United States v. Locke

In the

United States Court of Appeals
For the Seventh Circuit

No. 10-1351

U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.

D ONELLA L OCKE,
Defendant-Appellant.

Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:08-cr-00018—Larry J. McKinney, Judge.

A RGUED JANUARY 19, 2011—D ECIDED JUNE 21, 2011

Before P OSNER, K ANNE, and R OVNER, Circuit Judges.
K ANNE, Circuit Judge. Donella Locke became a real
estate agent in an ill-fated attempt to rebuild her
credit and get out of debt. In 2008, she was indicted on
fourteen counts of wire fraud or aiding and abetting
wire fraud in violation of 18 U.S.C. §§ 2 and 1343—as
well as a charge of conspiracy to commit wire fraud in
violation of 18 U.S.C. § 371—for her role in several real
estate transactions. At trial, the government presented
2 No. 10-1351

evidence of only the five wire fraud counts in which
Locke was the principal offender.
The jury convicted Locke on all five counts. We find
that the district court did not plainly err in failing to
strike witnesses’ brief, candid use of the words “fraud”
and “misrepresentation” while testifying about the sig-
nificance of false information in Locke’s loan applica-
tions, so we affirm her conviction.
The district court sentenced Locke to seventy-one
months’ imprisonment and ordered her to pay restitu-
tion, basing part of both the length of her sentence and
the amount of restitution on conduct not necessarily
encompassed in her charges of conviction. Because the
district court’s findings were insufficient to support this
judgment, we vacate Locke’s sentence and restitution
order and remand for resentencing proceedings.

I. B ACKGROUND
Locke found herself mired in debt following the
collapse of her family’s childcare business in the late
1990s. Seeking to repair her credit, she purchased a book
that detailed plans for escaping former credit problems.
It included an advertised—though illegal—method for
obtaining a new Social Security Number (SSN). She
claims to have followed the book’s guidance and instruc-
tions “to the letter,” changing the addresses she used in
correspondence and documents, obtaining a new SSN
and social security card, and obtaining lines of credit
through services advertised in the book.
No. 10-1351 3

By 2002, Locke had also become a licensed realtor and
a licensed principal broker in the state of Indiana. She
began purchasing and arranging for the purchase of
residential properties in and around Indianapolis to use
as rental units. Over the course of her transactions,
Locke’s methods became questionable and, ultimately,
criminal. She received money from rushed closings
for contracting work she never had completed, used
false addresses in invoices from companies that did not
exist, submitted loan applications with inflated incomes
and account balances, and submitted forged documenta-
tion in support of loan applications.
A grand jury returned an indictment against Locke
and her acquaintance, Beverly Ross, charging the pair
with one count of conspiracy to commit wire fraud and
a combined total of thirty-six counts of wire fraud that
each involved a specific property. Locke was charged
by herself with wire fraud in five of those counts (com-
prising the “Locke transactions”) and was charged with
aiding and abetting wire fraud in nine others. Ross
pled guilty to one of the charged counts, leading the
government to dismiss the others against her, while
Locke proceeded to trial.
The government chose to present evidence only on
the five counts involving the Locke transactions (Counts
8, 9, 10, 11, and 14). Each of the five underlying real estate
transactions occurred between January and May 2005,
and all five properties were in foreclosure within
months—no more than one payment having been made
on any property. In each transaction, Locke submitted a
4 No. 10-1351

loan application with falsified information and sup-
porting documentation. To prove the materiality of
Locke’s falsehoods, the government called seven wit-
nesses representing the lenders or mortgage brokers
involved in the five Locke transactions. Each testified as
to the influence of the inaccurate information in the
lending decision, using variations of the words “fraud” or
“misrepresentation” in doing so. We recount the testi-
mony at issue in detail due to the importance of its context:
• Steven Newcomb testified for the wholesale
lender involved in the Count 8 transaction. Asked
whether the lender would have funded the loan
if it had known the listed SSN had not been
issued by the government, Newcomb answered
that it would not “because we would not have
an accurate representation of the borrower’s full
credit and credit rating and credit history.”
Asked if repeated inaccuracies would influence
the decision, Newcomb answered in the affirma-
tive because “it would just be a blatant misrepre-
sentation of the borrower’s credit.”
• Mortgage broker Scott Chinn testified that if he
had known the SSN listed in Counts 8 and 10
was false, “it would have killed the loan.” The
prosecutor asked why, and Chinn responded, “It’s
fraud.” He then explained that the SSN is “how
we pull the credit” and “see if the person can
pay for the home.”
• Mortgage broker Diane Taylor processed the ap-
plication in Count 9. She testified that she would
No. 10-1351 5

have denied the loan had she known of the sub-
stantially lower income Locke reported in
other applications: “[T]here would be some
misrepresentation. There was . . . quite a variance
in income . . . which would trigger to the under-
writer that there was something not exactly cor-
rect. . . .”
• Pamela Ingalls, testifying as to Count 10, was
asked how knowledge of the false SSN would
have affected her lender-employer’s decision
on her loan. She answered that it would have
been “fraudulent information on the loan applica-
tion,” noting that her lender would not have
funded the loan. Ingalls was then asked how the
credit decision would have been impacted by a
discrepancy in how Locke reported her income
on applications to different lenders. She re-
sponded that it would have changed the out-
come because “fraudulent information may
have been provided.”
• James Orr, an officer for the mortgage place-
ment firm involved in Count 11, was asked
whether his firm would have forwarded the ap-
plication to a lender had it known that the pro-
vided SSN was not legally issued. He responded
that “we wouldn’t have . . . [b]ecause it is obvi-
ously a misrepresentation of the facts with a
[SSN] that does not belong to our applicant.”
He also explained that the income discrepancy
would likewise have thwarted Locke’s loan appli-
6 No. 10-1351

cation, “[b]ecause it is a misrepresentation of
the income based on other information that was
available.”
• Vicky Bonardi, the operations manager for the
Count 11 firm, testified that the lender would not
have funded the loan knowing the SSN or the
stated income were misrepresented because
the falsehoods would prevent the lender from
verifying employment or income stability. She
answered that the loan would not have closed
if the lender had known of a falsified address in
the application packet because “there’s ob-
viously some what we call funny business or
misrepresentation.”
• Peggy Cansdale stated that, if her lender employer
had known the SSN on the loan application in
Count 14 was not Locke’s assigned number, it
“wouldn’t have made the loan.” Asked why, she
said, “Fraud. It would be fraud on the loan. The
credit doesn’t belong to her, and documents
have been altered.” At the end of her testimony,
she noted her company’s lending policy: “Even
if [a credit profile] is misrepresented once, we
kill it. We have a zero tolerance for fraud.”
Locke testified on her own behalf at trial, asserting a
good-faith defense. She insisted she had merely relied
on the instructions in the credit-repair book, never be-
lieving her actions to be illegal or deceitful. She urged
that she was not the source of much of the inaccurate
information in the applications and that she was
No. 10-1351 7

unaware that any lender had ever been misled. She also
denied having forged or falsified any document.
The jury was not convinced. After the government
rested its case without presenting evidence as to the
conspiracy or aiding and abetting charges, Locke moved
for a judgment of acquittal on those charges. The district
court ultimately granted her renewed motion and in-
structed the jury as to the wire fraud charges only,
focusing on the specific intent requirement. The jury
found Locke guilty on each of the five remaining counts.
At the sentencing hearing, the district court sustained
one of Locke’s objections to the presentence report
(PSR). It then calculated her offense level to be 25—a base
offense level of 7 for an offense involving fraud, in-
creased by 16 points because the loss amount exceeded
one million dollars, further increased by 2 points
because the offense involved ten or more victims.
Because Locke had no prior criminal history, the
district court calculated the advisory range to be 57 to
71 months. After considering all relevant factors, the
district court sentenced her to 71 months’ imprisonment.
It also ordered her to pay $2,360,914.51 in restitution
to thirteen victims. In its subsequent statement of
reasons, the district court adopted the PSR, except for
the recommendation it had rejected at the sentencing
hearing. Locke timely appealed.

II. A NALYSIS
Locke presents three issues on appeal, challenging
both her conviction and sentence. She first argues that
8 No. 10-1351

her conviction must be reversed because the district
court erred in not striking inappropriate testimony from
certain government witnesses. She alternatively argues
that we must remand this case for resentencing because
the district court erroneously based her sentence
length and restitution order on unconvicted conduct.
We will address each issue in turn.

A. Challenge to Conviction
For the first time on appeal, Locke contends that the
district court erred by not striking a portion of the testi-
mony from each of seven government witnesses.
Because she neither objected to their testimony nor re-
quested a limiting or curative instruction, we review
this issue for plain error only. United States v. Noel, 581
F.3d 490, 498 (7th Cir. 2009). To prevail, Locke must
show that (1) the district court erred in not striking the
witnesses’ testimony, (2) its error was obvious or clear,
(3) the error affected her substantial rights, and (4) the
error “seriously affected the fairness, integrity, or public
reputation of the judicial proceedings.” United States
v. Askew, 403 F.3d 496, 503 (7th Cir. 2005).
Specifically, Locke takes issue with the witnesses’ use
of the words “fraud” and “misrepresentation” in their
responses to prosecutors’ questions about the signif-
icance of false information on Locke’s loan applications
according to the lenders’ underwriting guidelines. Her
arguments may be distilled to two salient contentions.
First, these witnesses should not have been allowed
to testify as to their opinions, which she describes as
No. 10-1351 9

reaching legal conclusions and commenting on her
intent. Second, their testimony misled the jury, effec-
tively instructing it that incorrect information on loan
applications amounts to fraud per se, thus eliminating
the specific intent element of wire fraud.1

1. Admissibility of Lay Witness Opinion Testimony
We begin by noting these witnesses were not testifying
as experts. The Federal Rules of Evidence limit—but
do not bar—lay witnesses’ ability to testify as to their
opinions and inferences, even about ultimate
issues in the case.2 In some situations, even “lay opinion

1
Conviction under the wire fraud statute, 18 U.S.C. § 1343,
requires the defendant to have willfully acted “with the
specific intent to deceive or cheat, usually for the purpose of
getting financial gain for one’s self or causing financial loss to
another.” United States v. Howard, 619 F.3d 723, 727 (7th Cir.
2010) (quoting United States v. Britton, 289 F.3d 976, 981 (7th
Cir. 2002)).
2
The testimony of a witness “in the form of an opinion or
inference otherwise admissible is not objectionable because
it embraces an ultimate issue to be decided by the trier of
fact.” Fed. R. Evid. 704(a). But the Rules treat inferential
testimony of expert and lay witnesses differently. The second
half of Rule 704 provides, “No expert witness testifying with
respect to the mental state . . . of a defendant in a criminal
case may state an opinion or inference as to whether the
defendant did or did not have the mental state . . . constituting
an element of the crime charged. . . .” Fed. R. Evid. 704(b)
(continued...)
10 No. 10-1351

testimony as to the mental state of another is indeed
competent,” United States v. Bogan, 267 F.3d 614, 619 (7th
Cir. 2001) (quoting United States v. Guzzino, 810 F.2d 687, 699
(7th Cir. 1987)), and it is within the discretion of the
trial judge to determine whether such testimony is
helpful under Rule 701 and appropriate under Rule
403’s balancing test, Bohannon v. Pegelow, 652 F.2d 729,
732 (7th Cir. 1981). Our analysis, then, turns not on
whether the witnesses’ testimony obliquely implicated
Locke’s intent. Instead, we look to Rule 701’s helpful-
ness requirement to assess the witnesses’ testimony in
this case.3 We ask whether the district court rightfully
could have determined, in its broad discretion, that
these lay witnesses’ testimonies were helpful to the
jury and not meaningless assertions. See United States v.
Allen, 10 F.3d 405, 415 (7th Cir. 1993).

2
(...continued)
(emphasis added). “Since neither Rule 701 nor Rule 704(a) limits
the subject matter of lay opinion testimony, there is no theoreti-
cal prohibition against allowing lay witnesses to give their
opinions as to the mental states of others.” United States v.
Rea, 958 F.2d 1206, 1214-15 (2d Cir. 1992).
3
Lay witness testimony “in the form of opinions or in-
ferences is limited to those opinions or inferences which
are (a) rationally based on the perception of the witness,
(b) helpful to a clear understanding of the witness’ testimony
or the determination of a fact in issue, and (c) not based on
scientific, technical, or other specialized knowledge within
the scope of Rule 702.” Fed. R. Evid. 701. Locke does not
attack the witnesses’ testimony on the first or third grounds.
No. 10-1351 11

Locke argues that the witnesses’ answers should have
been stricken because their opinions, which bordered on
legal conclusions, were inherently unhelpful. She cites
United States v. Van Eyl, 468 F.3d 428, 432-33 (7th Cir.
2006), for the proposition that the court plainly erred in
permitting witnesses to testify using the words “fraud” or
“misrepresentation.” In Van Eyl, the district court had
granted the defendant’s in limine motion to exclude
lay opinion testimony on conclusions of fraud because
“the court feared the jury would conclude that if others
thought the conduct was wrong, then Van Eyl must
have possessed the intent to defraud.” Id. at 437. We
found that the exclusion was well within the district
court’s discretion, id., but we did not simultaneously
deem inadmissible all lay opinion testimony that
possibly implicates intent.
Locke also relies upon an isolated line from our deci-
sion in United States v. Noel for her argument that
lay witnesses’ legal conclusions are impermissible: “We
have held repeatedly that lay testimony offering a legal
conclusion is inadmissible because it is not helpful to
the jury, as required by 701(b).” 581 F.3d 490, 496 (7th
Cir. 2009). But she neglects to read that phrase within
the context of the testimony challenged in Noel and the
cases we cited for support—context that needs to be
considered as we evaluate the testimony in each case.
In Noel, a detective serving as a prosecution witness
described various photographs found on the defendant’s
computer and opined that they fit the statutory defini-
tion of child pornography. Id. at 494. We held the testi-
mony was not helpful to the jury because it “amounted
12 No. 10-1351

to nothing more than a statement that the photos
were illegal.” Id. at 496-97.
We decline Locke’s invitation to glean too broad a rule
from Noel. Properly read, Noel underscores two points
relevant to this case. First, a lay witness’s opinion or
inference testimony must be helpful to the finder of fact
in order to be admissible. Id. at 496. Second, a witness’s
opinion that the facts in a case meet the elements of the
charged crime will likely constitute unhelpful testimony
because it merely tells the jury what result to reach. Id.
at 497. Neither of these two propositions shows that
the district court committed any clear or obvious error
here.

2. Propriety of the Witnesses’ Testimonies
To convict Locke, the government needed to prove that
the inaccuracies in her loan applications and real estate
transaction documents were material. Neder v. United
States, 527 U.S. 1, 25 (1999); United States v. Powell, 576
F.3d 482, 490 (7th Cir. 2009). Locke’s representations
were material if they could have influenced the victims’
decisions. United States v. Roberts, 534 F.3d 560, 571 (7th
Cir. 2008). Lay opinion testimony, which “provides the
jury with a more complete picture than would be pro-
vided by a recitation of each component fact,” United
States v. Conn, 297 F.3d 548, 554 (7th Cir. 2002), could
shed light on the materiality of Locke’s falsehoods.
The witnesses were officers or employees of the mort-
gage brokerages or lenders involved in the Locke transac-
No. 10-1351 13

tions. As shown by the sequence of questions and re-
sponses recounted above, the government introduced
each witness to testify as to the prevalence of the false
information in the loan documents and the significance
of the falsehoods under the lenders’ guidelines. We
easily conclude that their opinions about the false-
hoods’ influence on the loan decisions would have
helped the jury reach a conclusion regarding the mate-
riality element of the wire fraud charges.
Having found that the testimony could have been
helpful, we consider whether the testimony impermis-
sibly communicated that the facts in Locke’s case met
the elements of wire fraud—that is, whether the
challenged testimony merely told the jury what conclu-
sion to reach. Had the prosecutors deliberately elicited
testimony about whether Locke knowingly made a mate-
rial misrepresentation to deprive the lenders of money,
their questions “would have required an answer in
the form of a legal conclusion that would have been
unhelpful opinion testimony.” United States v. Hach, 162
F.3d 937, 945 (7th Cir. 1998). We are not convinced that
the witnesses’ testimonies can be classified as legal con-
clusions, let alone such directive ones.
Locke asserts that the mere use of the words “fraud”
and “misrepresentation” conveyed the witnesses’ “unex-
pressed, and perhaps erroneous, legal standards to the
jury.” Torres v. Cnty. of Oakland, 758 F.2d 147, 150 (6th
Cir. 1985). But the testimony Locke challenges is far
afield from the unhelpful, bare-legal-conclusion testimo-
nies in Noel and Torres. Witnesses in both cases opined
14 No. 10-1351

on the application of the exact statutory elements in-
volved in the case. Noel, 581 F.3d at 497 (“She, in essence,
told the jury nothing more than, ‘I am familiar with the
definition of child pornography, and this meets that
definition. . . . ”); Torres, 758 F.2d at 151 (“[T]he question
tracks almost verbatim the language of the applicable
statute.”). Accord United States v. Scop, 846 F.2d 135, 142
(2d Cir. 1988) (same).
By distinct contrast, the prosecutors’ questions here did
not invoke any of the wire fraud statute’s language,4 and
they did not call for opinions on whether its elements
were fulfilled. The witnesses’ responses likewise neither
approached the statutory language nor commented on
Locke’s specific intent in any way. Rather, each witness
explained why the loan in question would have been
disapproved by using “fraud” or “misrepresentation” in
a colloquial sense, employing the vernacular of their
financial professions. See United States v. Hearst, 563
F.2d 1331, 1351 (9th Cir. 1977) (testimony not objec-
tionable when average laymen would understand the
terms used and ascribe them the same basic meaning
intended by the witness). The jurors could hardly

4
“Whoever, having devised . . . any scheme or artifice to
defraud, or for obtaining money or property by means of
false or fraudulent pretenses, representations, or promises,
transmits or causes to be transmitted by means of wire . . .
communication in interstate . . . commerce, any writings . . .
for the purpose of executing such scheme or artifice, shall
be fined under this title or imprisoned not more than 20
years, or both.” 18 U.S.C. § 1343.
No. 10-1351 15

confuse the words “what we call funny business or mis-
representation” with commentary on the elements of
wire fraud.
Neither did the prosecutors’ questions or the witnesses
responses call the jurors’ attention to Locke’s in-
tent—though even if they had, such testimony is not
necessarily inappropriate. See Bogan, 267 F.3d at 619-20;
Bohannon, 652 F.2d at 732. The witnesses were com-
menting on how their companies react to false informa-
tion on applications, not on Locke’s mens rea. See
United States v. Owens, 301 F.3d 521, 527 (7th Cir. 2002)
(witness’s use of phrase “misleading and fraudulent” to
describe reports did not comment on defendant’s state
of mind); United States v. Liner, 435 F.3d 920, 924 (8th
Cir. 2006) (implication that program was fraudulent did
not directly address defendant’s intent to defraud). The
witnesses’ words—read within the context of the ques-
tions and the full responses—must be stretched beyond
their capacity for us to conclude that the district court
allowed multiple witnesses to testify that Locke in-
tended to deceive the lenders and thus committed wire
fraud.
Had Locke properly preserved this issue for review, see
Fed. R. Evid. 103, we might have determined that the
district court abused its discretion by not striking the
testimony at Locke’s request. See United States v. Wantuch,
525 F.3d 505, 514 (7th Cir. 2008). Alternatively, the
district court might have admonished the prosecutors and
witnesses to avoid words that can be construed to have
legal baggage. See United States v. Espino, 32 F.3d 253,
16 No. 10-1351

257 (7th Cir. 1994) (“A more appropriately phrased ques-
tion . . . could have avoided the problem of compelling
the defendant to offer testimony requiring a legal con-
clusion.”). But the bottom line is that Locke never
objected to the testimony, let alone alerted the district
court to her underlying concerns. Under the circum-
stances, we certainly cannot conclude that any error in
the district court’s failure to strike the testimony sua
sponte was “clear or obvious, rather than subject to rea-
sonable dispute,” as the plain error doctrine requires.
Puckett v. United States, ___ U.S. ___, 129 S. Ct. 1423, 1429
(2009). Accordingly, we reject Locke’s contention that
the witnesses should not have been allowed to testify
regarding their opinions because they reached legal
conclusions and spoke of her intent.
Locke’s second contention—that the challenged testi-
mony misled jurors by giving them “de facto” instruc-
tions on the law—achieves little more traction. We can
imagine that the witnesses’ use of “fraud” and “misrepre-
sentation” may have confused the jury as to wire
fraud’s elements, at least initially. See United States v.
Baskes, 649 F.2d 471, 478 (7th Cir. 1980). But any such
confusion was extinguished when the district court
appropriately instructed the jury regarding wire fraud.
It expounded on specific intent, explaining both that
Locke must have intended to deceive or cheat the
victims to gain money or property and also that good
faith would be inconsistent with guilt. The district court
made clear that, to convict, the jury had to find that
Locke “realized what she was doing, was aware of the
nature of her conduct, and did not act through
No. 10-1351 17

ignorance, mistake or accident.” Locke does not argue
that the jury was unable to follow the district court’s
instructions, so we presume its verdict comported with
those instructions. See United States v. Ochoa-Zarate, 540
F.3d 613, 620 (7th Cir. 2008). Any ephemeral “de facto”
instruction was displaced by the district court’s expan-
sive instructions, so Locke was not prejudiced.
Finally, we do not find that Locke’s substantial rights
could have been affected by any error in failing to strike
the testimony. The evidence against her was diverse and
robust, including proof of multiple forgeries, falsified
account balances and incomes, and use of phony busi-
nesses and addresses. Locke’s good-faith defense re-
quired the jury to disbelieve her family members’ testi-
mony about forgeries and faxing a document on Locke’s
behalf; to blame mortgage brokers for falsified residential
leases, inaccurate income and account balance reporting
in loan applications, and fake addresses on documents;
and to disregard fake invoices from Locke’s purported
vendors. We conclude that Locke would not have been
acquitted had the district court struck the sporadic,
repeated use of two words with potential legal baggage
in the course of otherwise appropriate questioning and
testimony. See United States v. Avila, 557 F.3d 809, 821
(7th Cir. 2009).
In summary, we do not find that the district court
plainly erred in failing to strike the witnesses’ challenged
testimony sua sponte. The testimony was helpful to the
jury, as it shed light on the materiality element of wire
fraud. The testimony neither told the jury what conclu-
18 No. 10-1351

sion to reach nor instructed the jury that wire fraud is
a strict liability crime. Further, the overwhelming evi-
dence in the case would have led to Locke’s conviction
even in the absence of this testimony. Accordingly,
her convictions must stand.

B. Challenges to Sentencing
Locke contends that we must remand her case for
resentencing even though we find her conviction to be
sound. She presents two issues with the sentencing
court’s judgment. Her first issue involves the length of
her incarceration, while the second involves the
amount of restitution ordered. Both issues turn, how-
ever, on whether the district court erroneously con-
sidered unconvicted conduct in arriving at its conclusions.

1. Offense Level and the Number of Victims
To determine the guidelines-recommended sentence,
the district court needed to determine both the amount
of loss and the number of victims involved in Locke’s
crimes. See U.S.S.G. § 2B1.1(b)(1)-(2). Locke acknowl-
edges that both factors must include conduct relevant
to, but not specified within, her counts of convic-
tion—that is, acts “that were part of the same course
of conduct or common scheme or plan as the offense of
conviction.” U.S.S.G. § 1B1.3(a)(2). See also United States
v. Smith, 218 F.3d 777, 783 (7th Cir. 2000). She contends,
however, that the district court did not make the findings
necessary to support basing her offense level on “relevant
No. 10-1351 19

conduct” from several counts that were dismissed at
trial. We review a district court’s factual findings
during its determination of the offense level for clear
error, reversing only when we are “left with the definite
and firm conviction that a mistake has been made.”
United States v. Cruz-Rea, 626 F.3d 929, 938 (7th Cir. 2010)
(quoting United States v. Wyatt, 102 F.3d 241, 246 (7th
Cir. 1996)).5 Even the deferential clear error standard
“cannot cure an absence of findings on key elements of
the [relevant conduct] analysis.” United States v. Fox,
548 F.3d 523, 532 (7th Cir. 2008).
During Locke’s sentencing hearing, the district court
calculated Locke’s offense level to be 25 by including
a two-level increase because her offenses involved ten
or more victims. See U.S.S.G. § 2B1.1(b)(2)(A). The pros-
ecutors had presented their view of Locke’s entire fraud-
ulent scheme during sentencing arguments, urging
the district court to adopt the unconvicted counts as
relevant conduct in sentencing. The government con-
cedes that the five counts on which Locke was con-
victed did not involve ten or more victims, but argues
that the district court correctly found that the victims

5
There is some confusion whether Locke preserved her
challenge to an offense level increase based on the number of
victims exceeding those in her counts of conviction. If Locke
forfeited this issue, we would ordinarily review for plain error
only. United States v. Salem, 597 F.3d 877, 884 (7th Cir. 2010). But
the government suggested clear error review. (Appellee’s Br.
at 44.) “Hence, we review the district court’s relevant con-
duct determinations for clear error.” Salem, 597 F.3d at 884.
20 No. 10-1351

involved in the dismissed counts should be included in
the offense level calculation because they were directly
harmed by Locke’s “relevant conduct.”
The district court noted that the issue before it in
setting the offense level was “whether the conduct that
was charged and the other counts that weren’t tried
amounts to relevant conduct.” (Sent. Tr. at 19.) It then
stated that “the law in relevant conduct is fairly clear
and adequately cited by the Government. It causes
the Court to find that 2 points extra is correct. . . . It is
relevant conduct because of the case law . . . cited by the
Government.” Id. Later, when discussing its guidelines
range calculation, the district court explained that the
amount of money and the number of victims involved
impacted Locke’s range: “I’ve added the 2 points. I think
it’s appropriate to talk about . . . 10 victims or more
because of the relevant conduct in this case.” Id. at 37.
The court made no further comments regarding relevant
conduct and did not explicitly adopt the PSR at the sen-
tencing hearing.
For the dismissed counts to constitute relevant con-
duct, the acts in those counts must have been both at-
tributable to Locke and also part of a single scheme
common to the counts of conviction. United States v. Pira,
535 F.3d 724, 728 (7th Cir. 2008). Because the allegations
in those counts were not proven at trial, the district
court needed to determine—by a preponderance of the
evidence—that the events occurred and fell within
§ 1B1.3’s purview. United States v. Ojomo, 332 F.3d
485, 489 (7th Cir. 2003). That determination should be
No. 10-1351 21

explicitly stated and supported either at the sen-
tencing hearing or in a subsequent written statement of
the district court’s reasoning. Id. The statements need
not be particularly robust, but they must satisfy us that
the district court considered the evidence and concluded
that the conduct indeed had the requisite relationship
to the convictions. See id. at 490; Smith, 218 F.3d at 783.
More importantly, there must be evidence before the
sentencing court to support a “relevant conduct” finding.
Each case affirming a sentence involving relevant con-
duct in the face of “a paucity of explicit findings by the
sentencing judge,” Smith, 218 F.3d at 783, had one factor
in common: sufficient, objective evidence in the record.
E.g., United States v. Wilson, 502 F.3d 718, 721, 723 (7th
Cir. 2007) (defendant’s confession and witnesses’ state-
ments at trial and sentencing); Smith, 218 F.3d at 784
(findings “backed up by the objective evidence”);
United States v. Acosta, 85 F.3d 275, 279-80 (7th Cir.
1996) (adopted PSR and corroborated testimony);
United States v. Thomas, 969 F.2d 352, 355 (7th Cir. 1992)
(defendant’s admission of narcotics sales). The opposite
result obtains in cases where both the findings and sup-
porting evidence are deficient. E.g., United States v.
Ortiz, 431 F.3d 1035, 1042-43 (7th Cir. 2005) (the “district
court’s terse findings” and the government’s “non-exis-
tent” evidence of relevant conduct criteria required
finding of clear error); United States v. Bacallao, 149 F.3d
717, 720-22 (7th Cir. 1998) (lack of independent findings
and reliance on PSR inadequate because nothing in the
record or PSR supported relevant conduct finding);
United States v. Duarte, 950 F.2d 1255, 1264-65 (7th Cir.
22 No. 10-1351

1991) (neither evidence at trial and sentencing nor PSR
supported relevant conduct conclusion). Without any
evidence to serve as the denominator, a sentencing
court obviously cannot find conduct to be relevant by
a preponderance.
Locke argues that the district court lacked evidentiary
support for its relevant conduct finding. We agree. Nine
of the fourteen counts against her were dismissed at trial
without any evidence having been presented, and no
evidence regarding her participation in the transactions
underlying those counts was presented at sentencing.
Although the government wished to avoid “putting
on several little mini-trials” at sentencing, (Sent. Tr. at 7),
it retained the burden of proving that any fraud in
those other transactions was attributable to Locke and
was part of a common plan.
The government correctly asserts that the district
court may rely on uncontested portions of the PSR as
findings of fact. See Fed. R. Crim. P. 32(i)(3)(A); United
States v. Ali, 619 F.3d 713, 719 (7th Cir. 2010). It argues
that Locke’s failure to object to these sections con-
stituted an admission to the conduct necessarily
involved in reaching the sums listed, enabling the court
to rely on those uncontested paragraphs as findings of
fact in its offense level determination. But this rea-
soning suffers from three infirmities. First, Locke at all
times denied any knowing involvement in frauds perpe-
trated in the unconvicted transactions. Second, the PSR
contains no discussion relating those transactions to
Locke’s common scheme or plan. See United States v.
No. 10-1351 23

Sumner, 265 F.3d 532, 539-40 (7th Cir. 2001). So far as
we can discern, the PSR’s only information regarding
the victims of these transactions is a list of lenders, ad-
dresses, and dollar values in the amount of loss and
restitution paragraphs. Third, the district court must
actually adopt the PSR or its reasoning. The district
court adopted the PSR, but only after the fact and only
by checking a box without further explanation. “Although
the adoption of a PSR’s findings in this manner may
suffice under a plain error standard of review, it is in-
adequate when reviewed for clear error.” Salem, 597
F.3d at 888.
In this case, the district court “simply intoned the
words ‘relevant conduct’ and pronounced sentence,”
Thomas, 969 F.2d at 355, without explaining what facts
of the case justified such a finding. Given the lack of
evidence before the district court and the lack of an
explicit adoption of a PSR containing an adequate rele-
vancy analysis, we are left with the definite and firm
conviction that the district court made a mistake in con-
sidering the transactions underlying the dismissed
counts as relevant conduct. Accordingly, we conclude
that the district court clearly erred in determining
Locke’s offense level to be 25.
The district court sentenced Locke to 71 months’ incar-
ceration, the top of the 57-to-71-month recommended
range it had calculated. Had the additional victims not
been included in the offense level calculations, Locke’s
offense level would have been 23 (corresponding to a
guidelines range of 46 to 67 months). The district court,
24 No. 10-1351

quite possibly, would have selected the shorter period of
67 months had the “relevant conduct” been excluded,
so we do not find this error harmless.
At the same time, we acknowledge that the district
court might find—based upon sufficient evidence pre-
sented during resentencing—the conduct in the uncon-
victed counts relevant to Locke’s sentencing. It could
then state its findings with specificity and, presumably,
enter the same sentence we vacate today. We express
no opinion on the propriety of that outcome. Because
no particular outcome is certain, we remand for re-
sentencing. See United States v. Zahursky, 580 F.3d 515,
528 (7th Cir. 2009).

2. Restitution Order
Locke also takes issue with the district court’s restitu-
tion order based on reasons similar to—but analytically
distinct from—her relevant conduct argument. The
district court ordered her to pay restitution to thirteen
payees in the amount of $2,360,914.51, while her five
counts of conviction impacted only seven victims and
totaled $1,371,476.51. Because $989,438.00 of the ordered
amount was apparently based on non-convicted con-
duct, Locke concludes, we should vacate the restitu-
tion order and remand for determination of an appro-
priate amount.
We ordinarily review restitution orders for an abuse
of discretion, reversing if the district court considered
inappropriate factors or failed to exercise its discretion.
No. 10-1351 25

United States v. Frith, 461 F.3d 914, 919 (7th Cir. 2006).
But because Locke failed to object to the restitution cal-
culation during the sentencing hearing, she concedes
we should review the district court’s order for plain
error only.6 See United States v. Dokich, 614 F.3d 314, 318
(7th Cir. 2010). We have previously held that requiring
a defendant “to pay several thousand dollars in restitu-
tion, without a statutory basis for doing so,” constitutes
plain error by affecting the defendant’s substantial
rights and implicating “the fairness of the judicial pro-
cess.” United States v. Randle, 324 F.3d 550, 558 (7th
Cir. 2003).
Federal courts may only order restitution where specifi-
cally authorized or required to by statute. United States
v. Webber, 536 F.3d 584, 601 (7th Cir. 2008). Locke cites
United States v. McGee in support of her argument that
the district court could take “relevant conduct” into ac-
count while computing a prison sentence, but that re-
stitution “may not be awarded with respect to other
losses . . . unless the defendant consents to this additional

6
The government argues that Locke waived any opposition
to the restitution order by not objecting to the PSR’s proposed
restitution amount while she did object to the loss amount,
the number of victims, a bankruptcy fraud increase, and the
guidelines range. We disagree. Locke continually opposed
any sentence based on unconvicted conduct, and any failure
to specifically address the paragraph proposing a restitu-
tion amount lacked strategic motivation. We therefore find
this issue forfeited, not waived. United States v. Pineda-
Buenaventura, 622 F.3d 761, 766 n.2 (7th Cir. 2010).
26 No. 10-1351

award.” 612 F.3d 627, 635 (7th Cir. 2010). But this blanket
argument overlooks those circumstances—not at play
in McGee—in which defendants must remunerate
victims who are not specifically identified or involved
in the counts of conviction. See United States v. Booth, 309
F.3d 566, 576 (9th Cir. 2002) (“Restitution is . . . not con-
fined to harm caused by the particular offenses of . . .
convict[ion].”). As crimes against property, Locke’s
wire fraud convictions fall within a mandatory restitu-
tion statute, 18 U.S.C. § 3663A, created by the Man-
datory Victim Restitution Act (“MVRA”). If the offense
of conviction “involves as an element a scheme, con-
spiracy, or pattern of criminal activity,” the MVRA re-
quires restitution for “any person directly harmed by
the defendant’s criminal conduct in the course of the
scheme, conspiracy, or pattern.” 18 U.S.C. § 3663A(a)(2).
A wire fraud conviction requires the government to
prove that “the defendant participated in a scheme to
defraud,” United States v. Howard, 619 F.3d 723, 727
(7th Cir. 2010), so the MVRA required the district court
to order restitution for all victims of Locke’s conduct in
the course of her scheme. We have previously noted
that the crime comprehended by the mail and wire
fraud statutes is the scheme to defraud, not just the
isolated iterations of wire transmissions or mailings, so
restitution for victims of the overall scheme is required.
See United States v. Belk, 435 F.3d 817, 819 (7th Cir. 2006).
Accordingly, “[a]s long as the [sentencing] court can
adequately demarcate the scheme, it can order restitu-
tion for any victim harmed by the defendant’s conduct
during the course of that scheme.” Smith, 218 F.3d at 784.
No. 10-1351 27

Other circuits have arrived at the same conclusion.
E.g., United States v. Kones, 77 F.3d 66, 70 (3d Cir.
1996) (“[W]here a defendant is convicted of defrauding
person X and a fraudulent scheme is an element of that
conviction, the sentencing court has power to order
restitution for the loss to defrauded person Y directly
caused by the defendant’s criminal conduct, even where
the defendant is not convicted of defrauding Y”); Booth,
309 F.3d at 576 (same).
In constructing a restitution order for Locke’s multiple
wire fraud convictions, therefore, the district court
should have made specific findings regarding Locke’s
scheme or schemes to ensure its order complied with the
MVRA.7 See United States v. Bennett, 943 F.2d 738, 741
(7th Cir. 1991). Although Locke’s indictment certainly
alleged a single overall scheme, the government did not
pursue the conspiracy charge or many of the individual
transaction counts at trial. If the counts of conviction
were merely five iterations of her overall scheme to

7
We caution that this is not the same analysis as in “relevant
conduct” determinations, as “relevant conduct” is not within
the scope of the MVRA. Frith, 461 F.3d at 920. Yet the evi-
dence supporting each may overlap, and the necessary
findings may ring similar on the record. See United States
v. Hensley, 91 F.3d 274, 278 (1st Cir. 1996) (“[I]n determining
whether particular criminal conduct comprised part of a
unitary scheme to defraud, the sentencing court should con-
sider the totality of the circumstances, including the nature
of the scheme, the identity of its participants and victims, and
any commonality in timing, goals, and modus operandi.”).
28 No. 10-1351

defraud, the order would likely have been permissible.
See Belk, 435 F.3d at 819; United States v. Mitrione, 357 F.3d
712, 721-22 (7th Cir. 2004) (restitution order including
Medicare not plainly erroneous though count of convic-
tion only specified Medicaid as a victim because defen-
dant’s crime included a scheme and Medicare was
directly harmed by the scheme), vacated on other grounds,
543 U.S. 1097 (2005). But if the counts of conviction com-
prised five individual, discrete schemes to defraud,
the issued restitution order would be impermissible. Cf.
Frith, 461 F.3d at 920. The ultimate question, then, is
whether Locke’s counts of conviction comprised a
unitary scheme.
The district court’s findings on the record were insuffi-
cient to answer that question and support the restitu-
tion order it pronounced. The district court never dis-
cussed its restitution decision during sentencing. It did
increase the offense level by two points based on the
involvement of more victims than those listed in the
counts of conviction, but it did not explain how those
victims were directly harmed by Locke’s scheme or
schemes. See Randle, 324 F.3d at 556. It did state that
Locke’s “offense took place over the two-year period
with all of the attendant dishonesty contained within
this scheme.” (Sent. Tr. at 38.) But a subsequent state-
ment may cut against the suggestion that a single
scheme existed: “I don’t think [the guidelines] take
into account the length of time over the course of two
years and the number of separate wire frauds.” Id. at 41
(emphasis added). The district court made no findings
as to (1) whether the counts involved individual
No. 10-1351 29

schemes, as suggested by the discrete charges, or were
part of an overall scheme or pattern of criminal conduct;
(2) the scope of Locke’s scheme or pattern of criminal
activities, if a single scheme or pattern is found; and
(3) which victims were harmed by Locke’s conduct
within that scheme or those individual schemes.
The court erred in ordering her to pay restitution to
victims not clearly harmed by the conduct in Locke’s
counts of conviction, and this error affected her sub-
stantial rights. See Randle, 324 F.3d at 558. To ensure the
fairness and integrity of the judicial process, we exer-
cise our discretion to vacate the order and remand the
matter for the district court’s reconsideration. As with
the relevant conduct determination discussed above,
we express no opinion as to the propriety of arriving
at the same restitution order on remand if the district
court finds a single pervasive scheme. But the determina-
tion should be made by the district court in the first
instance.

III. C ONCLUSION
The district court did not plainly err in failing to strike
the testimony of government witnesses, so we A FFIRM
Locke’s conviction on five counts of wire fraud. The
district court clearly erred, however, in setting Locke’s
offense level without making sufficient findings re-
garding the number of victims involved in her crimes.
It also plainly erred in ordering Locke to pay restitution
to victims without making sufficient findings regarding
the scope of her scheme or schemes to defraud. Accord-
30 No. 10-1351

ingly, we V ACATE her sentence and restitution order
and R EMAND for resentencing proceedings consistent
with this opinion.

6-21-11