United States v. Lilly

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

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

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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

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.

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$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

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

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).

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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

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.

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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

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

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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.

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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.

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