United States v. Peppe

• Court: Court of Appeals for the First Circuit
• Decided: March 29, 1996
• Docket: 95-2121
• Status: Published

Opinion

USCA1 Opinion

United States Court of Appeals
                            United States Court of Appeals

                                For the First Circuit
                                For the First Circuit

                                 ____________________



        No. 95-2121



                                    UNITED STATES,



                                      Appellee,



                                          v.



                                   HENRY J. PEPPE,



                                Defendant - Appellant.



                                 ____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



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



                                 ____________________



                                        Before



                                Selya, Stahl and Lynch,

                                   Circuit Judges.
                                   ______________



                                 ____________________



            Richard  H. Gens  with  whom Martin  K.  Leppo was  on  brief  for
            ________________             _________________

        appellant.

            Gary  S. Katzmann,  Assistant United  States Attorney,  with  whom
            _________________

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


____________________



                                    March 29, 1996

                                 ____________________



STAHL, Circuit Judge.  Pursuant to a plea agreement
                      STAHL, Circuit Judge.
                             _____________



            with  the  government,  defendant-appellant  Henry  J.  Peppe



            pleaded guilty  to a three-count indictment  charging him and



            his   codefendant,   Joseph   S.   Mongiello,   with   making



            extortionate extensions of credit  and using, and  conspiring



            to use, extortionate means to collect and attempt  to collect



            an  extension of credit.   The district court sentenced Peppe



            to  twenty-seven  months'  incarceration  followed  by  three



            years' supervised  release, a  special assessment fee,  and a



            $10,000 fine.  Peppe  now appeals the imposition of  the fine



            and   a  condition   of  his  supervised   release  requiring



            probation-office  approval prior  to  any  incurring  of  new



            credit charges or opening of new credit lines.1



                                          I.
                                          I.
                                          __



                       Factual Background and Prior Proceedings
                       Factual Background and Prior Proceedings
                       ________________________________________



            A.  Offense Conduct
            ___________________



                      We  accept the facts of the offense as set forth in



            the  unchallenged portions of the Presentence Report ("PSR").



            See United States v. Grandmaison, No. 95-1674, slip op. at 2-
            ___ _____________    ___________



            3 (1st Cir. Mar. 1, 1996).



                      In the  summer of 1993, Peppe  and Mongiello loaned



            to John Wiltshire,  a self-employed  contractor, $3,000  upon



                                
            ____________________



            1.  At oral  argument before  this court, Peppe  withdrew his

            challenge   to  the  court's   imposition  of  an  additional

            condition of  supervised release: that Peppe  grant access to

            any and all financial  information requested by the probation

            office.  Accordingly, we do not address this argument.



                                         -2-
                                          2



which Wiltshire was  required to  pay 5%  interest per  week.



            When  Wiltshire was late  in making his  loan payments, Peppe



            and  Mongiello  would intimidate  him  and  his wife  through



            repeated,   threatening  telephone  calls.    In  June  1994,



            Wiltshire  temporarily  stopped  making  the  weekly interest



            payments because he  could no  longer afford them.   In  July



            1994,  Wiltshire  agreed  to  do some  construction  work  at



            Peppe's home in return for forgiveness of part of the debt.



                      On August 1, 1994, Wiltshire contacted  the Federal



            Bureau of Investigation ("FBI") about his situation.  By that



            date,  he had  paid about  $6,000 in  interest on  the $3,000



            loan.    As  part  of  the  FBI's  subsequent  investigation,



            Wiltshire tape-recorded telephone conversations  and meetings



            with   Peppe   and    Mongiello,   including    conversations



            accompanying five  additional payments on  the loan.   On one



            such  occasion,   Peppe  referred  to  his   "cuff  list"  of



            delinquent loan-shark debtors to see how far behind Wiltshire



            was.  In October 1994, Wiltshire told Peppe that he would not



            make further payments on  the loan and indicated that  he had



            relocated himself  and his  wife.  Upon  hearing this,  Peppe



            became very angry and  warned Wiltshire, "I will catch  up to



            you" and "I will find you."  At the time of his arrest, Peppe



            had  in his  possession  a "cuff  list"  listing ten  debtors



            overdue in their payments.


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                                          3



B.  The Plea Agreement
            ______________________



                      The  parties  agreed  that  Peppe's  plea would  be



            tendered pursuant to Fed. R.  Crim. P. 11(e)(1)(B), and that,



            "[w]ithin  the  maximum sentence"  possible  under applicable



            law,  "the  sentence  to  be   imposed  is  within  the  sole



            discretion of  the sentencing judge."   Peppe acknowledged in



            the  plea agreement  that he  faced a  maximum penalty  of 20



            years'  incarceration and a $250,000 fine on each count.  The



            agreement stated  that,  under the  United States  Sentencing



            Guidelines, Peppe's Base Offense Level was 20 and the parties



            would  recommend to  the  court a  three-level reduction  for



            Peppe's acceptance  of responsibility,  resulting in a  Total



            Offense Level of 17.



            C.  The Presentence Report
            __________________________



                      In  the  PSR,  Peppe's  Total   Offense  Level  was



            computed at 17, his  Criminal History Category at I,  and the



            applicable  Guideline  imprisonment  range  was  found  to be



            twenty-four to thirty months  followed by two to three  years



            of  supervised  release.   The fine  range was  determined at



            $5,000 to  $50,000, pursuant  to U.S.S.G.     5E1.2(c)(1) and



            (2).    While  the  government  contended  that  the  victim,



            Wiltshire, was entitled to  restitution of the interest paid,



            $6,000, the PSR stated that the issue of granting restitution



            in  loan-sharking  cases  had  never been  addressed  in  the



            District  of Massachusetts,  and  relayed the  matter to  the


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                                          4



court.  Peppe  complained that  the government's  restitution



            figure came only  from Wiltshire and was exaggerated,  but he



            did  not offer  his  own calculation  and  did not  otherwise



            object to that portion of the PSR.



                      The  PSR  also  included  the  following additional



            facts to which  neither party  objected.  Peppe  is a  forty-



            year-old high  school graduate with previous  work experience



            as  a  bartender,  temporary  postal  employee, greyhound-dog



            owner  and racer,  and employee  at his father's  smoke shop.



            Peppe and his wife, Jayne Zannino Peppe, have three children,



            the  youngest of whom  may have a  serious medical condition.



            Peppe's wife manages the care of the family and home, working



            part-time  as  a real  estate  agent.   Peppe's  assets total



            $24,056.50,   comprised  of,   inter  alia,   bank  accounts,
                                           _____  ____



            securities, life insurance, real estate,  and an automobile.2



            His  liabilities total  $50,000, made  up of  loans  from his



            brothers  for attorney fees incurred in his defense.  The PSR



            reports that Peppe has a negative net worth of $25,943.50 and



            a monthly negative cash flow of $193.



            D.  The Sentencing Hearing
            __________________________



                      The district court adopted the factual findings and



            Sentencing Guideline  applications set forth in the  PSR.  At



            the sentencing  hearing,  the district  court  confirmed  the


____________________



            2.  As of the time of the balance sheet set forth in the PSR,

            Peppe no longer owned greyhounds.



                                         -5-
                                          5



PSR's calculation of Total Offense Level and Guideline ranges



            for  the   fine  and  imprisonment  term.     The  government



            recommended thirty  months' incarceration, a  fine of  $5,000



            and  an order of restitution of $6,000.  Peppe responded that



            restitution  should  not  be  an  issue  in  sentencing,  and



            requested  a hearing should it become a factor.  With respect



            to restitution, the court stated:



                      [T]he  record,  frankly,  is   not  clear

                      enough   for  me   to  do   anything  but

                      speculate concerning the proper  level of

                      restitution.    I  decline  to  take  any

                      further time before  reaching a  sentence

                      in  this case  to  attempt  to fashion  a

                      restitutionary  remedy,  particularly  in

                      light  of  the  fact  that   there  is  a

                      potential for a fine.   And I will impose

                      a fine in this case.



                      The district court  sentenced Peppe to twenty-seven



            months'  imprisonment   on   each   count,   to   be   served



            concurrently, followed  by three years of supervised release.



            The  court  further imposed  a  $10,000  fine, with  interest



            waived,  to  be paid  in installments.    In addition  to the



            standard conditions of supervised release,  the court ordered



            that Peppe  could  not  "incur  new credit  charges  or  open



            additional  lines of  credit  without prior  approval of  the



            probation  officer"   who,   in   turn,   would   take   into



            consideration  Peppe's  compliance   with  the  fine  payment



            schedule.  At the  conclusion of the sentencing  hearing, the



            court opined:


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                                          6



I think I needn't say very much about the

                      reasons for  the sentence.   I think  Mr.

                      Pep[p]e  understands that this  is one of

                      the costs of doing  this kind of business

                      and that  there is imposed  in connection

                      with those costs a  fine component, and a

                      component  [of]  being  taken  away  from

                      loved ones at critical times.


II.
                                         II.
                                         ___



                                      Discussion
                                      Discussion
                                      __________



                      Peppe now  argues that the court  erred by imposing



            the $10,000  fine and by  prohibiting him from  incurring new



            credit charges or opening  additional lines of credit without



            prior approval  of the  probation office.   Neither challenge



            was  raised before  the  sentencing judge,  however, and,  as



            Peppe concedes, our review  is for plain error only.   United
                                                                   ______



            States v. Carrozza, 4  F.3d 70, 86-87 (1st Cir.  1993), cert.
            ______    ________                                      _____



            denied, 114 S. Ct. 1644 (1994).
            ______



            A.  Imposition of $10,000 Fine
            ______________________________



                      Peppe contends that the  court did not consider his



            financial  resources  and earning  ability  in assessing  the



            $10,000 fine.  He  points out that his  financial information



            in the record  is undisputed, and argues that  it establishes



            both  his  current   inability  to  pay  the   fine  and  the



            unlikelihood that  he will be able  to pay it in  the future.



            Peppe also suggests that  the fine contained a "restitutional



            component," noting  that its amount  reflects an  approximate



            combination of  the government's  recommendation  for a  fine


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                                          7



($5,000) and restitution ($6,000), and that the court did not



            consider  the  requisite  factors  to  support a  restitution



            remedy.    He maintains  that,  in  addition to  waiving  the



            interest on the fine,  the court should also have  waived the



            fine  itself   and  imposed  alternative  sanctions  such  as



            community service.



                      When imposing a fine and its conditions, a district



            court must  consider, inter alia, "any  evidence presented as
                                  _____ ____



            to  the defendant's  ability to  pay the fine  (including the



            ability to pay over a period of time) in light of his earning



            capacity and  financial resources"  and "the burden  that the



            fine places on  the defendant and his  dependents relative to



            alternative punishments."   U.S.S.G.   5E1.2(d); see  also 18
                                                             ___  ____



            U.S.C.    3572(a).    The   defendant  bears  the  burden  of



            demonstrating that his case warrants an exception to the rule



            that a fine  be imposed.  United  States v. Savoie,  985 F.2d
                                      ______________    ______



            612,  620 (1st  Cir. 1993);  U.S.S.G.   5E1.2(a)  ("The court



            shall  impose a fine in all cases, except where the defendant



            establishes that he  is unable  to pay and  is not likely  to



            become  able to pay any  fine").  Moreover,  a district court



            need  not  make  express  findings  regarding  a  defendant's



            financial condition  so long as the record  is sufficient for



            adequate appellate review.   Savoie, 985 F.2d  at 620 (citing
                                         ______



            United  States v. Wilfred Am. Educ. Corp., 953 F.2d 717, 719-
            ______________    _______________________



            20 (1st Cir. 1992)).  When a challenge to the imposition of a


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                                          8



fine is fully preserved  for appellate review, we  review for



            abuse  of discretion.   Savoie, 985  F.2d at 620.   But here,
                                    ______



            because  Peppe did  not  object below,  we  review for  plain



            error.  Carrozza, 4 F.3d at 86-87.
                    ________



                      First, we  do not agree  with Peppe that  the court



            failed to consider his  financial condition when imposing the



            fine.    The PSR,  adopted  by the  district  court, detailed



            Peppe's assets, liabilities, and  monthly cash flow.  Wilfred
                                                                  _______



            Am. Educ. Corp., 953 F.2d at 719-20 (reviewing court will not
            _______________



            presume that the court below ignored relevant evidence in the



            record).    The court's  consideration  of Peppe's  financial



            condition  is evident in its  waiver of interest  on the fine



            and written order  stating that it  "has determined that  the



            defendant  does  not  have  the  ability  to  pay  interest."



            Indeed,  in choosing $10,000, the  court chose a  fine at the



            lower end of the applicable $5,000 to $50,000 range.



                      Second, although it is undisputed that Peppe's  net



            worth and monthly cash  flow are negative, these facts  alone



            do  not compel  the  conclusion that  a  fine should  not  be



            imposed.   Rather, it was Peppe's burden to establish that he



            was  not able to pay  the fine, with  or without a reasonable



            installment schedule.  At no time did Peppe offer evidence to



            establish his inability to pay, and his inability to pay does



            not  follow inexorably  from the  facts in  the record.   See
                                                                      ___



            United States v. Olivier-Diaz,  13 F.3d 1, 5 (1st  Cir. 1993)
            _____________    ____________


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                                          9



(noting that plain  error will not  be found where  defendant



            asserts a  fact that he failed to ask the sentencing court to



            find, "unless  the desired  factual finding  is the  only one



            rationally  supported by the record below.").  Interestingly,



            all of Peppe's  debt is owed to family members who funded his



            defense costs.   Further, Peppe  does not address  his future



            ability to pay the fine, and given his age, good health,  and



            past  employment  experience,  he  cannot  complain  in  this



            regard.



                      Finally,  Peppe contends  that the  court fashioned



            the   fine  to   include  an   impermissible  "restitutionary



            component."  This argument lacks merit.  The court explicitly



            stated  that   a  restitutionary   remedy  would   be  purely



            speculative, and  simply declined  to take  that route.   The



            court did  not express the  desire to compensate  the victim,



            Wiltshire;  rather, it  expressed the  goal to  punish Peppe.



            Accordingly, the court imposed the  fine in an amount  higher



            than recommended  by the government,  but still at  the lower



            end of the Guideline  range.  The record shows that Peppe had



            ample  notice  of  both the  potential  for  a  fine and  the



            applicable fine range, and never claimed the inability to pay



            any amount.



                      We find no error -- certainly no plain, or obvious,



            error  --  in  imposing  the  $10,000  fine.     We  decline,


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                                          10



therefore, to order any relief sought  by Peppe regarding the



            fine.



            B.  Probation Office Approval Prior to Obtaining New Credit
            ___________________________________________________________



                      Peppe  argues  that   requiring  probation   office



            approval  prior  to  his  incurring  new  credit  charges  or



            obtaining  additional  lines  of  credit  is  not  reasonably



            related  to  his  offense and  constitutes  an  impermissible



            occupational restriction that inhibits his  pursuit of lawful



            business  activity.    He   also  contends  that,  under  the



            Guidelines, the only purpose for this  condition is to ensure



            compliance with a fine payment schedule; accordingly, he asks



            this  court  to modify  the  condition  to resemble  U.S.S.G.



              5E1.2(g).



                      A  district   court  may  impose  a   condition  of



            supervised  release  that  is  "reasonably related"  to:  the



            defendant's offense, history,  and characteristics; the  need



            for   deterrence  from   further  criminal   conduct;  public



            protection;  and  effective  correctional  treatment  of  the



            defendant.   U.S.S.G.   5D1.3(b);  see also United  States v.
                                               ___ ____ ______________



            Thurlow, 44 F.3d 46, 47 (1st Cir.), cert.  denied, 115 S. Ct.
            _______                             _____  ______



            1987   (1995).     Peppe's  offense   conduct  involved   the



            extortionate  extension  of  credit.   His  "cuff  lists"  of



            delinquent  loan-shark  debtors,  evidenced  in  the  record,



            suggest  that  his  extortionate  lending  activity  was  not



            limited to  the identified victim, Wiltshire.   The condition


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                                          11



of  prescreening  new credit  charges and  credit lines  is a



            reasonable  information-gathering  device  for the  probation



            office to  monitor Peppe's use  of money; when  Peppe desires



            new  credit, the  probation  office  may  inquire as  to  its



            purpose and planned disbursement.   Moreover, as the district



            court  indicated at  sentencing, the  probation office  could



            also use that opportunity  to monitor Peppe's compliance with



            the fine  payment schedule.   Therefore, the  condition meets



            the  requirements  of    5D1.3(b)  because  it is  reasonably



            related to  Peppe's offense, preventing  his participation in



            further extortionate lending, and ensuring his payment of the



            fine.



                      Peppe suggests that  the credit condition  inhibits



            his ability to work or  engage in lawful business activities,



            in derogation of  the requirements  of U.S.S.G.    5F1.5(a).3



            We disagree.  First,   5F1.5(a) is inapplicable because Peppe



            fails  to  explain  how  the court's  condition  affects  his



            participation  in  a   "specified  occupation,  business,  or
                                    _________



            profession."  Id. (emphasis  added).  Even assuming it  is an
                          ___



            "occupational restriction" within the  meaning of   5F1.5, it


____________________



            3.  U.S.S.G.    5F1.5(a) provides  that  a court  may bar  or

            limit a defendant's participation in a "specified occupation,

            business,  or  profession"   if  it   determines  that   such

            participation bears a "reasonably direct relationship" to the

            relevant offense conduct, and the restriction  "is reasonably

            necessary to  protect the public  because there is  reason to

            believe  that, absent  such  restriction, the  defendant will

            continue to engage in [similar unlawful conduct]."



                                         -12-
                                          12



is appropriate  for many of  the same  reasons that  it is  a



            proper condition of supervised release under   5D1.3(b).  See
                                                                      ___



            supra  note 3  (noting  criteria considered  in occupational-
            _____



            restriction  condition).  Second, the condition requires only



            prior approval of the probation office; it is not an absolute



            bar to incurring credit charges or obtaining new  credit, and



            it  applies only for the  duration of the supervised release.



            Thus, we do not  see, and Peppe has  not explained, how  this



            condition   impermissibly   restricts  his   lawful  business



            activities.  



                      Finally, we  find  Peppe's argument  that  U.S.S.G.



              5E1.2(g)  prohibits  the  condition   in  his  case  to  be



            disingenuous.   See  U.S.S.G.    5E1.2(g)  (providing that  a
                            ___



            district  court  "may  impose  a  condition  prohibiting  the
                                                         ___________



            defendant  from  incurring  new  credit  charges  or  opening



            additional lines of  credit unless he  is in compliance  with
                                        ______ __  __ __ __________  ____



            the payment schedule") (emphasis  added).  Here, the district
            ___ _______ ________



            court did not "prohibit" Peppe from obtaining credit, it only



            required  prior   approval.    Further,  simply  because  the



            Guidelines permit the condition in the circumstance reflected



            in    5E1.2(g) does not mean that a court cannot employ it in



            other cases under   5D1.3(b), the provision generally guiding



            conditions  of supervised  release.   Finally, we  decline to



            modify the  credit conditions  imposed on Peppe  to "comport"



            (as  Peppe puts it) with  section 5E1.2(g), which would allow


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                                          13



Peppe to forego  credit prescreening as  long as he  complied



            with  the payment schedule.   That condition is  not what the



            district court deemed appropriate in its carefully  fashioned



            sentence,  and we discern no  reason or basis  to disturb the



            court's decision.



                      The  district court  did  not err  in imposing  the



            condition that Peppe obtain prior approval from the probation



            office for new credit charges or lines of credit.


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                                          14



III.
                                         III.
                                         ____



                                      Conclusion
                                      Conclusion
                                      __________



                      Nothing  more  need be  said.    For the  foregoing



            reasons,  all of  Peppe's  challenges on  appeal are  without



            merit.    Affirmed.
                      Affirmed
                      ________


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