United States v. Lilly

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT

                                 ____________________



        No. 95-2191



                              UNITED STATES OF AMERICA,



                                      Appellee,



                                          v.



                                  WILLIAM W. LILLY,



                                Defendant, Appellant.



                                 ____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                     [Hon. William G. Young, U.S. District Judge]
                                             ___________________



                                 ____________________



                                        Before



                                Cyr, Boudin and Stahl,



                                   Circuit Judges.
                                   ______________



                                 ____________________



            Morris  M.  Goldings with  whom  Richard  S.  Jacobs and  Mahoney,
            ____________________             ___________________      ________

        Hawkes & Goldings were on briefs for appellant.
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            John  J. Falvey, Jr.,  Assistant United States Attorney, with whom
            ____________________

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

        States.


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                                    April 3, 1996

                                 ____________________



BOUDIN, Circuit Judge.  William Lilly appeals the denial
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            of  his motion in the district court, brought under 28 U.S.C.



               2255 and  the  prior version  of Fed.  R.  Crim P.  35(a),



            seeking  relief as  to sentence.1   In substance,  Lilly asks



            both for resentencing and for a determination that no term of



            probation  may be  imposed upon  him.   He also  challenges a



            restitution  order that is part of his present sentence.  The



            facts are  set  forth in  detail  in Judge  Young's  thorough



            opinion in United States v. Lilly, 901 F.  Supp. 25 (D. Mass.
                       _____________    _____



            1995), and we limit ourselves to a brief summary.



                 Lilly was indicted in  1990 on 30 counts of  bank fraud.



            Four  charges were later dropped,  but he was  convicted by a



            jury on the remaining  26 counts.  This was  a pre-guidelines



            case, and in November 1991, Lilly was sentenced to five years



            in  prison on count 1, to be followed by concurrent five-year



            suspended sentences  on counts  2-7 and 12-29  accompanied by



            five years' probation, and  by a five-year suspended sentence



            on count 30 consecutive to the other suspended sentences.  He



            was ordered to pay $5,071,751.59 in restitution.



                 Nearly  two months later, and after Lilly had noticed an



            appeal,  the  trial  judge  realized that  a  probation  term



            required  by law  had  not  been imposed  on  count  30.   On


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                 1Former  Rule 35(a)  permitted the  court to  correct an

            "illegal  sentence" at  any  time and  continues to  apply to

            Lilly's sentence because his offenses were committed prior to

            November 1, 1987.



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December 30, 1991,  he issued a  second judgment sua  sponte,
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            which differed from the  first judgment in two respects:   it



            made all of the suspended  sentences run concurrently, and it



            explicitly imposed five years' probation on count 30.   Under



            this  second judgment,  Lilly's effective  sentence  was five



            years' imprisonment  to be  followed by a  suspended sentence



            and five years' probation.



                 Lilly's  initial  appeal  from  his  convictions, argued



            before this  court in 1992,  did not challenge  his sentence.



            Instead, he claimed that the indictment was multiplicitous in



            treating  as individual  offenses the various  frauds charged



            under  counts 1-29 against First Mutual Bank of Boston.  That



            argument proved successful and,  in December 1992, this court



            vacated  his convictions  on counts  2-7 and  12-29.   United
                                                                   ______



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



                 However, this court also found that the multiplicity did



            not impair the convictions on counts 1 and 30 and it affirmed



            both convictions.   Lilly, 983 F.2d at 306.   Count 1 covered
                                _____



            the  execution  of the  scheme to  defraud directed  at First



            Mutual  as to which counts 2-7 and 12-29 were multiplicitous;



            count  30 involved  execution of  a separate  scheme directed



            against another  bank and was unaffected  by the multiplicity



            ruling.  This court remanded for entry of a revised judgment,



            noting that a new sentencing proceeding was not required.


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In  February  1993, the  district  judge  entered a  new



            judgment on  remand, representing the third  judgment in this



            case.   In  this third  judgment, the  court gave  Lilly five



            years in prison on count 1; on count 30, the court gave Lilly



            a  five  year suspended  sentence to  run  after the  term of



            imprisonment imposed on count 1 and again ordered restitution



            of  $5,071,751.59.     The   judgment  referred   to  certain



            conditions of probation,  but in  another apparent  oversight



            did not specify any probation  term for count 30.  Lilly  did



            not appeal this third judgment.



                 In February  1995, Lilly  filed a motion  to vacate  his



            sentence, pursuant to 28 U.S.C.   2255 and former Rule 35(a).



            The district court treated the motion as one properly brought



            under former  Rule 35(a) to  correct an illegal  sentence but



            denied  it on  the  merits.   On  appeal, the  government  is



            content  to  assume arguendo  that  the  merits are  properly
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            presented  under former  Rule  35(a), although  it notes  its



            reservations as to Lilly's attack on the restitution order.



                 The essence of Lilly's argument as to probation is this:



            the first  and  third  judgments  did  not  sentence  him  to



            probation  on  count  30,  and  the  second  judgment,  which



            purported  to do so was without effect because it was entered



            in  his  absence and  after he  filed  his notice  of appeal.



            Lilly says that, at minimum, the third judgment is unclear as



            to probation and  entitles him to  resentencing.  He  further


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asserts that because probation was not imposed on count 30 in



            the first judgment, the district court cannot now add it upon



            resentencing without impermissibly increasing his sentence.



                 The problem here is more complicated than difficult, and



            responds quickly  to the  application of  common sense.   The



            first question  is one  of interpreting the  prevailing third



            judgment entered in February 1993; we must parse it to decide



            whether  it should be read to incorporate a five-year term of



            probation,  which the  government  claims is  implicit.   The



            second question concerns the validity of  the judgment, if so



            read,  as against  Lilly's claim  that  such a  reading would



            unlawfully increase his sentence.



                 The parties agree that the applicable probation statute,



            18 U.S.C.   3651 (since  repealed), requires that a probation



            period accompany  any suspended  sentence; this is  a reading



            not obvious from  the statutory language but supported by the



            cases and various policy considerations.  Miller v. Aderhold,
                                                      ______    ________



            288  U.S. 206,  210-11 (1933)  (decided under  predecessor to



            section 3651); United  States v. Elkin,  731 F.2d 1005,  1010
                           ______________    _____



            (2d  Cir.), cert.  denied, 469  U.S. 822  (1984).   The first
                        _____  ______



            judgment  failed to specify a probation term on count 30, but



            the second judgment swiftly corrected the error.



                 Therefore,  when the  case came  up on  appeal from  the



            convictions  in  1992,  the then-existing  (second)  judgment



            reflected a five-year  term of probation  on count 30,  which


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went  unchallenged   on  the   appeal.    In   affirming  the



            convictions  on counts 1 and 30, this court specifically said



            that  no resentencing  proceeding was  required.   Lilly, 983
                                                               _____



            F.2d at 306.   In the  new third judgment entered  on remand,



            the  sentences on counts 1  and 30 mirrored  those imposed on



            counts 1 and 30 in the  second judgment, save that (as in the



            first judgment) the district  court again overlooked the need



            to refer specifically to probation in count 30.



                 We say "overlooked" because  in our minds it is  evident



            that the district court  intended count 30 to include  a term



            of probation, as the law requires, and intended it to be five



            years.  Both the first and second judgments provided for five



            years'  imprisonment followed  by  five  years of  probation.



            Since  the  multiplicity  determination  did  not  alter  the



            substance of Lilly's misconduct, there was no reason  why the



            reduction in counts  should have been  expected to alter  the



            total sentence.2   Indeed, that is why  we did not require  a



            new sentencing proceeding.



                 In  addition,  the  third  judgment  expressly  included



            conditions  of probation,  conditions  that  would have  been


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                 2Lilly  had secured a single  large bank loan  to buy an

            apartment complex (submitting  in support mortgage  documents

            for   individual   apartments    units)   containing    false

            representations.   Although  the original  indictment treated

            each apartment mortgage as a separate fraud count, this court

            viewed the  loan application to  the bank  as comprising  the

            execution  of a single scheme to defraud.  Lilly, 983 F.2d at
                                                       _____

            303.



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pointless  without  probation  and  signaled an  intent  that



            probation  be served.  In these circumstances, and given that



            probation was  legally required for a  suspended sentence and



            had in fact been imposed on count 30 in the  second judgment,



            it  is patent  to  us that  the  district court  intended  to



            reimpose  the   same  probation  requirement  in   the  third



            judgment.



                 Finally,  if we were  in the  slightest doubt  about the



            district court's intention, the doubt is clearly dispelled by



            the  district  court's  recent  decision in  the  Rule  35(a)



            proceeding  where it  explained its  intent as  to probation.



            Lilly, 901 F.Supp. at 29.  The district court's opinion makes
            _____



            it perfectly clear that, whatever wording was overlooked, the



            court intended in its third judgment--and its first as well--



            to impose  probation on  count  30.   A remand  to clarify  a



            supposed "ambiguity" would be an errant waste of time.



                 Lilly  knows full  well that  this is  so, and  the real



            thrust of his objection  is that the district court  lawfully



            could not when  imposing the  third judgment, or  in any  new
            _____ ___                                     __



            remand we might now order,  add a term of probation to  count



            30.  Lilly's  reason is  that probation was  not included  in



            count 30 of  the first judgment  and would therefore  enlarge



            the  original  sentence long  after  its  imposition.   Lilly



            thinks,  quite  mistakenly,  that  courts  are  automatically


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forbidden  from  increasing sentences  after  they  have been



            imposed.



                 The law  on enlargement  of sentences after  their first



            imposition  is in  fact  complex.   There are  constitutional



            limitations  and  issues  of  authority  independent  of  the



            Constitution, but there is no automatic bar to an increase in
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            all circumstances.  See generally Bozza v. United States, 330
                                _____________ _____    _____________



            U.S.  160, 165-67 (1947); DeWitt v. Ventetoulo, 6 F.3d 32, 34
                                      ______    __________



            n.3 (1st  Cir. 1993) (collecting cases), cert. denied, 114 S.
                                                     _____ ______



            Ct. 1542 (1994).  But the complexities need not be plumbed in



            this case because there  is no enlargement even if  we assume



            that count 30 did not incorporate a term of probation.



                 In  practical  terms,  the  present  judgment  does  not
                                                                      ___



            enlarge the  overall sentence originally imposed  for Lilly's



            misconduct.   As  already  noted, in  the first  judgment the



            explicit  sentence for  the package  of counts  included five



            years' imprisonment followed by a suspended sentence and five



            years'  probation.  That is also the sentence under the third



            judgment if read to  incorporate five years' probation.   The



            number of counts fell  but the underlying misconduct remained



            the same.  See United States v. Pimienta-Redondo, 874 F.2d 9,
                       ___ _____________    ________________



            16-17  (1st Cir.)  (en  banc),  cert.  denied, 493  U.S.  890
                                __  ____    _____  ______



            (1989).



                 Lilly's  remaining  claims  relate  to  the  restitution



            order.   Lilly asserts that the  district court miscalculated


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the loss figures used to determine  the amount of restitution



            and  failed  to  make  express findings  to  confirm  Lilly's



            ability to pay restitution.  Independently, Lilly argues that



            the restitution  order is illegal because  the district court



            delegated to the probation officer the authority to determine



            when Lilly was obliged to make installment payments.



                 Former  Rule 35(a)  permits a  challenge to  an "illegal



            sentence"  and  it is  questionable  whether  all of  Lilly's



            attacks on the restitution order, even if sound, would render



            the restitution order  "illegal."  One  might think that  the



            first two are fairly  routine claims of mistake that  are not



            fundamental  infirmities  and  do   not  make  the   sentence



            "illegal."    As for  the third,  Lilly  has a  somewhat more



            plausible  claim that  improper delegation  would render  the



            order "illegal"  on its face.  Cf.  United States v. Ahmad, 2
                                           ___  _____________    _____



            F.3d 245, 248-49 (7th Cir. 1993).



                 The case  law under  former Rule 35(a)  reflects varying



            definitions of "illegality" and  some disagreement as to what



            makes a sentence "illegal."  Compare,  e.g., United States v.
                                         _______   ____  _____________



            Padgett,  892 F.2d 445 (6th Cir. 1989), with United States v.
            _______                                 ____ _____________



            Celani,  898 F.2d 543 (7th Cir. 1990).  There is little First
            ______



            Circuit law on  the subject.   However, without deciding  the



            jurisdictional issue, we are entitled to affirm on the merits



            where this will save  time, United States v. Connell,  6 F.3d
                                        _____________    _______



            27,  29  n.3  (1st Cir.  1993),  and  that  course is  doubly


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appropriate  here  since former  Rule 35(a)  is a  subject of



            diminishing importance.



                 Lilly first says the restitution  order was not based on



            a proper theory of loss.  His argument appears to be that the



            district  court attributed to him  much or all  of the losses



            suffered  by  the  First  Mutual Bank  when  it  subsequently



            collapsed, despite  the court's  finding that  Lilly's frauds



            were only a contributing factor in the bank's demise.  But it



            is evident  from the sentencing colloquy  and the restitution



            amount that the court  did not rely on this  more speculative



            bank-collapse  theory.   Instead, the district  judge figured



            losses by  looking at Lilly's specific  transactions with the



            bank.



                 As  detailed in  the government's  sentencing memorandum



            and discussed  by Lilly's counsel at  the sentencing hearing,



            the  restitution total reflected  the difference  between the



            amounts  in default on the  mortgages that Lilly  sold to the



            bank and the lesser appraised value of the properties held as



            collateral.  Lilly is correct that the calculations relied to



            some  extent on estimates  of property values,  but this does



            not  preclude  restitution  where,   as  here,  a  reasonable



            approximation can be made.  United States v. Savoie, 985 F.2d
                                        _____________    ______



            612, 617 (1st Cir. 1993).   



                 Lilly also asserts the trial judge did not make adequate



            findings   regarding   his  ability   to   pay  the   ordered


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restitution.  His theory is that because the statute requires



            the  court to consider ability  to pay, 18  U.S.C.   3664(a),
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            the restitution  order is invalid  if no findings  of ability



            are made on the record.  Although this view prevails  in some



            circuits,  we have  held that  the  statutory obligation--not



            very  demanding by  its own  terms--does not  require express



            record findings  and generally  is satisfied where,  as here,



            the  court  relies  on  a presentence  report  detailing  the



            defendant's financial condition.  Savoie, 985 F.2d at 618-19.
                                              ______



                 Nor does the statute require a  record basis for finding



            that a defendant can presently pay restitution.  The prospect



            of  future income is sufficient.  United States v. Newman, 49
                                              _____________    ______



            F.3d  1, 10-11  (1st Cir. 1995).   Lilly does  not attempt to



            argue  that no  such  likelihood exists,  so  we reserve  for



            another occasion  the question of what  circumstance, if any,



            would preclude  a  district court  from ordering  restitution



            based on prospective income.         



                 Lilly's   third  claim   is  that  the   district  court



            improperly delegated  authority to  the probation officer  to



            set a  payment schedule.   Several circuit  courts have  held



            that the  responsibility for  deciding when payments  must be



            made  inheres in  the district  court, and  that it  would be



            improper  for  the court  to  delegate  this authority  to  a



            probation officer.   E.g., United  States v. Porter,  41 F.3d
                                 ____  ______________    ______



            68, 71  (2d Cir.  1994); Ahmad,  2 F.3d  at 248-49.   Lilly's
                                     _____


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claim turns on  the cryptic statement  in the third  judgment



            that Lilly  make restitution  "as directed" by  the probation



            officer.  



                 Whatever ambiguity may have  existed has been removed by



            Judge Young's recent opinion which makes clear that the third



            judgment does not give the probation officer authority to set



            a  binding  payment schedule.   Lilly,  901  F. Supp.  at 32.
                                            _____



            Rather,  it   is  Judge  Young's  intention   that  Lilly  be



            supervised  by the  probation  officer to  ensure good  faith



            compliance; and if any question arises as to whether Lilly is



            complying, it will be  resolved by the district court.   This



            limited  role  has been  approved  by  other circuits,  e.g.,
                                                                    ____



            Ahmad, 2 F.3d at 249,  and is a reasonable enlistment  of the
            _____



            probation officer's services.



                 Affirmed.
                 ________


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