United States v. Monaco

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

5-10-1994

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Precedential or Non-Precedential:

Docket 93-5261

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 93-5261

UNITED STATES OF AMERICA,
Appellant

V.

THOMAS L. MONACO

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Criminal Action No. 92-00003-01)

Argued December 10, 1993

Before: BECKER and NYGAARD, Circuit Judges,
and YOHN, District Judge*

(Opinion Filed May 10, l994 )

EDNA B. AXELROD, ESQUIRE
ERIC L. MULLER, ESQUIRE (Argued)
Office of United States Attorney
970 Broad Street
Room 502
Newark, NJ 07102
Attorneys for Appellant

JOHN J. BARRY, ESQUIRE (Argued)
CAMILLE M. KENNY, ESQUIRE
Clapp & Eisenberg
One Newark Center
Newark, NJ 07102
Attorneys for Appellee

OPINION OF THE COURT

1
* Honorable William H. Yohn, Jr., United States District Judge
for the Eastern District of Pennsylvania, sitting by designation.

NYGAARD, Circuit Judge.
The government appeals from Thomas L. Monaco's

sentence, contesting both the district court's application of,

and its downward departure from the United States Sentencing

Guidelines. For the reasons that follow, we will vacate the

sentence and remand the cause to the district court.

The Oxy-Comm Contract

In July 1986, the Department of Defense ("DoD") awarded

Northern Precision Laboratories, Inc. ("NPL") a contract to

produce a test set for an aircraft pilot's oxygen/communications

mask ("Oxy-Comm"). Payments were to be by periodic reimbursement

for a fixed percentage of costs, overhead and other expenses

incurred, with the balance of the fixed price to be paid upon

completion. NPL's computerized accounting system was designed to

track all costs incurred and assign them to the proper contract

so progress payment request forms could be automatically

generated. To receive a progress payment, these forms merely had

to be submitted to the DoD. Although documentation for costs

incurred was necessary in case of an audit, the form itself was

sufficient for payment.

When NPL was awarded the Oxy-Comm contract, it was

experiencing cash flow problems which made it difficult to

satisfy NPL's working capital and net worth requirements under

its loan agreements. To keep NPL's credit intact, its president

2
and founder, Thomas L. Monaco, contacted the Cortec Group, an

investment banking firm. In 1985, Cortec loaned $250,000 to NPL

in return for a $50,000 annual management consulting fee and

stock warrants exercisable within five years.

Monaco decided that by billing labor to the Oxy-Comm

contract before it was actually performed, he could improve NPL's

cash flow situation. To receive accelerated payments, Monaco had

NPL's Accounting Department change his son's department number

from Administration to Engineering, a direct labor

classification. Monaco directed his son to prepare labor sheets

falsely indicating that he worked 1,000 hours on job number 845

since August 1986. Job number 845 corresponded to the Oxy-Comm

contract, but Monaco's son did not know that. The elder Monaco

gave the labor sheets to NPL's Production Control Manager to be

put into the computer system. Monaco then submitted a false

progress payment request to the DoD which included the extra

hours reported by his son. Monaco and his son generated four

additional progress payment requests by simply repeating the

procedure. As a result of these false hours, NPL received

approximately $140,000 in accelerated payments.

The DESI Contract

NPL had earlier been awarded a subcontract from Sperry

Corporation to produce a tracking system for NASA. It had

received most of the payments under this fixed price contract.

Unfortunately for NPL, because of technical problems with the

system, more work remained to be done. Hoping to renegotiate the

3
Sperry contract and get paid for this work, NPL set up job number

1040 to track the additional expenses it incurred.

Later, the DoD awarded NPL a contract to develop a

digital end speed indicator ("DESI") to monitor the speed of

naval aircraft taking off from carriers. This fixed price

contract was also payable under the progress payment system. For

reasons that are unclear, the DESI contract was also assigned job

number 1040.0 Because of this numerical duplication, charges

related to the Sperry overrun were billed to the DESI contract

and resulted in improper progress payments. A year later, Monaco

discovered the error. By then, NPL's financial condition had

deteriorated to the point that it could not repay the money and

Monaco permitted NPL to keep the unearned progress payments.

These acts nevertheless failed to help NPL's financial

condition. Monaco realized that NPL would need additional

backing to successfully bid on upcoming contracts and again

sought help from Cortec. At Monaco's request, Cortec exercised

the previously issued warrants. After assuming control over NPL

Cortec immediately ousted Monaco. It then discovered the billing

discrepancies and notified the authorities. A few months later,

Cortec placed NPL in Chapter 7 bankruptcy. As a result of the

bankruptcy, what would have been merely an interest free loan

from early payments ripened into a loss of over $381,000 to the

United States.

0
Monaco states that he did not assign the job number himself and
could only speculate as to how this double assignment occurred.

4
 B.

Monaco and his son were indicted. Monaco pleaded

guilty to conspiracy, 18 U.S.C. § 371, and his son pleaded guilty

to aiding and abetting a false statement. Because part of

Monaco's offense conduct took place after October 31, 1987,0

sentence was imposed under the 1988 Sentencing Guidelines.0

Beginning with a base offense level of six, the district court

first added seven points under U.S.S.G. § 2F1.1(b)(1)(H) (1988)

to reflect the size of the government's loss, then subtracted two

points under section 3E1.1(a) for acceptance of responsibility.

The court refused to apply the two-level enhancement for more

than minimal planning, leaving Monaco with an offense level of

eleven, which, with Monaco's criminal history category of I,

would have resulted in a sentence of eight to fourteen months.

The district court then departed downward one

additional level, making the following observations:
[T]here is some substance to what
[defense counsel] says when he speaks of the
essence of the offense was not to take money
that NPL or Mr. Monaco was not entitled to,
but to expedite payment and cut a corner.
Well, I don't know if I accept that analogy
in that form; but what really happened here
is, Mr. Monaco fraudulently borrowed the

0
The younger Monaco's conduct was completed by November 1, 1987;
hence, he was sentenced under pre-Guidelines procedure to one
year of probation.
0
3. Under the 1988 guidelines, the loss caused by Monaco's fraud
would require a seven point enhancement, while under the 1992
version, nine levels would be added. Accordingly, the district
court correctly chose to apply the 1988 guidelines. See U.S.S.G.
§ 1B1.11(b)(1) (1992); United States v. Kopp, 951 F.2d 521, 526
(3d Cir. 1991).

5
 Government's money without paying any
interest on it, hoping that in the end,
things would work out, complete the work,
keep his company afloat. And he got a bad
result; not something that is uncommon. . . .
I believe Mr. Monaco's motives in this case
were pure. I don't believe that he did this
to place money in his own pocket. . . .
Basically, Mr. Monaco is a good person,
probably the type of neighbor anyone would
want. . . .

But in any event, but for this mistake,
we have a very decent human being standing
before the Court. And so once again, this
Court must strike a difficult balance in
figuring out, well, what are we going to do
with this decent human being who made a
mistake, not that he could siphon off money
for his own needs, but for his corporation?
Is this the type of person that we want to
put in a prison and a prison environment? . .
. I'm satisfied from the totality of the
events here that I'm not going to send Thomas
L. Monaco to a prison setting. . . .

I'm going to depart downward . . . for
all the reasons that [defense counsel]
outlined. And the strongest reason, I think,
is the fact that I wouldn't want to have to
reflect that I engaged in conduct that caused
my son to stand before this Court and be
criminalized. The emotions and feelings that
you're going to live with and the peace that
you're going to have to make with yourself
and within your family I think is something
that the sentencing guidelines didn't take
into account.

The court imposed a sentence of six months home imprisonment,

five years probation, $100,000 in restitution and 500 hours of

community service. The United States appeals both the

application of the guidelines and the court's decision to depart

downward.

6
 II.

A.

U.S.S.G. § 2F1.1(b)(2) requires a two level increase

when the offense involved more than minimal planning. "More than

minimal planning" is defined in U.S.S.G. § 1B1.1, application

note 1(f), which provides, in pertinent part:0
"More than minimal planning" means more
planning than is typical for the commission
of the offense in simple form. . . .

"More than minimal planning" is deemed
present in any case involving repeated acts
over a period of time, unless it is clear
that each instance was purely opportune.
Consequently, this adjustment will apply
especially frequently in property offenses.

. . .

In an embezzlement, a single taking
accompanied by a false book entry would
constitute only minimal planning. On the
other hand, creating purchase orders to, and
invoices from, a dummy corporation for
merchandise that was never delivered would
constitute more than minimal planning, as
would several instances of taking money, each
accompanied by false entries.

The district court determined that Monaco's planning

was minimal because it was "a simple repetition of a simple plan"

with "no more planning than inherent in the crime of fraud

0
We are bound by the guidelines commentary in this case.
"[C]ommentary in the Guidelines Manual that interprets or
explains a guideline is authoritative unless it violates the
Constitution or a federal statute, or is inconsistent with, or a
plainly erroneous reading of, that guideline." Stinson v. United
States, 113 S. Ct. 1913, 1915 (1993). In is not argued in this
appeal that any of the above exceptions apply.

7
itself." In United States v. Cianscewski, 894 F.2d 74, 82 (3d

Cir. 1990), we stated that the question of more than minimal

planning was "better left to the district court;" nevertheless,

we conclude it clearly erred in making the determination here.

It is first helpful to look at the nature of Monaco's

fraud. We will assume, without deciding, that the DESI fraud was

purely opportune and focus on Monaco's conduct on the Oxy-Comm

contract.0 It is undisputed that in late 1986 or early 1987,

Monaco asked his son to prepare inaccurate labor sheets, which

Monaco then had entered into NPL's computer system. When the

computer generated the progress payment request, Monaco signed it

and turned it in to the DoD. Paragraph 29 of the Presentence

Report, to which Monaco made no objection in the district court,

indicates that over the next few months he again enlisted the

efforts of his son a total of four more times, repeating the

fraudulent billing scheme.

The Progress Payment System is an honor system based

largely upon voluntary compliance. While complete records must

be maintained in case of an audit, payments are made directly

from progress payment requests, without supporting documentation.
0
Monaco asserted that the improper charges to the DESI contract
were at first accidental, but that when he discovered the
problem, he decided to allow NPL to retain the money. The
Government, on the other hand, points to certain documentary
evidence which purports to indicate that Monaco knew what was
happening long before he claims to have discovered the error. The
district court made no explicit finding as to which version of
the events it credited, but the overall tenor of the sentencing
colloquy appears more favorable to Monaco's position.
Nevertheless, because we conclude the Oxy-Comm fraud alone
provided sufficient evidence of more than minimal planning, we
will not consider the DESI fraud further.

8
Monaco chose to have false hours input into NPL's computer system

so that, at least ostensibly, the fraudulent progress payment

requests would appear to be generated in the usual course of

business. Had the DoD conducted an audit, it would have

consequently been difficult to discover Monaco's fraud. This is

one of the reasons why the enhancement for more than minimal

planning is provided. See United States v. Wong, 3 F.3d 667, 672

(3d Cir. 1993); United States v. Georgiadis, 933 F.2d 1219, 1226

(3d Cir. 1991) (applying U.S.S.G. § 2B1.1(b)(5)).

Moreover, the district court found, in accordance with

paragraph 29 of the Presentence Report, that Monaco's fraud was

"a simple repetition of a simple plan" (emphasis added).

According to guideline commentary, more than minimal planning is

present in any case where repeated acts occur over a period of

time. The only exception is when each act was "purely

opportune," which has been appropriately defined as "spur of the

moment conduct, intended to take advantage of a sudden

opportunity." United States v. Rust, 976 F.2d 55, 57 (1st Cir.

1992) (citing United States v. Kopp, 951 F.2d 521, 536 n.22 (3d

Cir. 1991)).

While the DESI fraud may well have fit the exception,

the Oxy-Comm fraud clearly did not. It involved a series of

discrete decisions by Monaco to turn in progress payment requests

with inflated hours. At each stage, he had the opportunity to

consider the wrongfulness of his actions. See Wong, 3 F.3d at
671; Georgiadis, 933 F.2d at 1226 (more than minimal planning
adjustment "considers the deliberative aspects of a defendant's

9
conduct and criminal scheme"). Instead of ending the fraud, he

continued it. This repetition makes the Oxy-Comm fraud very

similar to the example given in the commentary of a repeated

embezzlement accompanied by false bookkeeping entries. Under

these circumstances, an enhancement for more than minimal

planning was required.0

Accordingly, we conclude that the district court

clearly erred when it found that Monaco did not engage in more

than minimal planning. We turn now to the issue of whether a

downward departure was permissible.

B.

The district court also departed downward one level for

"all the reasons" argued by Monaco's counsel. These reasons

included: (1) the amount of the true loss was overstated by the

Guideline's loss table; (2) the punitive effects of seeing one's

son hauled into court and adjudicated a criminal were not taken

0
Monaco relies heavily on U.S. v. Maciaga, 965 F.2d 404 (7th Cir.
1992), but that reliance is misplaced. There, a bank security
guard stole money out of the bank's night depository chute. The
first time, he planned the theft. Sometime later, he
inadvertently triggered the bank's silent alarm while performing
his normal duties. After honestly explaining the situation to
the investigating police officers, he saw a second opportunity to
steal from the depository and did so. The Court of Appeals for
the Seventh Circuit held that while the first larceny was
planned, the second was purely opportune, overturning the
district courts finding of more than minimal planning. Id. at
407. The Maciaga court noted that it could not find any case
where the more than minimal planning enhancement was applied to
less than three repeated acts of fraud. Id. Maciaga could only
be helpful to Monaco if the DESI fraud was purely opportune
(which we assume without deciding) and if there were somehow only
a single act of fraud surrounding the Oxy-Comm contract, which is
contrary to both the Presentence Report and the district court's
findings.

10
into account by the Sentencing Commission; and (3) other factors

related to his offense and conviction, namely the loss of

Monaco's business, his age, his poor prospects for future

employment and inability to hold public office, the civil

litigation in which Monaco was named as a defendant, and the long

interval between the initial investigation and Monaco's

indictment, which caused him to "live under a cloud." We need

only discuss items 1 and 2.0

1.

Monaco argues that, under the commentary to U.S.S.G.

§2F1.1 (1988), a departure is permitted here. Specifically, he

points to application note 11 in the 1988 commentary, which

stated, in pertinent part:
In a few instances, the total dollar loss
that results from the offense may overstate
its seriousness. Such situations typically
occur when a misrepresentation is of limited
materiality or is not the sole cause of the
loss. Examples would include understating
debts to a limited degree in order to obtain
a substantial loan which the defendant
genuinely expected to repay; . . . and making
0
The other grounds for departure are impermissible. U.S.S.G.
§5H1.1 states that age is not ordinarily relevant in departing
from the guidelines. We find nothing remarkable about Monaco's
age of fifty-seven. The loss of Monaco's business, his
involvement in litigation, his poor prospects for future
employment and his inability to hold public office are
consequences common to many white-collar felons, and these
factors were carefully considered by the Sentencing Commission.
Moreover, the loss of Monaco's business, if anything, occurred
despite, not because of, his fraud. Likewise, many white collar
defendants must wait considerable periods while their activities
are investigated and brought before the grand jury. Monaco
argues that, even if each of these factors individually does not
warrant a departure, the combination of all of them does make a
departure appropriate. We reject this collective argument as
well.

11
 a misrepresentation in a securities offering
that enabled the securities to be sold at
inflated prices, but where the value of the
securities subsequently declined in
substantial part for other reasons. In such
instances, a downward departure may be
warranted.

According to Monaco, the above note applies. Although the United

States ultimately lost over $381,000, Monaco argues that his

intent was only to take an interest-free loan from the government

and that it was Cortec's actions in taking over NPL and forcing

it into bankruptcy that turned the advance into a total loss.

Monaco asserts that the seven-level enhancement of U.S.S.G.

§2F1.1(b)(1)(H) (1988) overstates the amount of loss caused by

his acts and hence overstates his criminal culpability.

We conclude that a departure based on overstatement of

criminality by the loss tables is permissible. Monaco's intent,

as found by the district court, was not to steal money outright

from the United States, but to expedite payments that would have

been due at some future time and obtain a de facto interest-free

loan. Nevertheless, NPL failed and the United States suffered a

considerable loss. In United States v. Kopp, 951 F.2d 521, 531

(3d Cir. 1991), we defined loss as the greater of the amount the

victim lost in fact and the estimated amount of the intended or

probable loss. We then went on to state that "[t]o the extent

actual loss [has] other, more proximate causes, a discretionary

downward departure . . . might be appropriate." Id. That may be

the situation here. Without the takeover of NPL by Cortec0 and

0
We note that NPL's lucrative DESI contract was taken over by
another Cortec-affiliated company.

12
the subsequent bankruptcy, it is quite possible that the loss to

the United States would have been far less than actually

occurred. The district court needs to make findings of fact on

this issue in order to support any departure on the ground of

overstatement of criminality by the loss tables.0

We will accordingly remand, for two reasons. First, we

cannot be sure whether the district court granted a downward

departure based on application note 11, refused it based on an

erroneous view of its power to depart, or refused it in the

exercise of its sound discretion. Moreover, we simply do not

know what choice the district court would have made had it known

that the more than minimal planning adjustment was required. This

too was within its discretion. Hence, we will remand to the

district court for it to make appropriate findings of fact and

0
At the sentencing hearing, counsel for Monaco argued
that the "uniqueness" of the crime caused the monetary loss
guidelines to overstate the seriousness of the offense. During
the colloquy between the court and counsel, the court then stated
to the Assistant United States Attorney:

I agree with you. Its not a unique crime. You
know, [you] can't have it both ways: It's
either unique, or its simple and not complex.

Evidently, the court was saying that if Monaco's crime was
"simple and not complex" for purposes of the "more than minimal
planning" calculations, it could not be "unique" within the
meaning of application note 11.

"Uniqueness," however, is not required before a
district court can depart downward from the guidelines. All that
is required is a mitigating circumstance not adequately taken
into account by the Sentencing Commission in formulating the
guidelines. See, e.g., United States v. Lieberman, 971 F.2d 989,
995 (3d Cir. 1992). If the district court meant by this
statement that it had the power to depart only in unique
circumstances, it erred.

13
resentence Monaco. On remand, the district court may, in its

discretion, choose to depart downward based on application note

11.0 See United States v. Stuart, No. 93-7361, slip op. at 9-11,

1994 U.S. App. LEXIS 7826, at *14-18, 1994 WL 133633, at *5-6 (3d

Cir. Apr. 19, 1994) (suggesting possibility of downward departure

where defendant's culpability as courier was potentially

overstated by amount of stolen property he was carrying); United

States v. Jackson, 798 F. Supp. 556, 557 (D. Minn. 1992)

(exercising discretion and departing downward when sentencing

perpetrator of fraudulent real estate appraisal scheme where

other parties were largely responsible for loss).

2.

The other reason for the district court's departure was

the mental anguish Monaco felt seeing his son, otherwise a law-

abiding citizen with an excellent future, convicted of a crime

because of his father's fraudulent scheme. The younger Monaco

had completed successfully his graduate degree in Business

Administration and could have no doubt looked forward to a career

in the defense industry, but was restricted in that possibility

by the criminal record he received. In addition, he was

0
That discretion, however, is limited in two ways. First, the
district court should not depart more levels than would have been
required to account for the probable amount of foregone interest
to the United States. Second, the court should consider the
inherent risk of loss in Monaco's fraud. Although a total loss
was not intended, it certainly did materialize and that risk is
one of the losses that a perpetrator of fraud imposes on his
victims. We do not think that such a wrongdoer should completely
escape a sentencing enhancement if his scheme involved a
substantial risk of loss merely because, under his own rosy
scenario, no loss was intended.

14
stigmatized, not for deliberately committing a criminal act, but

for dutifully and unquestioningly honoring his father's request.

This is not at all what the elder Monaco intended for his son;

the Presentence Report records that Monaco stressed the values of

family, religion, education and a strong work ethic to his

children and set an honest, law abiding example for them, with

the sole exception of the offense conduct here. The district

court believed that the distress and guilt that Monaco would feel

as a conscientious father was punishment in itself, of a kind not

adequately taken into account by the Sentencing Commission.

The government contends that the court erred because

the involvement of a child in a parent's criminal endeavors is

never a mitigating circumstance, but is instead an aggravating

one. Indeed, a number of courts have approved enhanced sentences

for defendants who brought children or younger relatives into

their criminal activities. See, e.g., United States v. Ledesma,

979 F.2d 816, 822 (11th Cir. 1992); United States v. Jagim, 978

F.2d 1032, 1042 (8th Cir. 1992), cert. denied, 113 S. Ct. 2447

(1993); United States v. Porter, 924 F.2d 395, 399 (1st Cir.

1991); United States v. Christopher, 923 F.2d 1545, 1555-56 (11th
Cir. 1991). These cases, however, all involved fairly egregious

activities that the defendants must have known at the time were

both criminal and would expose their family member to criminal

liability, such as involving their children in the distribution

of crack cocaine.0

0
In Ledesma and Christopher, defendants involved their children
in schemes to manufacture and distribute crack cocaine. 979 F.2d

15
 Not all cases, however, contain such outrageous

behavior. There are many types of federal offenses that make

serious crimes out of behavior that might not appear to the

average person to be particularly blameworthy. This is

especially true given the often long reach of federal criminal

jurisdiction, such as exists under the false statements and

mail/wire fraud statutes. In certain factual situations, a

defendant might not realize that the suborned conduct of his

child would later cause the child to stand in court and be

adjudged a felon.

In sum, we will not say that bringing a child into a

criminal scheme is always an aggravating circumstance, especially

when the defendant did not understand that what he or she was

asking the child to do violated the law. The evaluation is too

bound up in the facts and circumstances of each case and is best

left to the sound discretion of the trial court. Thus, while the

district court would not have abused its discretion if it had

enhanced Monaco's sentence with an upward departure for bringing

his son into the fraud, it certainly was not required to do so.

The government would have us conclude that involving

one's child in a crime is never mitigating and bases its argument

on U.S.S.G. § 3B1.3, which provides that when a defendant abuses

a position of trust, the sentence should be adjusted upward by

at 819; 923 F.2d at 1556. The defendant in Jagim invited his
nephew to participate and profit in a fraudulent tax shelter
scheme. 978 F.2d at 1036. In Porter, defendant urged his son to
rob a bank in order to raise money for defendant's bail. 924
F.2d at 399.

16
two levels. While not arguing for that specific adjustment here,

the government contends that the Sentencing Commission fully

considered the moral gravity of employing one's child in a crime,

thus making a downward departure unavailable. We disagree.

The application notes to the 1988 version of U.S.S.G.

§3B1.3 are not entirely clear, but their overall tenor appears to

encompass the relationship of employer and employee, not parent

and child. Any doubt is resolved by reference to the 1993

application notes, which define a position of public or private

trust as involving "professional or managerial discretion."

U.S.S.G. § 3B1.3, application note 1 (1993). No mention is made

at all of nonbusiness positions of trust.0 Moreover, likening

the criminalization of a child to an abuse of trust misrepresents

the rationale behind the section 3B1.3 enhancement, which is that

a person who uses a special position of trust to commit a crime

is likely to be more difficult to apprehend and prosecute than

the average criminal. Lieberman, 971 F.2d at 993. Employing

one's child in a criminal scheme generally does not make

concealment of the offense itself any easier.

In at least some cases, such as the district court

found here, a defendant who unwittingly makes a criminal of his

child might suffer greater moral anguish and remorse than is
typical. Accordingly, even though the Eleventh Circuit Court of

0
The 1993 Sentencing Guidelines are not strictly applicable to
this case; however, we are not applying the 1993 guidelines
commentary by their own terms. Rather, we are referring to them
to infer whether the Sentencing Commission considered the issue
of a parent recruiting a child into a criminal scheme when it
promulgated the 1988 version of U.S.S.G. § 3B1.3.

17
Appeals in Ledesma held in the alternative that a section 3B1.3

enhancement was appropriate for bringing a child into a drug

conspiracy, see 979 F.2d at 822, we think the Sentencing

Commission did not consider this issue when it promulgated the

guidelines.

Moreover, we do not believe that by promulgating

U.S.S.G. § 5H1.6, the Sentencing Commission foreclosed the

possibility of a downward departure in this extraordinary

situation. That section specifically states that family ties and

responsibilities are "not ordinarily relevant" for departure

purposes. "Not ordinarily relevant" is not synonymous with

"never relevant" or "not relevant." Cf. U.S.S.G. § 5H1.10 (race,

sex, national origin, creed, religion and socio-economic status).

Indeed, as we recognized in United States v. Higgins, 967 F.2d

841, 845 (3d Cir. 1992), when a "not ordinarily relevant" factor

can be characterized as "extraordinary," a district court has the

power to depart from the guidelines. See also United States v.

Headley, 923 F.2d 1079, 1082-83 (3d Cir. 1991); United States v.

Johnson, 964 F.2d 124, 128-29 (2d Cir. 1992). Moreover, in

United States v. Gaskill, 991 F.2d 82, 85 (3d Cir. 1993), we
opined that section 5H1.6 is not "a clear prohibition, but rather

an indication that exceptions should be invoked only where the

circumstances are not 'ordinary' or 'generally' present."

We think this case is sufficiently extraordinary to

support the district court's downward departure from the

guidelines. U.S.S.G. § 5H1.6 questions typically arise when a

parent of young children is facing a prison term and argues that

18
his or her family responsibilities either weigh against

imprisonment or militate in favor of a shorter sentence. Because

leaving children behind while in prison is a hardship common to

many convicted parents, courts refuse to allow downward

departures. See United States v. Shoupe, 929 F.2d 116, 121 (3d

Cir.), cert. denied, 112 S. Ct. 382 (1991); Headley, 923 F.2d at

1082-83.

In the unusual facts and circumstances of this

extraordinary case, however, it is entirely probable that Monaco

never intended to criminalize his son and was deeply and

legitimately shocked and remorseful when it happened.0 This is

not something that is likely to occur frequently, and when it

does, the interests of justice weigh more heavily against

overpunishing the defendant than they do in favor of rigidly

enforcing the guidelines without regard for legitimate

penological bases of sentencing.0 For example, in Gaskill, where

we approved a departure under section 5H1.6, the defendant was

the sole caregiver for his mentally ill wife. 991 F.2d at 83.

He was not a violent offender and unlike the situation in

Headley, where a long sentence was involved, a reasonable
downward departure would have made a major difference in his
0
We have no doubt that Monaco himself knew that what he was doing
was wrong. It is quite possible, and would not be entirely
surprising, that Monaco had no idea that the "favor" he asked of
his son would cause the son to be convicted of a federal felony.
What he asked was a lie to be sure, but as a nonlawyer, it is
quite likely that he did not suspect that the conduct amounted to
aiding and abetting a false statement under federal law.
0
See Edward R. Becker, Flexibility and Discretion Available to
the Sentencing Judge Under the Guidelines Regime, Federal
Probation, Dec. 1991, at 10, 13.

19
period of incarceration and allowed him to quickly return to his

family duties. Id. at 85-86. Here too the defendant is a

productive, non-violent offender and a small downward departure

would eliminate the need for incarceration entirely.

The government's final argument against the downward

departure is that it would contravene United States v. Newby, 11

F.3d 1143 (3d Cir. 1993). There, we held that the loss of good

time credits arising from a prison altercation was not a

mitigating factor warranting a downward departure for the

associated criminal charge of assaulting and interfering with a

prison guard. That is to say, merely because a prisoner faces

the prison's administrative penalties for rule infractions, he

cannot thereby accrue a mitigating benefit in a criminal sentence

flowing from the same act or acts.

We held there that because criminal sentences and

disciplinary sanctions are designed to serve different purposes,

such a departure would defeat the goals of the criminal justice

system by giving incarcerated defendants lesser sentences than

they deserved. Id. at 1148-49. Therein we stated:
In addition to not being considered by the
Commission, a circumstance must be a
mitigating one in order to provide a basis
for a downward departure. The gravamen of a
mitigating circumstance is that it somehow
reduces the defendant's guilt or culpability.
It is a circumstance that "in fairness and
mercy may be considered as extenuating or
reducing the degree of moral culpability."
Black's Law Dictionary 1002 (6th ed. 1990).

Id. at 1148.

20
 The government argues from this that because Monaco's

guilt is not diminished by involving his son, any anguish he

feels at seeing his son convicted is not mitigating. The

government's interpretation, however, would be inconsistent with

our earlier decisions in United States v. Gaskill, 991 F.2d 82

(3d Cir. 1993) and United States v. Lieberman, 971 F.2d 989 (3d

Cir. 1992).

In Gaskill the fact that the defendant was the sole

source of care for his mentally ill wife did not bear on his

level of guilt or culpability in fraudulently using social

security numbers to obtain things of value, yet we held that a

downward departure was permissible. Gaskill's situation could be

described as either "extraordinary" or "extenuating." In

Lieberman we permitted a downward departure where the

prosecution's manipulation of the indictment made grouping of two

related offenses under the guidelines impossible. We did this

not because the defendant was less blameworthy than other

defendants, but to prevent "rais[ing] the prosecutor to a

position supreme over the district judge vis-a-vis sentencing by

virtue of the uncontrolled charging discretion." 971 F.2d at

998. It is evident, then, that reduced moral culpability is not

the only permissible basis for a downward departure.0

0
See also United States v. Rivera, 994 F.2d 942, 952-54 (1st Cir.
1993) (permitting departure in extraordinary familial
circumstances); Johnson, 964 F.2d at 128-30 (same); United States
v. Lopez, 938 F.2d 1293, 1296 (D.C. Cir. 1991) (departure based
on age of defendant permissible in extraordinary cases); Shoupe,
929 F.2d at 120 (same); United States v. Big Crow, 898 F.2d 1326,
1332 (8th Cir. 1990) (approving departure based on defendant's
"excellent employment history, solid community ties, and

21
 Moreover, the Guidelines themselves are replete with

offender characteristics that will, at least in extraordinary

circumstances, support a departure, none of which are normally

indicative of reduced guilt or culpability. See U.S.S.G.

§§5H1.1 (age), 5H1.2 (education and vocational skills), 5H1.4

(physical condition), 5H1.5 (employment record), 5H1.6 (family

ties and responsibilities), 5H1.11 (prior good works). Indeed,

among the most significant of the non-culpability related grounds

for departure is U.S.S.G. § 5K1.1, Substantial Assistance to

Authorities, particularly section 5K1.1(a)(4), which provides for

a departure based on the amount of risk or injury suffered by the

defendant of his or her family as a result of cooperating with

the government. Plainly, this factor has nothing whatever to do

with the defendant's culpability in committing the crime itself,

yet the commentary states explicitly that assistance to

authorities has been recognized as a mitigating factor.

In addition, the Guidelines Manual explicitly states

(and has consistently stated over the years) that, except for a

few circumstances unrelated to culpability where a departure is

impermissible, "the Commission [did] not intend to limit the

kinds of factors, whether or not mentioned elsewhere in the

guidelines, that could constitute grounds for departure in an

unusual case. See, e.g., United States Sentencing Commission

Guidelines Manual 6 (1993). The implication, of course, is that

consistent efforts to lead a decent life in a difficult
environment).

22
certain factors unrelated to guilt may be relevant for departure

purposes in extraordinary circumstances.

Internal Operating Procedure 9.1 sets forth our

judicial tradition that no panel of this court may overrule the

holding of a previous panel. Only the in banc court may do that.

To the extent that the decision of a later panel conflicts with

existing circuit precedent, we are bound by the earlier, not the

later, decision. Yohannon v. Keene Corp., 924 F.2d 1255, 1263 &

n.8 (3d Cir. 1991). Thus, to the extent that Newby's

pronouncement on moral culpability can be read to implicitly

overrule decisions such as Gaskill and Lieberman, the Newby

language must be considered dictum.0 See United States v. Ricks,

5 F.3d 48, 50 (3d Cir. 1993) (per curiam). Accordingly, nothing

in Newby prevents a downward departure in this case.

We believe that Monaco's situation is sufficiently

extraordinary and is sufficiently extenuating to support the

district court's discretionary decision to depart from the

guidelines. Having concluded that the district court correctly

departed downward, we cannot affirm its sentence outright. How

much to depart is quintessentially a question of discretion, and

while the district chose to depart downward one level, that

decision was made at a time when the court believed that the two-

0
We do not, however, disturb Newby's holding that loss of good
time credits do not warrant a downward departure. As noted
above, we construe Newby as focusing primarily on the fact that
because criminal sentences and disciplinary sanctions are
designed to serve different purposes, a departure would defeat
the goals of the criminal justice system by giving incarcerated
defendants lesser sentences than they deserved.

23
point enhancement for more than minimal planning was not

required. We simply do not know how many levels, if any, the

district court would have departed. We will therefore remand for

the district court to exercise its discretion in this regard.

III.

Because the district court incorrectly found that the

more than minimal planning enhancement did not apply to Monaco,

we will vacate its judgment of sentence and remand for

resentencing in light of our holding that a downward departure is

permissible on the facts of this case.

24