United States v. Hallman

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit

5-12-1994

United States of America v. Hallman
Precedential or Non-Precedential:

Docket 93-1414

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 1

UNITED STATES COURT
OF APPEALS
FOR THE THIRD CIRCUIT

No. 93-1801

UNITED STATES OF AMERICA,
Appellee,

v.

REGINALD HALLMAN,
Appellant.

Appeal from the
United States District Court
for the Eastern District of Pennsylvania
(D.C. Crim. No. 93-00104-01)

Submitted Under Third Circuit LAR 34.1(a)
May 3, 1994

(Filed: May 13, l994 )

Before: SLOVITER, Chief Judge, HUTCHINSON AND SEITZ, Circuit
Judges.

Jerry S. Goldman, Esquire
Jerry S. Goldman & Associates, P.C.
1520 Locust Street, 10th Floor
Philadelphia, Pennsylvania 19102
Attorney for Appellant

Michael R. Stiles, United States Attorney
Walter S. Batty, Jr., Assistant
United States Attorney, Chief of Appeals
Virgil B. Walker, Assistant
United States Attorney
 2

Office of the United States Attorney
615 Chestnut Street
Philadelphia, Pennsylvania 19106
Attorneys for Appellee
__________
OPINION OF THE COURT

SEITZ, Circuit Judge.

I.

Reginald Hallman ("Appellant") appeals a sentence imposed

on him by the district court. The district court had subject

matter jurisdiction pursuant to 18 U.S.C. § 3231. This court has

jurisdiction under 18 U.S.C. § 3742(a).
II.

On September 9, 1992, appellant used a stolen check to pay

for a room at the Korman Suites in Philadelphia, Pennsylvania.

At the request of federal investigators, local authorities

arrested the appellant and located stolen mail after he consented

to a search of his vehicle.

Appellant pled guilty to a state forgery charge and was

sentenced to three years probation and restitution of $6,400.

Appellant remained incarcerated, however, because he was

identified as a fugitive from justice in Atlanta, Georgia and

having charges pending against him in Delaware County (PA) Court.

On February 11, 1993, appellant was taken into federal

custody pursuant to a four-count federal indictment. It appeared

that, using various aliases, appellant deposited stolen and

forged checks into an account and then withdrew the funds

therefrom (Count 1). One of the checks deposited in this account

was a check made out to the Internal Revenue Service (Count 2).
 3

Appellant forged one of the stolen checks he possessed to

purchase an automobile in the State of Alabama for approximately

$14,000 (Count 3). Lastly, the appellant was found to have been

in possession of approximately sixty-one stolen pieces of mail

(Count 4).

Appellant entered a plea of guilty on all four counts.

After receipt of the Pre-Sentence Report and a hearing thereon,

the defendant was duly sentenced. He now appeals.
III.

The standard and scope of review of the district court's

interpretation and application of the Sentencing Guidelines is

plenary. United States v. Murillo, 933 F.2d 195, 196 (3d Cir.
1991). However, where the district court's application is based

on factual analysis, we will reverse the district court only if

its conclusion is clearly erroneous. United States v. Ortiz, 878

F.2d 125, 127 (3d Cir. 1989).
IV.

A. Calculation of Loss

A search of the appellant's car after his arrest on the

Korman Suites' forgery charge resulted in the recovery of sixty-

one pieces of stolen mail, mostly checks, that underlie Count 4.1

Appellant objects to the calculation of "loss" in this count,

which added $25,152.36 to the loss amount and one (1) point to

his offense level. Under USSG § 2F1.1, adjustments are made to

the base offense level if the monetary loss exceeds certain

1
The sixty-one pieces of mail included: fifty checks, six
bundles of blank checks, and five credit cards.
 4

levels. Under § 2F1.1(a), the base offense level is six. The

Probation Officer calculated the losses to be $73,419.36. This

was arrived at by adding the losses suffered by the bank in Count

1 ($34,282), the amount of the check in Count 3 ($13,985), plus

the face value of the stolen mail in Count 4 ($25,152.36). Under

USSG § 2F1.1(b)(1)(G) six points were added to the base level

because the "loss" exceeded $70,000.

The district court determined that the "loss" in regard to

these stolen checks should be determined under USSG § 2B1.1.2

The district court referred to Application Note 2 to USSG § 2B1.1

as applicable. The note defines "loss" as
the value of the property taken, damaged, or destroyed.
Ordinarily, when property is taken or destroyed the
loss is the fair market value of the particular
property at issue. . . . Examples: (1) In the case of
a theft of a check or money order, the loss is the loss

2
To avoid confusion in considering the arguments advanced by
appellant concerning the calculation of the offense score, some
clarification as to which Guidelines sections are being utilized
is necessary. In our four-count indictment, there are both fraud
and theft-oriented charges. Under USSG § 3D1.2(d), conduct that
results in offense levels being determined under Chapter 2 (e.g.,
theft and fraud) are to be "grouped" together. Once grouped
together, USSG § 3D1.3(a) requires that the highest offense level
of the group is to be used. Application Note 3 to § 3D1.3 states
that "[i]f the counts in the Group are covered by different
guidelines (e.g., theft and fraud), use the guideline that
produces the highest offense level." In this case, both
guidelines, §§ 2B1.1 and 2F1.1, result in the same score--12
points--and either could have been used to calculate the score.
The use of these guidelines to determine the score, however, does
not dispose of the need to refer to the appropriate guideline for
the calculation of loss. For example, although Hallman's
indictment groups fraud and theft charges, we must refer to
§2B1.1 to calculate the loss in regard to the theft charges
(e.g., Count 4). See 18 U.S.C. § 1708 (referring to § 2B1.1 of
Guidelines). This amount is then applied to the guideline used
to calculate the offense level.
 5

that would have occurred if the check or money order
had been cashed.

The face value of the stolen checks was $25,152.36.

A recent opinion of this court supports the calculation of

loss based on the face value of the checks. In United States v.
Cianscewski, 894 F.2d 74 (3d Cir. 1990), a couple was convicted

of possessing stolen mails and selling stolen treasury checks.

The amount of loss in regard to the checks was challenged on

appeal. The defendants argued that the amount of loss should have

been the sum of the amounts that were received for the checks

upon resale. The court disagreed and held that "[w]hen a check is

stolen, the cost to the party who ultimately bears the loss is

obviously the face value of the check. . . . Under such

circumstances . . . a court does not err by valuing losses at

replacement cost to the victim--in this case the face value of

the stolen checks." Id. at 80.
Appellant argues that some of the checks had no economic

value because they were not valid either as a result of the

passage of time or because payment on the checks logically would

have been stopped. This argument erroneously applies USSG

§ 2B1.1. Application Note 2 specifically states that "loss" is

"the loss that would have occurred if the check or money order

had been cashed." (Emphasis added). Appellant's crime of theft

of the checks was completed, although his criminal conduct was

only partially completed.

Appellant argues that the Government failed to show an

intent by him to use the checks and thus, the amount should be
 6

lowered by applying USSG § 2X1.1 relating to "attempts." In an

effort to require the government to show intent, the appellant

cites United States v. Kopp, 951 F.2d 521 (3d Cir. 1992). The

appellant's reading of this case is in error. The court in Kopp

was distinguishing theft and fraud. The court determined that

when calculating loss in a fraud context, the calculation of loss

should be based on "actual or intended harm." Id. at 529. The

court, however, said that when calculating the loss in the theft

context, applying USSG § 2B1.1, one need only apply the "simple

`amount taken' rule" because "all thefts involve an intent to

deprive the victim of the value of the property taken." Id..

The charge in Count 4 warrants application of § 2B1.1, and we

must therefore examine "loss" in the theft context. The district

court's calculation of the amount of loss involved in Counts 1, 3

and 4 is not clearly erroneous.
B. Related Offenses

Appellant next challenges the calculation of his criminal

history score. The district court adopted the Probation

Officer's career history calculation of thirteen points that

placed the appellant in a category VI classification. Appellant

appeals the calculation on the ground that the Pre-Sentence

Report contained two calculation errors when it counted related

offenses separately.
1. Consolidation for Sentencing

First, appellant argues that two prior sentences, listed

at paragraphs 51 and 52 of the Pre-Sentence Report, were

"related" within the meaning of USSG § 4A1.2(a)(2) because they
 7

were consolidated for sentencing. Under Application Note 3 to §

4A1.2,
[p]rior sentences are not considered related if they
were for offenses that were separated by an intervening
arrest. . . . Otherwise, prior sentences are
considered related if they resulted from offenses that
(1) occurred on the same occasion, (2) were part of a
single common scheme or plan, or (3) were consolidated
for trial or sentencing. . . .

The district court determined that there was not a consolidation

for sentencing purposes and adopted the Pre-Sentence Report's

calculation.

After examining two case action summaries from the State

of Alabama, we conclude that there may have been consolidation

for sentencing, but that this conclusion does not affect our

result as we find other grounds to sustain the separate

calculation of the offenses based on our interpretation of

Application Note 3. The first sentence of that Application Note

states that "[p]rior sentences are not considered related if they

were for offenses that were separated by an intervening arrest

(i.e., the defendant is arrested for the first offense prior to

committing the second offense)." The appellant was arrested for

the offenses listed at paragraphs 51 and 52 of the Pre-Sentence

Report on different dates. We read the "otherwise" in the Note to

mean that if there is not an intervening arrest, then there may

be other ways in which to find consolidation. We need not

consider those alternatives, however, as the district court's
 8

counting of each separate offense was proper under our reading of

Application Note 3.3
2. Common Scheme or Plan

Appellant's second "relatedness" contention is that his

conviction for the forgery of the check to the Korman Suites was

improperly counted because it was "related" to the conduct in

Count 4. The forgery conduct consisted of the appellant's

forging of a check, numbered 295 with the name "James La Roux"

emblazoned on the face. The check was one of a sequential series

of checks with Mr. La Roux's name on them. The appellant

contends that the prior sentence he received for the forgery is

related to the present offense of possession of stolen mail

because it is part of a common scheme or plan. Under USSG

§ 4A1.2(a)(2), "[p]rior sentences imposed in unrelated cases are

to be counted separately." According to Application Note 3 to

§ 4A1.2, prior sentences are related if they "(2) were part of a

single common scheme or plan . . . ."

3
Our reading of Application Note 3 finds support in a recent
decision in United States v. Gallegos-Gonzalez, 3 F.3d 325 (9th
Cir. 1993):
[T]he first question is always whether the underlying
offenses were punctuated by an intervening arrest; by
the logic and ordering of Note 3, that inquiry is
preliminary to any consideration of consolidated
sentencing. The use of the word "otherwise" indicates
that sentence consolidation is relevant only in the
absence of intervening arrests. Properly read, Note 3
instructs that whenever offenses are separated by
intervening arrests, the sentences for those offenses
are unrelated regardless of whether sentencing was
consolidated.
Id. at 327
 9

On its face, the argument made by appellant is an

erroneous application of the Guidelines because as a general

rule, USSG § 4A1.2(a)(2) applies to the relatedness between prior

sentences, not prior sentences to the present offense. E.g.,
United States v. Beddow, 957 F.2d 1330, 1337 (6th Cir. 1992);

United States v. Walling, 936 F.2d 469, 471 (10th Cir. 1991).

Therefore, because we have only one prior sentence here, there

can be no relatedness analysis under § 4A1.2(a)(2).

The appellant, however, suggests that under USSG

§ 4A1.2(a)(1), the prior sentence and present offense are related

because of the requirement that the prior sentence be imposed

"for conduct not part of the instant offense." Appellant's

argument is that the conduct that led to his state sentence for

forgery is part of the same scheme and conduct that led to his

federal indictment on the count of possession of stolen mail.

Although neither party has cited a case that would be of

assistance, there are several decisions from other circuits that

throw some light on the issue. The Sixth Circuit stated that

"the appropriate inquiry is whether the `prior sentence' and the

present offense involve conduct that is severable into two

distinct offenses." Beddow, 957 F.2d at 1338. The Sixth

Circuit's test was developed in response to the Tenth Circuit's

decision in United States v. Banashefski, 928 F.2d 349 (10th Cir.

1991). In Banashefski, the defendant, a felon, placed a shotgun

in the trunk of a stolen car and then drove the car away. He was

charged by the state with possession of a stolen car, and was

charged by the federal government for possession of a firearm by
 10

a felon. The district court determined that there were two

distinct possessory acts that were severable. The facts in our

case constitute a closer call. Recognizing that possession of

stolen mail is a distinct offense, we also note that possession

of stolen mail in the form of blank checks suggests that

additional conduct may be required for the actor to obtain ill-

gotten gains. We do not adopt the Sixth Circuit's "severability

test" based on our facts. Although Banashefski could have

possessed the firearm or the car without the other and been

charged with an offense for each, appellant here could not have

forged a check until he had stolen the checks.

Although most conduct may be separable into distinct

offenses, we believe the focus of the inquiry is on the conduct

and whether that conduct is related--is it part of a common

scheme or plan? We agree with the Seventh Circuit's view that

"[t]he Sentencing Commission . . . intended a broad reading of

`related cases.'" United States v. Connor, 950 F.2d 1267, 1271
(7th Cir. 1991) (finding that sentences given for federal

conviction and state conviction were related when they were

brought pursuant to one arrest, despite separate trials).

In determining whether there was a common scheme or plan,

intent of the defendant is a crucial part of the analysis. In

the Tenth Circuit's decision in United States v. Coleman, 947
F.2d 1424 (10th Cir. 1991), cert. denied, 112 S. Ct. 1590 (1992),

a defendant was being prosecuted on drug charges. The court held

that a sentence for retaliation by the defendant against a

witness during a prior trial was not part of the scheme or plan
 11

for which the defendant was presently being prosecuted because

the retaliation took place after the completion of the drug

offenses and therefore, could not be considered "`intimately

related'" to the drug charges as the defendant had suggested.

Id. at 1429-30.
The Seventh Circuit's decision in United States v. Ali,

951 F.2d 827 (7th Cir. 1992), decided a case factually similar to

the present one in which intent played a key role. In Ali, a

burglar argued that two prior convictions were related because

they were part of a common scheme. The two convictions were for

the robbery of a supermarket and the forgery of a money order

that was stolen during that robbery. To quote at length, for it

is quite relevant to our particular facts, the court in refusing

to find a common scheme or plan and relatedness, stated that:
No one robs without intending to obtain value from what
is taken, and if that is a financial instrument on
which a signature must be forged if it is to be cashed
or otherwise used to the robber's profit the forgery
could easily be thought a part of a single scheme or
plan. But "scheme" and "plan" are words of intention,
implying that the forgery and the robbery have been
jointly planned, or at least that it have been evident
that the commission of one would entail the commission
of the other as well. If the decision to commit
forgery arose only after the robber discovered what he
had taken, the forgery would be no more a part of the
scheme or plan to rob than would be retaliation against
a witness of whose existence the retaliator was unaware
when he planned the crime to which the witness has
testified; and Coleman even narrowly read would
therefore govern. A crime merely suggested by or
arising out of the commission of a previous crime is
not . . . related to the earlier crime in the special
sense of being part of a common scheme or plan.

Id. at 828 (emphasis added).
 12

We hold that the appellant's possession of this stolen

mail was part of a common scheme and plan and that the prior

sentence for the forgery was for conduct that is related to the

offense in Count 4. Our conclusion rests on the fact that all of

the stolen mail recovered in the search of the appellant's

vehicle was in the form of checks or credit cards and that the

check forged to Korman Suites was from a sequence of blank checks

found within the stolen mail. Therefore, it is reasonable to

infer that the mail was stolen to find checks or other

instruments that could be converted to use through forgery.

Because we hold that the forgery conviction and Count 4

are parts of a common scheme or plan, the appellant's criminal

history score warrants a reduction by one point. This will

result in a criminal history score of twelve and a Category V

criminal history classification.4
C. Restitution

The appellant's final contention is that the district

court abused its discretion in requiring that restitution be made

in the amount of $34,282 to the bank involved in Count 1 because

it failed to make specific factual findings as to his ability to

pay.

Restitution is authorized by the Victim and Witness

Protection Act (VWPA), 18 U.S.C. § 3663(a), and is incorporated

into the Sentencing Guidelines at § 5E1.1. Our review is plenary

over whether an award is permitted, but we review the specific

4
Thus, a sentencing range of 27-33 months will result as opposed
to 30-37 months.
 13

award for abuse of discretion. United States v. Seligsohn, 981
F.2d 1418, 1421 (3d Cir. 1992).

In exercising its supervisory powers, this court has

required the district courts to make "findings as to the factual

issues that are relevant to the application of the restitution

provisions of the VWPA." United States v. Palma, 760 F.2d 475,

480 (3d Cir. 1985). The district court is required to
consider the amount of the loss sustained by any victim
as a result of the offense, the financial resources of
the defendant, the financial needs and earning ability
of the defendant and the defendant's dependents, and
such other factors as the court deems appropriate.

Id. (quoting 18 U.S.C. § 3580(a)) (emphasis added). The district

court determined that the appellant could pay the amount

proscribed within the period of his supervised release. Our

review is limited to "whether the record supports the finding."

United States v. Sleight, 808 F.2d 1012, 1021 (3d Cir. 1987).

The district court did not impose a fine on appellant

citing his "inability to pay." Indigency at the time of

sentencing is, however, not a bar to ordering the appellant to
pay restitution. United States v. Logar, 975 F.2d 958, 962 (3d

Cir. 1992) (citing ten other circuits in accord with this rule).

The order of restitution, on the other hand, may not be based on

some future fortuitous event that may befall the appellant, but

must be based on realistic expectations. Id. at 962-64; cf.

United States v. Mitchell, 893 F.2d 935, 936 n.1 (8th Cir. 1990)

(rejecting government's argument that a "high amount of
 14

restitution is proper on the chance that the defendant may win

the lottery").

The district court based its order of restitution on the

Pre-Sentence Report. The Report includes an analysis of the

financial impact on the victim, the bank, and details the

appellant's physical and mental health, education, vocational

skills, and financial ability to pay. Specific findings by the

district court determined that the appellant obtained a high

school diploma; claimed to have obtained thirty-six college

credits at the University of Alabama; was given an honorable

discharge from the military for medical reasons; was once a part-

owner of a hair salon in Philadelphia that generated a monthly

gross income of $1,500; earned $300 a night from 1990 until 1992

as a private disc jockey; and had worked for his stepfather's

business assisting in the design and installation of security

systems. The district court also adopted the findings of the

report that found the appellant had purchased a 1991 Ford Mustang

for $20,750 cash in 1991 and sold the same car in 1992 for

$13,000. Finally, the report noted that he could make $.15-.25

per hour and possibly up to $1.25 per hour while incarcerated

that could be applied to the amount of restitution ordered. The

district court stated at sentencing that "the defendant by

education and natural ability that God and his parents gave him

has the capacity to earn lawful income."

To sustain the district court's order of restitution, the

appellant must "realistically [be able to] pay [the amount]

within the five year period." Sleight, 808 F.2d at 1021. The
 15

record supports a reasonable expectation that the appellant will

be able to make restitution. Putting aside the large amount of

money that he received for the sale of his car (or the amount he

paid for it in cash), the appellant's educational level and past

work experience indicate an ability to obtain gainful

employment.5

In light of the specific findings made by the Probation

Officer that were adopted by the district court, and the time

afforded the appellant in which to pay the amount, we cannot say

that the district court's restitution order constituted an abuse

of its discretion.
V.

We approve the district court's calculation of the amount

of loss involved, the separate calculation of the offenses listed

in paragraphs 51 and 52 of the Pre-Sentence Report, and the order

of restitution. We will vacate the district court's calculation

of the appellant's criminal history score as a result of our

holding that the forgery charge and Count 4 were part of a common

scheme or plan and should not have been counted separately. The

5
We note that 18 U.S.C. § 3663(g) authorizes the court to "revoke
probation or a term of supervised release . . . or hold a
defendant in contempt pursuant to section 3583(e) if the
defendant fails to comply with such order." Although the
ordering of restitution may not be an exact science, we also note
that § 3663(g) also permits the court, in determining whether to
revoke probation or supervised or to hold in contempt, may
"consider the defendant's employment status, earning ability,
financial resources, the willfulness of the defendant's failure
to pay, and any other special circumstances that may have a
bearing on the defendant's ability to pay." We read this section
as granting the court discretion to modify the restitution order
in the future depending on the defendant's circumstances.
 16

sentence of the district court will be vacated and the matter

will be remanded to the district court for sentencing consistent

with this opinion.