circuit
• Decided: January 5, 1994
• Docket: 93-1577
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                              _________________________

          No. 93-1577

                              UNITED STATES OF AMERICA,

                                      Appellee,

                                          v.

                                  WILLIAM W. LILLY,

                                Defendant, Appellant.

                              __________________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                [Hon. Walter Jay Skinner, Senior U.S. District Judge]
                                          __________________________

                              __________________________

Before

                                Selya, Circuit Judge,
                                       _____________

                            Coffin, Senior Circuit Judge,
                                    ____________________

                               and Cyr, Circuit Judge.
                                        _____________

                              __________________________

Mark M. Freeman and Rappaport,  Freeman & Pinta on brief for
               _______________     ___________________________
          appellant.
               A. John  Pappalardo, United  States Attorney,  and Brien  T.
               ___________________                                _________
          O'Connor,  Assistant United  States Attorney,  on  brief for  the
          ________
          United States.

                              _________________________

                                   January 4, 1994

                              _________________________

SELYA,  Circuit   Judge.    In  this  criminal  appeal,
                    SELYA,  Circuit   Judge.
                            _______________

          defendant-appellant  William W.  Lilly claims  that the  district

          court engaged in impermissible "double counting" when calculating

          the  guideline sentencing  range (GSR)  applicable  to his  case.

          Concluding  that  Lilly's  assignment of  error  lacks  force, we

          affirm the judgment below.

                                          I
                                          I

                    The facts relevant to this appeal are not now disputed.

          Lilly,  a  successful developer,  fell  on hard  times  after the

          collapse of a  boom market in real estate.  He began to play fast

          and loose, courting trouble on several fronts.  See, e.g., United
                                                          ___  ____  ______

          States  v.  Lilly, 983  F.2d  300  (1st  Cir.  1992)  (describing
          ______      _____

          appellant's  prosecution  for  bank  fraud).   On  May  21, 1991,

          Lilly's  woes   mounted:    a  federal  grand  jury  returned  an

          indictment against him and two cohorts,  Sheldon Stone and Gerald

          Sarro.   The  indictment  focused  on  a  condominium  conversion

          project in  Claremont, New Hampshire.   It charged all  three men

          with conspiracy, 18  U.S.C.  371 (1988),  and also charged  Lilly

          with  fifty-four substantive counts of making false statements to

          a federally  insured financial  institution, in  violation of  18

          U.S.C.  1014 (1988).

                    On  December 4, 1991,  the grand jury  returned another

          indictment accusing Lilly and five codefendants, Robert O'Connor,

          Gina Lonardo, Mark  Lonardo, Barry Tevrow,  and Diane Tevrow,  of

          having perpetrated eight counts of wire fraud, in violation of 18

          U.S.C.  1343  (1988).  These  charges involved a  so-called "land

2

flip" scheme,1  separate from  the Claremont  boondoggle.   After

          considerable skirmishing, not material  here, the two indictments

          were consolidated and Lilly pled guilty to all counts on February

          25, 1993.

                                          II
                                          II

                    In respect to many crimes, particularly "white  collar"

          crimes, the sentencing guidelines use the amount of the actual or

          intended loss  as an important  indicium in fixing  a defendant's

          offense level  and, hence, his  GSR. See, e.g., United  States v.
                                               ___  ____  ______________

          Tardiff,  969 F.2d  1283, 1285  (1st Cir.  1992) ("In  respect to
          _______

          fraud  crimes,  the   applicable  offense   level  increases   in

          proportion to  the monetary  magnitude of  the loss."); see  also
                                                                  ___  ____

          U.S.S.G.  2F1.1(b)(1).2   Here,  the district  court, faced  with

          several  proposed scenarios, determined that the aggregate amount

          of the monetary loss stemming from appellant's involvement in the

          two schemes equalled  $1,750,000   a total reached  by evaluating

          the land-flip  losses at $1,000,000  and the Claremont  losses at

____________________

               1We  have  described  a  land  flip  as  "an  intricate  and
          sophisticated scheme . . . under which real property is purchased
          for a low price, immediately resold  at a much higher price to  a
          straw or fictitious buyer, and the higher resale price is used as
          the basis for obtaining a  mortgage loan that finances the entire
          transaction."  United States v.  Cassiere, 4 F.3d 1006, 1010 (1st
                         _____________     ________
          Cir. 1993).

               2A  sentencing court  customarily applies the  guidelines in
          effect on the date of sentencing.  See United States v. Bell, 953
                                             ___ _____________    ____
          F.2d  6, 7 (1st Cir. 1992); United States v. Harotunian, 920 F.2d
                                      _____________    __________
          1040,  1041-42  (1st  Cir.  1990).   Accordingly,  this  case  is
          controlled by the November 1992 edition of the guidelines.

                                          3

$750,000.3  This computation  increased appellant's base  offense

          level  from  six  to  eighteen.    See  U.S.S.G.   2F1.1(b)(1)(M)
                                             ___

          (providing  a twelve-level  upward  adjustment  for fraud  crimes

          involving more than $1,500,000, up to and including $2,500,000).

                    After  holding appellant  responsible  for the  overall

          amount of the  combined losses, the  court increased his  offense

          level by  two  levels because  his  offenses involved  more  than

          minimal  planning, see  U.S.S.G.   2F1.1(b)(2)(A),  and  by  four
                             ___

          additional  levels  because  he  played  a  leading  role  in the

          Claremont scheme, see  U.S.S.G.  3B1.1(a) (providing for  a four-
                            ___

          level increase if a defendant  acts as an "organizer" or "leader"

          in an extensive  criminal enterprise).   The loss valuation,  the

          planning adjustment,  and the role-in-the-offense  adjustment all

          adversely affected  appellant's  GSR  and,  hence,  his  60-month

          sentence (a sentence within, but near the low end of, the GSR).

                                         III
                                         III

                    On appeal, Lilly makes only a single argument.  He says

          that the district court impermissibly "double counted" because it

          used  his position  as the  kingpin  in the  Claremont scheme  to

          increase his offense  level in two different ways,  first, as the

          basis for  attributing the full amount  of the loss to  him, and,

____________________

               3Appellant disputed both figures in the district court, but,
          on appeal, he does not challenge the district court's findings as
          to  the  amounts  involved.    Consequently,  we  deem  all  such
          arguments, together with  any other arguments asserted  below but
          not resurrected in this  court, to be waived.   See United States
                                                          ___ _____________
          v. Slade, 980 F.2d 27, 30  n.3 (1st Cir. 1992); United States  v.
             _____                                        _____________
          St. Cyr, 977 F.2d 698, 701 (1st Cir. 1992).
          _______

                                          4

second,   as  the   basis  for   an   upward  role-in-the-offense

          adjustment.4     We   reject   appellant's   construct  for   two

          independently sufficient reasons.

                                          A
                                          A

                    At the outset,  we note that appellant's  claim suffers

          from  a  fatal strain  of  procedural default.    While appellant

          voiced a  double counting concern  below   he contended  that the

          planning adjustment,  U.S.S.G.  2F1.1(b)(2)(A),  overlapped with,

          and represented  double counting of, his leadership  role, id. at
                                                                     ___

           3B1.1(a)    he did  not raise the  contention he  advances here.

          For  all intents  and purposes,  that  ends the  matter.5   Legal

          arguments cannot be  interchanged at will.  See  United States v.
                                                      ___  _____________

          Dietz, 950  F.2d 50, 55  (1st Cir. 1991) ("A  criminal defendant,
          _____

          dissatisfied  with the district court's rulings at sentencing yet

          persuaded that his original arguments lacked merit, cannot switch

          horses  mid-stream in  hopes  of  locating  a  swifter  steed.").

          Mindful  of this  principle,  "[w]e  have  repeatedly  ruled,  in

          connection with sentencing  as in other contexts,  that arguments

          not seasonably addressed to the trial court may not be raised for

          the first time in an appellate venue."  Id.; accord United States
                                                  ___  ______ _____________
                              
          ____________________

               4In support of this argument,  appellant points out that the
          district  court,  when  sentencing   the  two  other   "Claremont
          defendants," assigned lesser  amounts of loss  to them, with  the
          result  that  the  loss  attributed  to  appellant  exceeded  the
          aggregate loss attributed to others.

               5Lilly's  original complaint has not been renewed on appeal.
          It is,  in any event, jejune.  See  United States v. Balogun, 989
                                         ___  _____________    _______
          F.2d   20,  23-24  (1st  Cir.  1993)  (rejecting  complaint  that
          supervisory  role adjustment constituted  double counting in view
          of upward adjustment for more than minimal planning).

                                          5

v. Ortiz, 966 F.2d 707, 717 (1st Cir. 1992), cert. denied, 113 S.
             _____                                     _____ ______

          Ct. 1005 (1993);  United States v. Uricoechea-Casallas,  946 F.2d
                            _____________    ___________________

          162, 166 (1st Cir. 1991);  United States v. Pilgrim Market Corp.,
                                     _____________    ____________________

          944 F.2d  14, 21 (1st Cir. 1991); United  States v. Fox, 889 F.2d
                                            ______________    ___

          357, 359 (1st Cir. 1989).

                    In  order  to  preserve   sentence-related  points  for

          appeal,  litigants must raise  them squarely in  the lower court.

          Appellant  cannot pass  this test;  indeed, he  concedes that  he

          never   explained  his  current  version  of  a  double  counting

          objection to  the district court.   The mere fact  that appellant

          made  a different double counting argument  below, addressed to a

          different offense level  adjustment, does not exempt him from the

          operation of the raise-or-waive rule.  Thus, the appeal is by the

          boards.6

                                          B
                                          B

                    The  second  fly  in appellant's  ointment  is  that no

          double counting occurred in this case.  We explain briefly.  

                    The  amount  of  loss  attributable   to  a  particular

          participant in a jointly undertaken  criminal activity is the sum

          of  the amount  of  loss  he personally  caused  (or intended  to

____________________

               6Of  course,  even  though  a  defendant  fails to  raise  a
          particular  argument  at  the disposition  hearing  in  the lower
          court, his  sentence can still be  reversed on the  basis of that
          argument if the error is "plain."  The criteria for a  finding of
          plain error  in the  sentencing context  are, however,  rigorous.
          See  United States  v. Olano,  113 S.  Ct. 1770,  1777-79 (1993);
          ___  _____________     _____
          United States v. Olivier-Diaz, ___  F.3d ___, ___ (1st Cir. 1993)
          _____________    ____________
          [No. 93-1306,  slip op.  at 10];  see  also United  States v.  La
                                            ___  ____ ______________     __
          Guardia, 902 F.2d 1010, 1012-13 (1st Cir. 1990).  For the reasons
          _______
          stated infra, appellant cannot satisfy these exacting standards.
                 _____

                                          6

cause),  and, under the relevant conduct rubric, U.S.S.G.  1B1.3,

          the loss (actual  or intended) stemming from acts  by others that

          were   reasonably  foreseeable  by  him  and  were  committed  in

          furtherance of the  conspiracy.7   See U.S.S.G.   1B1.3(a)(1)(B);
                                             ___

          id., comment.  (n.2); see also  United States v. Moore,  923 F.2d
          ___                   ___ ____  _____________    _____

          910, 917  (1st Cir.  1991).   It follows  that the  measure of  a

          defendant's accountability for  transactions in which he  was not

          personally involved "is  usually congruent with the  scope of his

          agreement   with  the   other   participants   in  the   criminal

          enterprise."  United States v. Garcia,  954 F.2d 12, 16 (1st Cir.
                        _____________    ______

          1992).  In other words, the scope of a  participant's agreement  

          rather than his  place in the conspiracy's hierarchy   determines

          the amount of  loss properly laid at his  doorstep for sentencing

          purposes.

                    To be sure,  there is  an overlap  between "scope"  and

          "role."  It  stands to  reason that  the majordomo  of a  scheme,

          having  set  the  stage,  probably  will  be  saddled  with  more

          "relevant  conduct" than  a bit player.   That  overlap, however,

          does not  mean that adjusting  for a leadership  role necessarily

          portends  double counting  in a  case  where the  amount of  loss

          influences the offense level.   The two enhancements do not march
                              
          ____________________

               7Generally  speaking, a sentencing  court looks  to intended
                                                                   ________
          loss as well as actual  loss.  See U.S.S.G.  1B1.3(a)(3) (stating
                          ______         ___
          that relevant  conduct includes, inter  alia, "all harm  that was
                                           _____  ____
          the  object  of  [the] acts  and  omissions"  comprising relevant
          conduct);  See  also  U.S.S.G.   2F1.1,  comment.  (n.9)  (cross-
                     ___  ____
          referencing  U.S.S.G.  2X1.1);  U.S.S.G.  2X1.1,  comment. (n.4).
          Here, the court
          chose to focus on actual loss, and neither party assigns error to
          that choice.

                                          7

in  lockstep8  and,  moreover, serve  different  purposes  in the

          sentencing calculus.          This  case  illustrates  the point.

          Section  2F1.1(b)(1) is  aimed at  measuring the  gravity  of the

          offense.    It  does  so  by formulating  a  sliding  scale  that

          increases  a defendant's probable  punishment in rough proportion

          to  the  victims' financial  loss  (actual or  intended).   Thus,

          amount of loss becomes a proxy for the seriousness of an offense.

          See,  e.g.,  U.S.S.G.   2F1.1(b),  comment.  (n.10)   (suggesting
          ___   ____

          consideration of a departure if  the amount of loss overstates or

          understates a crime's seriousness).

                    Conversely, the  role-in-the-offense adjustment  is not

          concerned  with specific offense  characteristics like  amount of

          loss;  it is  aimed instead  at  measuring the  culpability of  a

          defendant's   conduct  in  the  commission  of  the  offense  and

          increasing  (or reducing) the  punishment in rough  proportion to

          the defendant's involvement.  The adjustment proposes, in effect,

          to  treat   less  harshly   those  persons   within  a   criminal

          organization who  are on the fringes, i.e.,  "minor" or "minimal"
                                                ____

          participants,  see U.S.S.G.   3B1.2, and  to  treat more  harshly
                         ___

          those who, although guilty of participating only in the self-same

          offense,  bear   greater  "relative   responsibility"  and   who,

          therefore, "present a greater danger to the public" and "are more
                              
          ____________________

               8Take,  for   example,  two  participants   in  a   criminal
          enterprise, one the  mastermind and one a  bottom-rung underling.
          The former is an organizer and  leader; the latter is not.   Yet,
          both  may  be chargeable  with  the entire  amount  of loss  in a
          particular case, say,  if the underling is a  forger who, knowing
          the plan, follows the mastermind's  lead and doctors the critical
          paperwork, thus consummating the fraud.

                                          8

likely  to recidivate."   U.S.S.G.   3B1.1,  comment. (backg'd.).

          Thus,  role becomes  a  proxy  for the  degree  of an  offender's

          culpability.  

                    We  think this regime  lies well within  the Sentencing

          Commission's   power.    Sentencing   factors  do  not   come  in

          hermetically sealed  packages, neatly wrapped  and segregated one

          from another.   Rather,  several factors may  draw upon  the same

          nucleus  of  operative  facts  while  nonetheless  responding  to

          discrete  concerns.    Consequently,  a  degree  of  relatedness,

          without more, does not comprise double  counting.  So it is here:

          although calculating  the amount of  loss for which  appellant is

          responsible requires some examination into what role he played in

          the overall  scheme, the  upward adjustment  for leadership  does

          not, by  dint of  the loss-evaluation  inquiry  alone, equate  to

          double counting.   Compare, e.g., United  States v. Balogun,  989
                             _______  ____  ______________    _______

          F.2d 20, 23-24  (1st Cir. 1993) (differentiating  between conduct

          undergirding supervisory role adjustment and conduct undergirding

          sentence enhancement for more than minimal planning).  The  proof

          of this pudding is that, if Lilly had  organized exactly the same

          scheme and provided  leadership to exactly the  same accomplices,

          but  bilked  investors or  lenders  out of  appreciably  more (or

          appreciably  less) money, the  amount of loss  would change, thus

          altering  his   offense  level     but   the  role-in-the-offense

          enhancement would remain constant.

                                          C
                                          C

                    We add  an eschatocol of  sorts.  Even if  the district

9

court's  actions usefully  could be  described in  some sense  as

          double  counting      and  we  doubt  the  accuracy   of  such  a

          characterization, see supra  Part III(B)   appellant would face a
                            ___ _____

          further hurdle.          Double   counting   in   the  sentencing

          context  "is a  phenomenon that  is less  sinister than  the name

          implies."   United  States v.  Zapata,  1 F.3d  46, 47  (1st Cir.
                      ______________     ______

          1993).  Since double counting is often perfectly proper, see id.,
                                                                   ___ ___

          the guidelines themselves are the most helpful aid in the task of

          separating  permissible  double counting  from  its impermissible

          counterpart.   The  Sentencing Commission  has  not been  bashful

          about  explicitly  banning   double  counting  in  a   number  of

          instances.     See,   e.g.,  U.S.S.G.    3A1.1,  comment.   (n.2)
                         ___    ____

          (discussing  "vulnerable victim"  enhancement); U.S.S.G.   3A1.3,

          comment. (n.2) (discussing  enhancement relating to  restraint of

          victim); U.S.S.G.   3C1.2, comment.  (n.1) (discussing  "reckless

          endangerment" enhancement).   We  believe the  Commission's ready

          resort to explicitly stated  prohibitions against double counting

          signals that courts  should go quite  slowly in implying  further

          such prohibitions where none are  written.9  Accord United States
                                                       ______ _____________
                              
          ____________________

               9Some  circuits have  held that  double  counting is  always
          permissible   except  when  it  is  expressly  forbidden  by  the
          guidelines.  See, e.g., United States v.  Reese, 2 F.3d 870, 894-
                       ___  ____  _____________     _____
          95 (9th Cir. 1993), petition for cert. filed (Oct. 28, 1993) (No.
                              ________ ___ _____ _____
          93-6552); United States  v. Ellen, 961 F.2d 462,  468 (4th Cir.),
                    _____________     _____
          cert. denied, 113  S. Ct. 217 (1992); United  States v. Williams,
          _____ ______                          ______________    ________
          954 F.2d 204,  208 (4th Cir. 1992).   That view is,  however, not
          without its detractors.  See,  e.g., United States v. Hudson, 972
                                   ___   ____  _____________    ______
          F.2d  504, 507  (2d  Cir. 1992)  (declining to  follow Williams);
                                                                 ________
          United  States v.  Romano,  970  F.2d 164,  167  (6th Cir.  1992)
          ______________     ______
          (similar); cf. United States v.  Fuller, 897 F.2d 1217, 1222 (1st
                     ___ _____________     ______
          Cir. 1990) (voicing concern about  whether a single factor can be
          double counted in setting a defendant's offense level).  We leave

                                          10

v. Wong,  3 F.3d  667, 670-71  (3d Cir. 1993);  United States  v.
             ____                                         _____________

          Sanders,  982 F.2d  4,  8  (1st Cir.  1992)  (per curiam),  cert.
          _______                                                     _____

          denied, 113 S. Ct. 2937 (1993); United States v. Rocha,  916 F.2d
          ______                          _____________    _____

          219, 243 (5th Cir. 1990), cert.  denied, 111 S. Ct. 2057  (1991);
                                    _____  ______

          United States v. Goolsby, 908 F.2d 861, 863 (11th Cir. 1990).   
          _____________    _______

                    In the situation at hand, the  guidelines not only fail

          expressly to  outlaw double  counting, but also  imply the  exact

          opposite.   They specifically  instruct that  persons who  commit

          fraud offenses ought  to receive sentences commensurate  with the

          amount of loss for which they are responsible, and that those who

          marshal criminal enterprises  ought to  receive extra  punishment

          for their  leadership roles.  We think that when, as now, neither

          an  explicit prohibition against double counting nor a compelling

          basis for implying  such a prohibition exists,  clearly indicated

          adjustments  for  seriousness  of the  offense  and  for offender

          conduct can both be imposed, notwithstanding that the adjustments

          derive in some measure from  a common nucleus of operative facts.

          See, e.g., Balogun,  989 F.2d at 23-24; United  States v. Newman,
          ___  ____  _______                      ______________    ______

          982 F.2d 665,  673 (1st Cir. 1992),  cert. denied, 114 S.  Ct. 59
                                               _____ ______

          (1993); Sanders,  982 F.2d at  8; see also  Zapata, 1 F.3d  at 50
                  _______                   ___ ____  ______

          (holding  that where the guidelines provide for the consideration

          of  a single factor in the  calculation of both offense level and

          criminal   history  category,   either  expressly   or  by   fair

          implication, double counting is permissible).

____________________

          this question open,  as the case at  hand can be resolved  by the
          application of less controversial principles.

                                          11

IV
                                          IV

                    We  need go  no further.   Concluding,  as we  do, that

          appellant's  assignment of error is  without merit, we affirm the

          judgment below.

Affirmed.
          Affirmed.
          ________

12