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.
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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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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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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.
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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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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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($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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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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(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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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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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]."
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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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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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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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