UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 96-10707
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UNITED STATES of AMERICA,
Plaintiff - Appellee,
versus
JERROLD WAYNE HALTOM,
Defendant - Appellant.
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Appeal from the United States District Court for the
Northern District of Texas
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May 13, 1997
Before DUHÉ, BENAVIDES, and STEWART, Circuit Judges.
BENAVIDES, Circuit Judge:
The appellant, Jerrold Wayne Haltom, pleaded guilty in
district court to one count of mail fraud and four counts of income
tax evasion. He was sentenced to concurrent prison terms of 26
months on each count. Haltom appeals his sentence on two grounds.
He contends that the district court misapplied the United States
Sentencing Guidelines by refusing to group his mail fraud and tax
evasion offenses together as “closely related” counts. He also
claims that he was sentenced in violation of his rights under the
ex post facto clause of the Constitution.
Haltom has more to gain, in terms of a definite and
substantial reduction in his prison term, from his grouping
argument than from his ex post facto argument. Because we find the
grouping argument persuasive, we need not address the merits of his
constitutional claim.1
I.
Haltom was an account executive with Oliver Taylor Company
West, Inc., a food brokerage firm in Lubbock, Texas. He
represented the interests of food manufacturers, including Heinz
and Del Monte, in their dealings with wholesalers and retail
grocers in West Texas and New Mexico. Each manufacturer routinely
provided promotional funds to wholesalers and retailers that agreed
to promote its products. As the man in the middle, Haltom billed
the manufacturers for the grocers’ promotional expenses and
distributed the promotional funds.
Haltom exploited his position by perpetuating a false invoice
scheme against his clients, the manufacturers. In simple terms, he
claimed a greater amount in promotional funds than was owed the
wholesalers and retailers, and he pocketed the difference.
Unsurprisingly, he failed to report this illicit income on his
federal income tax returns. Haltom stipulated that he
misappropriated $766,618 from the food manufacturers and cheated
the government of $100,838 in taxes for 1989, 1990, 1991, and 1992.
On February 16, 1996, Haltom was charged by information with
1
Haltom would receive no incremental benefit from prevailing
on both the ex post facto claim and the grouping argument.
2
one count of mail fraud and four counts of tax evasion in violation
of 18 U.S.C. § 1341 and 26 U.S.C. § 7201, respectively. He pleaded
guilty, and was sentenced in district court on June 7, 1996.
II.
We review de novo the district court’s application and
interpretation of the United States Sentencing Guidelines. 18
U.S.C. § 3742(e); United States v. Domino, 62 F.3d 716, 719 (5th
Cir. 1995) (footnote and internal citations omitted).
Calculations under the guidelines begin with the determination
of the appropriate base offense level for each count of conviction.
The base offense level generally reflects the seriousness of the
offense, as determined by the drafters of the guidelines. In order
to tailor the punishment to the crime in a given case, the
guidelines provide for adjustments to the offense level based on
various “specific offense characteristics.” For example, a
sentence may be enhanced because of the amount of money or volume
of contraband involved, the youth or old age of the victim, or the
defendant’s use of physical force or a firearm. See generally
UNITED STATES SENTENCING COMMISSION, GUIDELINES MANUAL, Ch. 2 (Offense
Conduct), Introductory Commentary; see also id., Ch. 1, Pt. A,
subpart 4(a) (Real Offense vs. Charge Offense Sentencing) (1995).
In this case the district court was required to determine the
base offense level for each of Haltom’s offenses, adjust for any
specific offense characteristics, and then calculate a combined
offense level pursuant to the grouping rules governing multiple
3
counts of conviction. See GUIDELINES MANUAL, Ch. 3, Pt. D.
The district court calculated that the adjusted offense level
for Haltom’s mail fraud conviction was 20. The court began this
calculation by assigning Haltom a base offense level of 6 pursuant
to the appropriate fraud guideline, U.S.S.G. § 2F1.1(a). The court
then increased the offense level by 10 because the fraud resulted
in a loss of more than $500,000; by 2 because it involved the abuse
of a position of private trust; and again by 2 because it required
more than minimal planning. See U.S.S.G. §§ 2F1.1(b)(1)(K), 3B1.3,
2F1.1(b)(2).
The district court assigned Haltom an adjusted offense level
of 16 for tax evasion. The district court treated the four tax
evasion counts as a single offense, as required by the grouping
rules. See U.S.S.G. § 3D1.2(d). The base offense level, 14, was
determined in light of the aggregate tax loss to the government,
$100,838. See U.S.S.G. §§ 2T1.1(a)(1), 2T4.1 (Tax Table).2 The
offense level for tax evasion was increased to 16 because the
2
The district court’s reliance on the tax table in the 1995
edition of the Guidelines Manual gave rise to appellant’s ex post
facto claim. The tax table was amended November 1, 1993,
increasing by 2 the offense level for a tax loss of $70,000 to
$120,000. See U.S.S.G., App. C, amend. 491. This amendment took
effect after Haltom filed the last of his four false tax returns
but while his mail fraud scheme was ongoing. Guidelines section
1B1.11(b)(3) purports to authorize the retroactive application of
an amendment to the guidelines, so long as the defendant is being
sentenced for at least one crime perpetrated after the amendment.
Haltom argues, however, that the retroactive application of the
amended tax table in this case violated the ex post facto clause.
See United States v. Domino, 62 F.3d 716, 720 (5th Cir. 1995) (“A
sentence that is increased pursuant to an amendment to the
guidelines effective after the offense was committed violates the
ex post facto clause.”) (internal citation omitted). As noted at
the outset, we need not decide the merits of this claim.
4
offense involved more than $10,000 a year in unreported income from
criminal activity, i.e., the fraud charged in count one.3 See
U.S.S.G. § 2T1.1(b)(1).
The district court next calculated Haltom’s combined offense
level based upon the adjusted offense levels of 20 for mail fraud
and 16 for tax evasion. Starting with the higher of the two
offense levels, 20, the court applied the formula in section 3D1.4
to reflect the additional harm caused by Haltom’s tax crimes.
Because the offense level for the tax evasion counts was 4 levels
less than the offense level for mail fraud, the application of
section 3D1.4 resulted in an increase in Haltom’s offense level
from 20 to 22.
The district court then reduced appellant’s offense level by
3 because he accepted responsibility for his actions and assisted
authorities in investigating his own criminal conduct. U.S.S.G. §
3E1.1. Finally, on the government’s motion, the district court
departed downward 2 levels in recognition of Haltom’s substantial
assistance in the investigation and prosecution of other persons.
U.S.S.G. § 5K1.1. The court thus determined that Haltom’s total
offense level was 17. Because Haltom had no prior convictions, he
was subject to a sentence of 24 to 30 months. See U.S.S.G. Ch. 5,
Pt. A (Sentencing Table). He was sentenced to a prison term of 26
months on each count, to be served concurrently, followed by three
3
A defendant who fails to report more than $10,000 a year in
criminal income is punished more harshly than one who fails to
report a comparable amount of legitimate income. U.S.S.G. §
2T1.1(b)(1).
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years of supervised release. Haltom also was required to make
restitution in the amount of $635,621, and to pay a $5,000 fine.
III.
Appellant does not dispute the accuracy of the district
court’s arithmetic, but challenges the court’s refusal to group the
mail fraud count with the tax evasion counts. Had the counts been
grouped, Haltom’s offense level would not have been increased from
20 to 22. Taking into account the subsequent 5-level reduction in
Haltom’s offense level, his total offense level would have been 15
rather than 17; the resulting sentence range would have been 18 to
24 months. See U.S.S.G. Ch. 5, Pt. A (Sentencing Table).
Chapter 3, Part D of the guidelines prescribes how to sentence
a defendant who has been convicted of more than one count. Section
3D1.2 specifies the circumstances in which multiple counts must be
grouped together. When counts are grouped, they are essentially
treated as a single offense for sentencing purposes. The stated
purpose of the grouping rules is to ensure that a defendant
convicted of multiple offenses receives “incremental punishment for
significant additional criminal conduct.” U.S.S.G., Ch. 3, Pt. D,
Introductory Commentary. The operative word is “significant.”
Sometimes, an additional count does not represent significant
additional criminal conduct, and does not lead to an increased
sentence. As the commentary explains, embezzling money from a bank
and falsifying the related bank records are distinct offenses, yet
they “represent essentially the same type of wrongful conduct with
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the same ultimate harm, so that it would be more appropriate to
treat them as a single offense for purposes of sentencing.” Id.
In other circumstances, the guidelines provide that the
offense level for one offense must be enhanced to reflect the
additional criminal conduct represented by another. In such cases,
grouping is appropriate because the additional harm represented by
the second count has already been factored into the sentencing
calculus as a specific offense characteristic of the first. Under
section 3D1.2(c), when the conduct underlying one count is a
specific offense characteristic of another count, the counts must
be grouped.4 As the commentary explains:
Convictions on multiple counts do not result in a
sentence enhancement unless they represent additional
conduct that is not otherwise accounted for by the
guidelines. In essence, counts that are grouped together
are treated as constituting a single offense for purposes
of the guidelines.
Id. (emphasis added). According to the commentary, an assault on
a bank teller during a robbery would be treated as a specific
offense characteristic of the robbery, not as a distinct offense.
Haltom contends that the conduct underlying his mail fraud
4
The relevant text provides:
All counts involving substantially the same harm shall be
grouped together into a single Group. Counts involve
substantially the same harm within the meaning of this
rule:
* * *
(c) When one of the counts embodies conduct that is
treated as a specific offense characteristic in, or other
adjustment to, the guideline applicable to another of the
counts.
* * *
U.S.S.G. §3D1.2.
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conviction resulted in an enhanced offense level for tax evasion,
and that therefore the counts should have been grouped. We agree.
Haltom’s offense level for tax evasion was increased by 2
because his unreported income was derived from criminal activity,
i.e., the mail fraud alleged in count one. It is therefore
indisputable that the mail fraud count “embodies conduct that is
treated as a specific offense characteristic” of the tax evasion
counts.
We recognize that as a matter of common parlance, Haltom’s
mail fraud and tax evasion convictions cannot readily be said to
have caused “substantially the same harm.” See U.S.S.G. § 3D1.2.
The mail fraud damaged the private financial interests of Haltom’s
corporate clients; the tax offenses harmed the government. Absent
a contrary directive in the guidelines themselves, we might have
considered these harms quite distinct and concluded that Haltom’s
offenses were not groupable. However, we are bound by the text of
the applicable guideline, which provides explicitly that “[c]ounts
involve substantially the same harm within the meaning of this rule
. . . [w]hen one of the counts embodies conduct that is treated as
a specific offense characteristic in . . . the guideline applicable
to another of the counts.” U.S.S.G. § 3D1.2(c). This definition
removes any doubt that Haltom’s offenses must be grouped.
Counsel stated at oral argument that the district court felt
itself bound, in the absence of controlling Fifth Circuit
precedent, to follow a similar case decided by the Third Circuit.
See United States v. Astorri, 923 F.2d 1052 (3d Cir. 1991). Even
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were we bound by the Third Circuit’s opinion in Astorri, we do not
find Astorri to be determinative in the instant case.
Dennis L. Astorri was a stockbroker who defrauded investors of
substantial sums of money. He pleaded guilty to one count of wire
fraud and one count of income tax evasion. The district court,
working from the base offense level for mail fraud, enhanced
Astorri’s offense level by 2 to reflect his tax evasion conviction.
The district court gave two alternative grounds for the
enhancement. As the court of appeals explained:
First, the [district] court concluded that if Astorri’s
wire fraud and tax evasion convictions are grouped
together under section 3D1.2, then the specific offense
characteristic of the tax evasion offense would increase
the offense level by two because Astorri evaded taxes due
on money generated by criminal activity. In the
alternative, the district court reasoned that if the two
offenses were not grouped together because they involved
different victims, the court could nonetheless enhance
the fraud conviction base offense level under [the
formula for combining discrete groups of offenses in]
section 3D1.4(a).
Astorri, 923 F.2d at 1055-56. The Third Circuit concluded that
grouping was inappropriate, but went on to affirm the 2-level
enhancement under section 3D1.4.
We believe that Astorri is distinguishable from the case we
decide today. The conduct underlying Haltom’s mail fraud
conviction was counted twice toward his sentence, once as the basis
for his mail fraud offense level and again a specific offense
characteristic of the tax evasion counts. This double-counting
actually lengthened Haltom’s sentence: the enhanced tax evasion
count was directly responsible for the ultimate 2-level increase in
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his total offense level for mail fraud, from 20 to 22.5 The
purpose of section 3D1.2(c) is to prevent precisely this sort of
“‘double counting’ of offense behavior.” U.S.S.G. § 3D1.2,
Commentary, Application Note 5. Cf. United States v. Box, 50 F.3d
345, 359 (5th Cir. 1995) (internal citation omitted) (stating that
double counting is forbidden only where specifically prohibited by
the guidelines), cert. denied, ---U.S.---, 116 S.Ct. 714, 133
L.Ed.2d 668 (1996).
In contrast, there is no indication in the Third Circuit’s
opinion that Astorri was the victim of impermissible double-
counting. To the contrary, the opinion strongly implies that there
was none. Astorri had received an offense level of 19 for fraud
and 15 for tax evasion. Applying the formula in section 3D1.4, the
district court added 2 levels to the offense level for fraud to
reflect the additional harm caused by Astorri’s tax evasion.
Astorri, 923 F.2d at 1057. However, the published opinion contains
no hint that Astorri’s tax evasion had already been enhanced to
reflect the conduct underlying the fraud count. The sentence
affirmed in Astorri was based on a district judge’s determination
to enhance the sentence 2 levels, based on either the specific
offense characteristic for tax evasion or under the formula in
section 3D1.4. The district judge did not attempt to increase
Astorri’s sentence twice based on the same conduct.
5
Had Haltom’s tax evasion count not involved a failure to
report income derived from criminal sources, i.e., mail fraud, his
tax evasion offense level would have remained at 14. Under the
formula in section 3D1.4, his combined offense level (before the 5-
level reduction granted by the district court) would have been 21.
10
By requiring the grouping of Haltom’s tax evasion count with
his mail fraud count, the guidelines spare him any incremental
punishment for his tax crimes. This result may seem anomalous; but
in the circumstances presented here, to avoid punishing Haltom
twice for mail fraud, the guidelines impose no punishment at all
for tax evasion. However, the guidelines clearly forbid the
alternative approach taken by the district court: using the mail
fraud count to enhance the offense level for tax evasion and then
using the enhanced tax evasion offense level to increase the
offense level for mail fraud.
The district court, believing itself bound by Astorri, imposed
too harsh a penalty by double-counting the conduct underlying
Haltom’s mail fraud conviction.6 Perhaps a more Solomonic approach
would be to split the difference by assigning Haltom a combined
offense level (before downward adjustments) of 21. This would have
the neat effect of punishing Haltom for tax evasion without doubly
punishing him for mail fraud. King Solomon, however, was not
limited by the doctrine of separation of powers. Mindful of that
doctrine, we will enforce the sentencing guidelines as far as they
are authorized by statute; we will not rewrite them.
The sentence is VACATED and the case REMANDED to the district
court for resentencing.
6
After the Third Circuit decided Astorri, the Sentencing
Commission issued an advisory stating that tax evasion should
always be grouped with the offense that generated the illegal
income--regardless of whether the 2-level increase for criminally
derived income was actually applied. See Questions Most Frequently
Asked About the Sentencing Guidelines, Vol. V, March 1, 1992
(construing U.S.S.G. §§ 3D1.2(c), 2T1.1(b)(1)).
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