United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT October 31, 2005
_______________________
Charles R. Fulbruge III
No. 04-20322 Clerk
_______________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JAMIE OLIS,
Defendant-Appellant.
Appeal from the United States District Court
For the Southern District of Texas
Before GARWOOD, JONES, and STEWART, Circuit Judges.
EDITH H. JONES, Circuit Judge:
Jamie Olis appeals from a judgment of conviction for
which he was sentenced to 292 months in prison for securities
fraud, mail and wire fraud, and conspiracy. The charges arose from
Olis’s work as a tax lawyer and accountant at Dynegy Corporation
(“Dynegy”) on a transaction called “Project Alpha.” Olis argues
that the evidence was insufficient for conviction and that the
district court improperly calculated his sentence. We hold that
the conviction is factually supported, but Olis must be
resentenced. Olis sufficiently preserved a Booker challenge to the
court’s application of the sentencing guidelines as a mandatory
scheme, and the district court overstated the loss caused by Olis’s
crimes. We therefore AFFIRM the conviction, and VACATE and REMAND
for resentencing.
I. BACKGROUND
The conviction arises from Olis’s position as Senior
Director of Tax Planning and International (and later, Vice
President of Finance) at Dynegy on a transaction called “Project
Alpha,”1 a complex five-year deal involving natural gas trans-
actions. Project Alpha was a plan to borrow $300 million and make
it appear to the outside world (and in particular to Dynegy’s
auditor Arthur Andersen) as if the money was generated by Dynegy’s
business operations. Project Alpha was designed to generate
positive cash flow to Dynegy “from operations” during 2001 and
negative cash-flow in 2002-05. Specifically, a special purpose
entity (“SPE”) called ABG Gas Supply was created and owned by
Deutsche Bank and Credit Suisse. During 2001, ABG Gas bought
natural gas at market prices and sold it to Dynegy at a discount.
Dynegy then sold the gas at market prices, netting $300 million.
During 2002-05, Project Alpha arranged that ABG Gas would buy gas
at market prices and resell it to Dynegy at above-market prices.
That money would flow to the banks, which would recoup the $300
million, plus interest.
1
We recite the facts in the light most favorable to the verdict. The
description of the transaction at issue is extremely simplified for the sake of
brevity.
2
To support the accounting characterization of the deal as
cash from operations, ABG Gas and the lenders could not be
guaranteed full repayment on their investment. Further, ABG Gas
had to be sufficiently “independent” from Dynegy, and the owners of
ABG Gas had to bear risk. But contrary to these requirements,
Olis, his boss Gene Foster and his colleague Helen Sharkey,
secretly put into place the “parent level” hedge and the “tear-up”
agreements among Dynegy, ABG’s owner banks, and Citibank to ensure
that the banks would not lose any money. The Government’s proof
indicated that Olis, Foster, and Sharkey intentionally concealed
the parent level hedge and tear-ups from Jim Hecker, the Arthur
Andersen partner responsible for signing off on Dynegy’s SEC
statements, in order to obtain the desired accounting treatment of
the transaction.
On April 25, 2002, following its review of Project Alpha,
the SEC required Dynegy to restate the cash flow as derived from a
“financing” rather than “operations.” Because Dynegy was now seen
to be borrowing rather than earning money from Project Alpha,
Dynegy’s stock price was adversely affected.
Foster, Sharkey, and Olis were indicted for conspiracy to
commit mail fraud, wire fraud, and securities fraud (count 1),
securities fraud (count 2), mail fraud (count 3) and wire fraud
(counts 4-6). Foster and Sharkey pled guilty to one count each in
3
exchange for maximum sentences of five years.2 Foster testified
against Olis at trial. The jury convicted Olis on all counts.
The district court sentenced Olis, applying the
Sentencing Guidelines as mandatory, to 292 months in prison, three
years supervised release, and a $25,000 fine. The offense level
was extraordinarily high based on the court’s findings that the
fraudulent scheme caused a loss of $105 million to one shareholder,
the University of California Retirement System (“UCRS”); that Olis
employed “sophisticated means” and a “special skill” to carry out
the fraud; and that there were more than fifty victims of the
fraud. Olis has appealed.
II. SUFFICIENCY OF EVIDENCE
Olis contends, almost perfunctorily, that the evidence
does not support his conviction. In particular, he disputes the
proof that he conspired to conceal two critical features of Project
Alpha from Dynegy’s outside auditor Arthur Andersen — the “parent
level” hedge and the “tear-up” agreements. This court will not
disturb a jury’s verdict unless the record demonstrates that a
rational jury could not have found each of the elements of the
offense beyond a reasonable doubt. United States v. Dahlstrom, 180
F.3d 677, 684 (5th Cir. 1999). The evidence, and all inferences
reasonably drawn from it, must be viewed in the light most
2
Foster and Sharkey are set to be sentenced thirty days after the
decision in this appeal.
4
favorable to the verdict, regardless whether the conviction is
based on direct or circumstantial evidence. Id.3
Olis asserts that the evidence demonstrated that everyone
working on Project Alpha, including Arthur Andersen accountants,
knew that the bank owners of ABG Gas were fully hedged against the
risk of loss from variable gas prices. Olis’s boss Foster,
testified, however, as a star prosecution witness and co-indictee,
that he and Olis wrongly agreed to the tear-ups and the parent
hedge and hid them from Arthur Andersen. Jim Hecker, an audit
partner at Arthur Andersen, testified that he advised Dynegy
against tear-ups, and Dynegy subsequently did not reveal this
aspect of Project Alpha to him. A reasonable jury, basing its
conclusion on the testimony of Foster and Hecker, together with the
incriminating emails among Olis and his co-indictees and a wealth
of other evidence, could easily have found Olis guilty beyond a
reasonable doubt of all the charged crimes.4
III SENTENCING
Far more problematic are some of the issues Olis raises
concerning his Booker objection, the district court’s use of the
3
We do not dwell on the elements of each and every count, because
Olis’s brief neither argues nor supports such a level of detail.
4
In addition to arguing insufficiency of the evidence, Olis requests
this court to order a new trial because the evidence preponderates heavily
against the verdict such that a mistake was made. Olis concedes that no motion
for a new trial was filed in the district court. A district court “is powerless
to order a new trial except on the motion of the defendant.” United States v.
Brown, 587 F.2d 187, 189 (5th Cir. 1979)(citing FED. R. CRIM. P. 33). Olis cannot
demonstrate that the district court erred in failing to grant him a new trial
when he never sought such relief in the district court.
5
2001 version of the Sentencing Guidelines, and the reasonableness
of the district court’s loss calculation, all of which contributed
to Olis’s sentence of imprisonment. We address each in turn.
A. Booker Objection
Olis first argues that under Booker, his Sixth Amendment
right to a jury trial was violated because the district court
enhanced his sentence under the mandatory guidelines regime based
on facts not proved to the jury beyond a reasonable doubt. See
United States v. Booker, __ U.S. ___, 125 S. Ct. 738, 756
(2005)(“any fact (other than a prior conviction) which is necessary
to support a sentence exceeding the maximum authorized by the facts
established by a plea of guilty or a jury verdict must be admitted
by the defendant or proved to the jury beyond a reasonable
doubt.”).
During sentencing, the district court determined the
following facts: (1) Olis was responsible for an approximately
$105 million loss to UCRS, which enhanced his base offense by
twenty-six levels under the Sentencing Guidelines; (2) Olis’s
offense involved sophisticated means, requiring a two-level
enhancement; (3) Olis used a special skill, in a manner that
significantly facilitated the commission or concealment of the
offense, resulting in another two-level enhancement; and (4) Olis’s
scheme included fifty or more victims, requiring a four-level
6
sentencing enhancement. None of these findings was proven beyond
a reasonable doubt to the jury or admitted by Olis.
Relying on these judge-found facts, and as mandated by
the Guidelines, the court calculated Olis’s total offense level to
be 40. Olis had no criminal history for guidelines purposes.
These two determinations yielded a sentencing range of 292 to 365
months in prison. See U.S.S.G. Ch. 5 Pt. A. The district court,
noting that it was “required to follow . . . the Federal Sentencing
Guidelines,” stated that it took “no pleasure in sentencing [Olis]
to 292 months,” but that it was the court’s job “to follow the
law.” The district court’s findings on the enhancements
dramatically increased Olis’s sentencing range beyond the minimum
span permitted by the jury’s verdict.
The Government asserts, however, that Olis did not
properly preserve his Booker objection and that we should review
Olis’s sentencing points for plain error. We disagree. Olis
repeatedly objected before and during his sentencing hearing to
both the district court’s loss calculation and the burden of proof
utilized by the court. His objections regarding the loss
calculation alerted the court to cases that acknowledged the
potential for a constitutional violation when sentencing facts are
not found by at least clear and convincing evidence.5 Olis’s
5
Olis argued to the district court that McMillan v. Pennsylvania, 477
U.S. 479, 87-88, 106 S. Ct. 2411, 2417 (1986), and United States v. Kikumura, 918
F.2d 1084 (3d Cir. 1990) supported his contention that a standard higher than
preponderance of the evidence should be used for enhancements that dramatically
7
objections were overruled and there is nothing to indicate that the
district court made its findings on any basis other than a
preponderance of the evidence. In United States v. Akpan, 407 F.3d
360, 375-76 (5th Cir. 2005), this court held that although one
defendant “never explicitly mentioned the Sixth Amendment,
Apprendi, or Blakely until his Rule 28(j) letter,” his objections
during sentencing that the court’s loss calculation had not been
proven at trial adequately apprised the district court of a Sixth
Amendment objection. Although Olis, like the defendant in Akpan,
never explicitly mentioned the Sixth Amendment, Apprendi, or
Blakely, his repeated objections also adequately apprised the court
that he was raising a constitutional error with respect to the loss
calculation.
Because Olis preserved his error by objecting in the
district court, we must “‘vacate the sentence and remand, unless we
can say the error is harmless under Rule 52(a) of the Federal Rules
of Criminal Procedure.’” Akpan, 407 F.3d at 376 (citation omit-
ted). We review the record de novo to determine whether the dis-
trict court’s error was harmless. United States v. Ahmed, 324 F.3d
368, 374 (5th Cir. 2003). Further, under Fed. Rule Crim. Proc.
52(a), the Government bears the burden of showing harmless error by
“demonstrating beyond a reasonable doubt that the federal
increase a sentence under the Sentencing Guidelines.
8
constitutional error of which a defendant complains did not con-
tribute to the sentence that he received.” Akpan, 407 F.3d at 377.
In this case, the Government points to no evidence
proving beyond a reasonable doubt that the district court would
have sentenced Olis to nearly twenty-five years in prison had it
acted under an advisory Sentencing Guidelines scheme as required by
Booker. Therefore, we vacate Olis’s sentence and remand for
resentencing. As Booker requires the district court to “consider”
the guidelines before issuing a “reasonable” sentence, 125 S. Ct.
at 757, 767, we must review the specific sentencing issues that
have arisen in this case and provide an analytical framework to aid
the district court in resentencing.
B. The 2001 Sentencing Guidelines
Olis contends that the district court erred by using the
2001 version of the Sentencing Guidelines, rather than the 2000
version, to calculate his sentence. Courts are required to “use
the Guidelines Manual in effect on the date that the offense of
conviction was committed.” U.S.S.G. § 1B1.11(b)(1). The guide-
lines add, “If a defendant is convicted of two offenses, one before
and one after the effective date of the revised edition of the
guidelines, the revised edition applies to both offenses.”
U.S.S.G. § 1B1.11(b)(3).
The jury convicted Olis for crimes that were committed
during the years 2000 through early 2002. The jury found in
9
Count 2 that the securities fraud in which Olis participated was
coextensive with the conspiracy, and in Count 6 that Olis committed
or aided and abetted wire fraud on March 13, 2002, the date that
Dynegy’s 2001 Form 10-K was electronically filed with the SEC. The
dates of these offenses plainly fall after the effective date of
the November 2001 revisions.
The jury additionally convicted Olis of the Count 1
conspiracy that lasted from on or about August 2000 through April
2002. This court has held that conspiracy “is a continuing
offense” and that “[s]o long as there is evidence that the
conspiracy continued after the effective date of the [amendments to
the] guidelines, the Ex Post Facto Clause is not violated.” United
States v. Buckhalter, 986 F.2d 875, 880 (5th Cir. 1993). Moreover,
unless a conspirator effectively withdraws from the conspiracy, he
is to be sentenced under the amendments to the guidelines, even if
he did not commit an act in furtherance of the conspiracy after the
date of the new guidelines, or did not know of acts committed by
other co-conspirators after the date of the new guidelines, where
it was foreseeable that the conspiracy would continue past the
effective date of the amendments. United States v. Devine,
934 F.2d 1325, 1332 (5th Cir. 1991). Devine applied to a defendant
whose criminal conspiracy straddled the period before and after the
effective date of the Guidelines, but its reasoning also applies
where, as here, the conspiracy continued into the period covered by
revised Guidelines. Olis never withdrew from the conspiracy.
10
Because three of the counts are governed by the 2001
amendments to the guidelines, the other three counts (mail fraud
committed in April 2001 and wire fraud committed in August and
October 2001) are also controlled by the November 2001 amendments.
C. Loss Calculation under the Sentencing Guidelines
The most significant determinant of Olis’s sentence is
the guidelines loss calculation. By the district court’s
reasoning, this added twenty-six levels to his base offense level
and alone placed Olis in a punishment range exceeding fifteen
years’ imprisonment.
This court reviews a district court’s factual findings at
sentencing for clear error and its legal analysis de novo. Nixon
v. Epps, 405 F.3d 318, 322 (5th Cir. 2005). While the district
court need only make a “reasonable estimate of loss,” U.S.S.G.
§ 2B1.1 APP. NOTE TO (C)(2002), this court first determines whether
the trial court’s method of calculating the amount of loss was
legally acceptable. United States v. Saacks, 131 F.3d 540, 542-43
(5th Cir. 1997); United States v. Krenning, 93 F.2d 1257, 1269 (5th
Cir. 1996).
Although otherwise amended in 2001, the guideline
covering securities fraud has continuously provided that a
sentencing court should use the greater of actual or intended loss.
§ 2B1.1, cmt. n2.2(a) (2001). The guidelines measure criminal
culpability in theft and economic crimes according to their
11
pecuniary impact on victims. Actual loss, which is at issue here,
“means the reasonably foreseeable pecuniary harm that resulted from
the offense.” § 2B1.1, cmt. n.2(a)(i). Moreover, actual loss
“incorporates [a] causation standard that, at a minimum, requires
factual causation (often called ‘but for’ causation) and provides
a rule for legal causation (i.e., guidance to courts regarding how
to draw the line as to what losses should be included and excluded
from the loss determination).” U.S.S.G. SUPP 2 APP. C, AMENDMENT 617
(NOVEMBER 1, 2001). This explanation does not, contrary to the
Government’s argument in brief, lessen the preexisting standards
that held a defendant responsible at sentencing only to the extent
that losses are caused directly by the offense conduct. See, e.g.,
U.S. v. Hicks, 217 F.3d 1038, 1048-49 (9th Cir. 2000); U.S. v.
Marlatt, 24 F.3d 1005, 1007 (7th Cir. 1994) (“[there is a]
difference between ‘but for’ causation and the causation — for
which the presence of but-for causation is ordinarily a necessary
condition but rarely a sufficient one — that imposes legal
liability. The distinction runs throughout the law. Criminal law
is no exception”).6 District courts must take a “realistic,
economic approach to determine what losses the defendant truly
6
See generally, WAYNE R. LAFAVE, SUBSTANTIVE CRIMINAL LAW, § 6.4(c) (2d ed.
2003) (noting that “even though A’s conduct may actually cause B’s [injury], his
conduct is not necessarily the “legal” (or “proximate”) cause of B’s [injury],
and that “the requirement of [legal] causation in criminal law, more often than
not, serves not to free defendants from all liability, but rather to limit their
punishment consistent with accepted theories of punishment”).
12
caused or intended to cause.” United States v. West Coast Aluminum
Heat Treating Co., 265 F.3d 986, 991 (9th Cir. 2001).
The loss guideline is skeletal because it covers dozens
of federal property crimes. Some flesh can be added, however,
where the gravamen of the offense conduct is securities fraud
perpetrated on an established market. Useful guidance appears in
the applicable principles for recovery of civil damages for
securities fraud. The civil damage measure should be the backdrop
for criminal responsibility both because it furnishes the standard
of compensable injury for securities fraud victims and because it
is attuned to stock market complexities. In civil cases, the
principle of loss causation is well established. See Dura
Pharmaceuticals, Inc. v. Broudo, __ U.S. __, 125 S. Ct. 1627,
1631-32 (2005); see generally Greenberg v. Crossroads Systems,
Inc., 364 F.3d 657 (5th Cir. 2004); Private Securities Litigation
Reform Act, 15 U.S.C. § 78u-4(b).7 Thus, there is no loss
attributable to a misrepresentation unless and until the truth is
subsequently revealed and the price of the stock accordingly
declines. Where the value of a security declines for other
reasons, however, such decline, or component of the decline, is not
a “loss” attributable to the misrepresentation. See also United
7
S.U.S.C. Section 78u-4(b)(4) states:
Loss causation: In any private action arising under this
chapter, the plaintiff shall have the burden of
providing that the act or omission of the defendant
alleged to violate this chapter caused the loss for
which the plaintiff seeks to recover damages.
13
States v. Grabske, 260 F.Supp. 2d 866, 869-71 (N. Dist. Cal.
2002).8
Although cases applying the guidelines to securities
fraud convictions at first blush yield no consistent rule
analogizing criminal responsibility with civil “loss causation,”
disparity is often more apparent than real. In cases where
defendants promoted worthless stock in worthless companies,
measuring the loss as the entire amount raised by the schemes is
neither surprising nor complex, and is fully consistent with civil
loss causation. See, e.g., United States v. Hedges,175 F.3d 1312,
1314-15 n.6 (11th Cir. 1999)(noting that the corporation’s “stock
became worthless when the conspiracy was discovered”). A few cases
appear to rely on a “market capitalization” approach, basing loss
on a gross correlation between stock price decline and the
revelation of a fraudulent transaction. See, e.g., United States
v. Eyman, 313 F.3d 741 (2d Cir. 2002); United States v. Moskowitz,
215 F.3d 265 (2d Cir. 2000). Because the courts’ underlying
reasoning is sparse and supporting facts are few, their
methodology, which might be at odds with the greater precision
required in civil loss causation, is unenlightening.
8
Under the PSLRA, the general method for calculating loss is the
difference between the price paid by the plaintiff and the price after
ameliorative information is released to the market, minus any amount of loss that
may have been caused by other market factors present during the period of loss.
BLOOMENTHAL & WOLFF, SECURITIES & FEDERAL CORPORATE LAW § 13:46 (2D ED. 2005)
14
The final type of case, most analogous to the one before
us, concerns fraudulent transactions that “cook the books”9 and
prop up a company’s stock but do not, aside from the exceptional
Enron or WorldCom situation, render the company worthless.
Sentencing decisions in these cases acknowledge that because a
company’s stock price is affected before and after the fraud, by
numerous extrinsic market influences as well as the soundness of
other business decisions by the company, the calculation of loss
attributable to securities fraud requires careful analysis. See,
e.g., United States v. Snyder, 291 F.3d 1291 (11th Cir. 2002);
United States v. Bakhit, 218 F. Supp. 2d 1232, 1238 (C.D. Cal.
2002); Grabske, 260 F. Supp. 2d at 869-71. Each of these cases
utilized or recommended somewhat different approaches to estimating
reasonably the amount of loss inflicted by a defendant’s securities
fraud committed within an extant company. Nevertheless, each case
takes seriously the requirement to correlate the defendant’s
sentence with the actual loss caused in the marketplace, exclusive
of other sources of stock price decline. Several features of the
decisions are noteworthy. First, given the time and evidentiary
constraints on the sentencing process, the methods adopted in these
cases are necessarily less exact than the measure of damage
9
John C. Coffee, “Are We Really Getting Tough on White Collar Crime,”
15 Fed. Sent. Rptr. 245, 246 (2003).
15
applicable in civil securities litigation.10 Second, Snyder and
Bakhit rejected an oversimplified market capitalization measure of
damages proffered by the Government in favor of a more nuanced
approach modeled upon loss causation principles. See Snyder, 291
F.3d at 1295-96; Bakhit, 218 F. Supp. 2d at 1238. As the Bakhit
court noted, the Government’s use of stock prices the day before
and the day after the revelation of the fraud did not account
either for the actual price at which most holders purchased the
company’s shares, or for the influence of outside factors on the
change in price. Bakhit, 218 F. Supp at 1239. The Government’s
approach measured paper losses in the company’s value, which have
no correlation with losses to actual shareholders who bought or
sold based on fraudulent information.11 Third, the cases rejected
defendants’ arguments that attempted to reason away all losses
caused by the fraud. Finally, the factual variations among these
cases reflect the importance of thorough analyses grounded in
economic reality.12
10
See Benjamin E. Rosenberg, Commentary: Damages vs. Loss– Two Answers
to the Same Question, 9 No. 18 ANDREWS DERIVATIVES LITIG. REP. 12 (2003).
11
Bakhit also refused to employ a Government theory of loss that had
never before been utilized in litigation. Bakhit, 218 F. Supp. 2d at 1238-39.
The Government does not further the goals of sentencing uniformity or fairness
when, as seems to be happening in these cases, the Government persistently adopts
aggressive, inconsistent, and unsupportable theories of loss.
12
In Snyder, the court noted that “because the price of BioCryst stock
was higher after disclosure of the fraud than its average price during the life
of the fraud,” using a method of determining loss, such as “subtracting the stock
price after the fraud from the average stock price over the life of the fraud,”
was not appropriate. Snyder, 291 F.3d at 1296. Therefore, the court stated that
the district court needed to “employ a slightly different, but nonetheless
proper, methodology.” Id. The court determined that the proper methodology
16
In this case, the district court, faced with a “cook the
books” fraud, overemphasized his discretion as factfinder at the
expense of economic analysis. Thus, the court elected to rely
solely on the Heil testimony concerning the purchase and sale of
UCRS stock as a measure of the loss caused by Olis’s offense.13
When Heil’s testimony was offered at trial to prove guilt, Olis’s
counsel was not placed on notice that the same evidence might later
pertain to the guidelines loss calculation. For that reason, other
significant extrinsic causes of the UCRS loss were not explored,
much less quantified, at trial. UCRS bought most of its Dynegy
holdings at the top of the market. As Olis pointed out at
sentencing, however, two-thirds of the drop in Dynegy’s price
occurred either before the revelation of Project Alpha’s problems
or more than a week after the announcement of the restatement of
earnings caused by Project Alpha. Taken on the court’s own terms,
would be to take the number of shares traded during the period the fraud was
extant, and multiply by the difference between the average price of the shares
during that period and the average price of the shares during the three days
after the fraud was revealed. Id. at 1295-96.
In Grabske, the share price of the corporation increased when the
fraud was committed, then dropped down once the fraud was disclosed, but still
remained above the pre-fraud share price. The court rejected both the
Government’s and the defendant’s loss calculation methods, and instead adopted
a rescissionary method consistent with the Private Securities Litigation Reform
Act. Grabske, 260 F. Supp. 2d. at 871-74.
In Bakhit, the court adopted a variant of the Snyder approach.
13
The Government relied on the Heil testimony and on the Gunderson
report, an expert analysis that, while attempting to account for market losses
due to extrinsic effects on Dynegy’s stock price, nevertheless measured gross
market capitalization loss rather than actual losses to shareholders because of
Olis’s offense. The Government’s alternative theory, which purported to measure,
as “gain to the defendant”, Dynegy’s tax benefit from Project Alpha, need not be
considered unless actual loss proves impossible to measure. Cf. Snyder, 291 F.3d
at 1296.
17
a substantial portion of the entire loss on the UCRS investment in
Dynegy, over $100 million, could not have been caused by Olis’s
work on Project Alpha.
During sentencing, moreover, Olis offered the expert
report of a Rice University expert, Professor Bala Dharan, which
explored numerous forces at work on the Dynegy stock price during
the relevant periods. The court refused to consider the report,
criticizing the expert’s analysis of whether Olis could have
“reasonably foreseen” the impact of his conduct on the stock
market. As the court observed, the economist was arguably stretch-
ing his expertise into an improper legal conclusion, but his
statements on this matter are separate from his economic analysis
of price and market movements. Professor Dharan’s report
demonstrates that Dynegy stock declined during the period covering
Project Alpha in tandem with the stocks of other publicly traded
companies in the energy marketing and trading business. Further,
Dynegy’s stock was negatively affected, even before the restatement
of Project Alpha’s cash flow impact, by the company’s failed bid to
acquire the faltering Enron. These factors and others cited in the
report suggested that attributing to Olis the entire stock market
decline suffered by one large or multiple small shareholders of
Dynegy would greatly overstate his personal criminal culpability.
Because the district court’s approach to the loss
calculation did not take into account the impact of extrinsic
factors on Dynegy’s stock price decline, Olis is entitled to
18
resentencing on this factor, subject to the principles just
discussed.
D. Other Sentencing Issues
Olis challenges, as duplicative, additional sentencing
enhancements for the use of “sophisticated means”, U.S.S.G.
§ 2B1.1(b)(8)(C), and “special skill”, U.S.S.G. § 3B1.3. This
court has held that double-counting is not impermissible unless the
guidelines so state. United States v. Calbat, 266 F. 3d 358, 363
(5th Cir. 2001). These guidelines do not proscribe their joint
application. Further, the district court properly cited a similar
case, United States v. Minneman, 143 F.3d 274, 283 (7th Cir. 1998),
which found no impermissible double counting. Olis used his
special skills in accounting and tax matters to advance an
extremely sophisticated, but fraudulent, scheme.
The final 4-level enhancement against Olis was based on
there being more than 50 victims of his crime, U.S.S.G. § 2B1.1
(b)(2)(B). The probation office counted as victims nearly all
140,000 employees of UCRS. This is a questionable assessment, as
pension plans attempt to balance gains and losses to their
beneficiaries, rendering any impact upon UCRS plan members far more
attenuated than if they individually owned Dynegy shares. It is,
however, inconceivable that fewer than fifty shareholders of Dynegy
suffered a market loss from purchases or sales of stock caused by
Olis’s fraud. This enhancement may unduly skew the guidelines
19
range in “cook the books” securities frauds, but it clearly
applies. See Coffee, supra at 246-47.
Conclusion
For these reasons, Olis’s conviction is affirmed, but he
must be resentenced in accordance with Booker’s overall standard of
reasonableness after the court “considers” the guidelines including
a recalculation of the amount of loss for which Olis should be held
responsible.
CONVICTION AFFIRMED; SENTENCE VACATED AND REMANDED.
20