In the
United States Court of Appeals
For the Seventh Circuit
No. 07-2729
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
G REGORY A. B ARNHART,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of Illinois.
No. 05-CR-20018—Michael P. McCuskey, Chief Judge.
A RGUED F EBRUARY 9, 2009—D ECIDED M ARCH 26, 2010
Before P OSNER and S YKES, Circuit Judges, and D OW ,
District Judge.
S YKES, Circuit Judge. A jury convicted Gregory Barnhart
on two counts of wire fraud—one involving a fraud on
a former employer and the other involving a fraudulent
scheme to obtain a $500,000 loan from Sun Trust Bank
The Honorable Robert M. Dow, Jr., United States District
Judge for the Northern District of Illinois, sitting by designation.
2 No. 07-2729
secured by E. I. du Pont de Nemours and Company
(“DuPont”). Barnhart argues that we should reverse his
convictions for two reasons. First, he contends that the
district judge’s questioning of witnesses during his
trial displayed an inappropriate bias in favor of the gov-
ernment. Second, he argues that the government prejudi-
cially “paraded” before the jury the factual details of his
prior convictions for theft and deceptive practices.
Barnhart also challenges his sentence, claiming that the
district judge improperly calculated the amount of loss
and erred by ordering him to pay restitution based on
relevant conduct.
We agree that the judge’s questioning of the witnesses
during this trial went too far, but it did not prejudice
Barnhart’s substantial rights given the overwhelming
evidence of his guilt. Barnhart’s “parading” argument is
meritless, as is his contention that the district court im-
properly calculated the amount of loss. We therefore
affirm his conviction and sentence. On the limited issue
of restitution, however, a remand is in order; the govern-
ment concedes that the district court should not have
ordered restitution based on relevant conduct, and
we agree.
I. Background
A. The Frauds
In the spring of 2003, Barnhart approached Paul Tatman,
owner of Tatman’s Collision Repair Centers (“Tatman’s”),
to discuss the possibility of purchasing the business.
No. 07-2729 3
Barnhart was unable to raise the necessary capital for the
acquisition, however, so Paul Tatman instead brought
him into the business as an employee to implement
improved systems and procedures at the company’s four
collision-repair service centers. Tatman’s issued Barnhart
a corporate credit card because the job required Barnhart
to travel between these four locations, which were scat-
tered throughout central Illinois. In September 2003, after
Barnhart had been working at Tatman’s for a few months,
the company’s accountant alerted Paul Tatman that
Barnhart had used the corporate credit card to purchase
a home-entertainment system—a plasma television,
speakers, a wall mount, and a three-year service plan—for
a total cost of $7,919.99. In making the purchase,
Barnhart had represented himself as the president of
Tatman’s. Paul Tatman promptly fired him.
Also in the spring of 2003, Barnhart began seeing—first
professionally and later socially—Dr. Sandra Schwartz,
a chiropractor who operated a profitable chiropractic
practice and had a net worth of roughly $1 million. After
he lost his job at Tatman’s, Barnhart presented Schwartz
with his idea to start a collision-repair company called
Blue Star Collision (“Blue Star”), and Schwartz loaned
Barnhart $25,000 in November 2003 to start the business.
Barnhart used most of that money to pay personal ex-
penses. Over the next six months, Schwartz contributed
about half a million dollars in capital to Blue Star with
an understanding that she would receive an 85% owner-
ship stake. But the two did not formalize this agree-
ment, and Schwartz never became a shareholder.
Barnhart also opened several corporate credit-card ac-
4 No. 07-2729
counts in Schwartz’s name and used the cards to charge
approximately $100,000 in personal expenses.
Despite Schwartz’s loans, Blue Star had cash-flow
problems, and Barnhart needed to find another source
of funds. In the spring of 2004, he entered into discus-
sions with the regional sales representative for DuPont’s
auto-body unit, and Barnhart and DuPont executed a
loan/guaranty/supply agreement in April 2004. Pursuant
to the agreement, Barnhart received a $500,000 loan
from SunTrust Bank, and DuPont agreed to guarantee
the loan in exchange for Barnhart’s agreement to pur-
chase all of Blue Star’s auto-refinishing paint from
DuPont. Schwartz in turn personally guaranteed the
loan, and she instructed Barnhart to inform her of all
expenditures related to the loan. Exhibit B of the loan
agreement required Barnhart to disclose Blue Star’s
“Indebtedness,” which Barnhart listed as “none.” Barnhart
also represented to DuPont that Blue Star would not be
insolvent after the execution of the agreement and agreed
that the loan proceeds would be used only to purchase
equipment for the body shop.
Soon after Blue Star and DuPont closed on this loan,
Schwartz left for a few days to care for her sick mother.
When she returned, the loan money was gone. Barnhart
had transferred $30,000 into his personal account and
used these funds to purchase a hot tub, a four-wheel all-
terrain vehicle, a 50-inch plasma television, and to make
child-support payments to his ex-wife. (Barnhart appears
to have committed the rest of the loan funds to pay off
various start-up costs, including equipment and building-
No. 07-2729 5
design costs; the government did not question this use
of loan proceeds.) Blue Star went out of business soon
thereafter, and DuPont was left on the hook to SunTrust
for the entire $500,000.
B. District-Court Proceedings
On May 6, 2005, a federal grand jury in the Central
District of Illinois returned an indictment against
Barnhart, charging him with three counts of wire fraud
in violation of 18 U.S.C. § 1343. Counts One and Two
concerned Barnhart’s actions when he was employed by
Tatman’s, and Count Three concerned the $500,000 loan
from SunTrust and DuPont. Specifically, Count One
alleged that Barnhart committed wire fraud when he
purchased a set of custom tires and rims on his Tatman’s
credit card without authority from his employer. Count
Two related to Barnhart’s purchase of the home-entertain-
ment system using the Tatman’s credit card. And Count
Three alleged that Barnhart obtained the DuPont/
SunTrust loan through fraud.
The case proceeded to trial. Because this appeal
primarily concerns Barnhart’s conviction on Count
Three—the most substantial of the frauds—we can skip
further discussion of the evidence on the other counts.
The government’s theory regarding the DuPont fraud
was that Barnhart intentionally misrepresented that
Blue Star had no indebtedness and was not insolvent
in order to obtain the loan, and that he fraudulently
used some of the loan proceeds to purchase personal items
and pay his child-support obligations. Much of the trial
6 No. 07-2729
testimony focused on Exhibit B of the loan agreement,
which required Barnhart to disclose Blue Star’s indebted-
ness.1 The government maintained that Barnhart’s state-
ment on Exhibit B that Blue Star had no debt was an
intentional falsehood; the prosecution marshaled sub-
stantial evidence establishing that the loan agreement
required Barnhart to list all Blue Star indebtedness and
that Blue Star had around $1.1 million of debt at the time
he executed the agreement.
Besides the loan documents, the evidence included
copies of Blue Star’s financial statements and testimony
1
The loan agreement is not a model of clarity. Apparently, no
part of the loan agreement explicitly stated what should be
listed in Exhibit B, which was titled “Indebtedness.” The
contract itself defined “Indebtedness” in a rather comprehensive
manner. It also defined “Authorized Indebtedness” as:
(i) Indebtedness under the Loans; (ii) purchase money
indebtedness; (iii) capital lease obligations; (iv) unsecured
current liabilities (other than liabilities for borrowed money
or liabilities evidenced by promissory notes, bonds or
similar instruments) incurred in the ordinary course of
business and either (A) not more than ninety (90) days past
due, or (B) being disputed in good faith by appropriate
proceedings with reserves for such disputed liability;
(v) other unsecured Indebtedness not to exceed Fifty
Thousand Dollars ($50,000) in the aggregate at one time
outstanding; (vi) loans obtained from Blue Star Collision
shareholders and (vii) the Indebtedness specifically listed
on Exhibit B.
(Emphasis added.) As we explain later, the parties offered
competing interpretations of the agreement.
No. 07-2729 7
from Dorothy Lierman, a certified public accountant
who worked for Blue Star in 2004. Lierman testified
about the company’s general financial situation and its
indebtedness at the time of the loan transaction. She
also explained that “insolvency” meant either that a
company’s liabilities exceeded its assets or, more
generally, that a company was unable to meet its regular
debt obligations, and that under either understanding,
Blue Star was obviously insolvent when Barnhart
executed the loan agreement. She told the jury that in
May 2004—just after the loan was closed—Blue Star’s
liabilities exceeded its assets by at least $100,000 and
possibly as much as $500,000. She said Barnhart would
have been well aware of the company’s indebtness and
insolvency.
The government also offered the testimony of
Gelsomina Paolini, the loan manager at DuPont who
handled the transaction. Paolini testified that the only
financial information she received from Blue Star after
February 2004 was confirmation that Schwartz had con-
tributed more than $500,000 to the company. DuPont
apparently classified this as “investment capital” based
on its identification as an “undocumented loan”—an
unsecured loan of a shareholder on which there was
no maturity date. Regarding Barnhart’s fraudulent use
of the loan proceeds, the government established that
Barnhart quickly spent $30,000 of the loan proceeds on
personal expenses.
Barnhart’s defense consisted primarily of his own
testimony and that of an attorney who represented
8 No. 07-2729
Blue Star during the loan negotiations. As to the allega-
tion that he misrepresented Blue Star’s indebtedness,
Barnhart claimed that the loan agreement did not require
him to disclose all of Blue Star’s indebtedness and that
even if it did, he did not intend to deceive DuPont when
he wrote “none” on Exhibit B. Jeffrey Davis, Blue Star’s
counsel during the transaction, testified that Barnhart’s
disclosures on Exhibit B were arguably not improper.
The attorney said the agreement never made clear
what debt should be listed on Exhibit B; he described
what he said was the confusing interaction between the
defined terms “Indebtedness” and “Authorized Indebted-
ness” in the contract—both of which (he contended) were
used to describe existing and future indebtedness.
Barnhart claimed that he informed DuPont about Blue
Star’s financial condition long before the consummation
of the loan. He readily acknowledged that Blue Star’s
liabilities exceeded $1 million at the time the loan
closed, but he said he disclosed the company’s financial
situation months earlier by sending DuPont a Blue
Star prospectus. Paolini confirmed she received the
prospectus and acknowledged on cross-examination
that DuPont had relied on it to classify the loan was
“high risk.” Finally, Barnhart testified that he believed
Blue Star could use the loan funds for business expenses
such as payroll, and he characterized the $30,000 that
he took for personal use as “payroll” because he had
not received a salary for several months. Any misunder-
standing on this point, he claimed, was simply a
mistake rather than evidence of intent to defraud.
No. 07-2729 9
During the testimony of prosecution and defense wit-
nesses alike, the judge interjected with questions of his
own. Barnhart did not object at the time, but the judge’s
questioning of the witnesses figures prominently in his
appeal. The jury returned guilty verdicts on Counts Two
and Three but was unable to reach a verdict on Count
One. In calculating the amount of loss to determine
Barnhart’s advisory Sentencing Guidelines range, the
judge included Barnhart’s fraudulent conduct against
Schwartz as relevant conduct. The judge sentenced
Barnhart to 78 months’ imprisonment and ordered him
to pay restitution of $500,000 to DuPont and $604,070.42
to Schwartz. This appeal followed.
II. Discussion
A. Judicial Questioning of Witnesses
Barnhart’s primary claim on appeal is that the district
judge’s questioning of witnesses was highly prejudicial
and either overtly or subtly conveyed a bias in favor of
the government. A claim of this type requires us to
make two inquiries: “First, we inquire whether the judge
in fact conveyed a bias regarding the defendant’s honesty
or guilt. If so, we consider whether the complaining
party has shown serious prejudice resulting from the
district court’s comments or questions.” United States v.
Washington, 417 F.3d 780, 784 (7th Cir. 2005) (citation
omitted). We evaluate the judge’s questioning of wit-
nesses in the context of the entire trial and not in isola-
tion. See United States v. Martin, 189 F.3d 547, 554 (7th Cir.
1999). “If the court’s questions were partial to the pros-
10 No. 07-2729
ecution and they could prejudice the jury’s decision, then
reversal of the conviction could be in order.” Id.; see also
United States v. Verser, 916 F.2d 1268, 1272-73 (7th Cir. 1990)
(explaining that a district judge’s duty to avoid giving an
“impression to the jury that the judge believes one version
of the evidence and disbelieves or doubts another” is
“[f]undamental to the right to a fair trial” (quotation marks
omitted)).
But where, as here, the defendant failed to make a
timely objection to the district judge’s questioning, we
analyze the claim of improper signaling through the lens
of plain-error review.2 See F ED. R. C RIM. P. 52(b). This
means Barnhart must establish that (1) an error has oc-
curred; (2) that it was “plain” in the sense that it was
clear; (3) that it affected his “substantial rights”; and
(4) that it “seriously affected the fairness, integrity, or
public reputation of the judicial proceedings.” United
States v. Askew, 403 F.3d 496, 503 (7th Cir. 2005).
District judges have broad discretion in conducting
trials and may question witnesses during direct or cross-
examination to clarify testimony or assist the jury’s under-
2
At oral argument Barnhart suggested that preserving an
objection in this context is impractical because of the obvious
sensitivity of objecting to the judge’s conduct in front of the
jury. We have previously acknowledged the awkwardness of
preserving a claim of judicial bias. See United States v. McCray,
437 F.3d 639, 644 (7th Cir. 2006). Nevertheless, the objection
must be made; but nothing in Federal Rule of Evidence 614(c)
requires this to be done in the jury’s presence.
No. 07-2729 11
standing of the evidence. See F ED R. E VID. 614(b); United
States v. McCray, 437 F.3d 639, 643 (7th Cir. 2006). But the
judge’s discretion to question witnesses is not unfettered;
the judge may not “assume the role of an advocate for
either side” by either signaling through his questions
that he thinks a witness is not credible or suggesting that
he disbelieves a party’s theory of the case. Martin, 189
F.3d at 553.
Barnhart argues that the judge’s questioning of both
defense and prosecution witnesses was so one-sided
that it conveyed the clear impression that the judge
thought the government’s case was strong and Barnhart’s
defense implausible. He points first to the judge’s ques-
tioning of Jeffrey Davis, Blue Star’s counsel during the
loan negotiations. Davis testified about his understanding
of the loan agreement’s definition of indebtedness
and what he said were its confusing instructions about
how to disclose Blue Star’s indebtedness. During cross-
examination, the prosecutor sparred with Davis over the
proper interpretation of the agreement. Davis tried to
explain that the confusion stemmed from the agree-
ment’s use of the terms “indebtedness” and “authorized
indebtedness.” At this the district judge interrupted:
T HE C OURT: If DuPont knew there was $1.1 million
worth of indebtedness, would they have made
this loan?
T HE W ITNESS: I do not know. I don’t know what was in
the—probably not with the balance sheets that they—
T HE C OURT: Especially if one document says “none”
and another document says “1.1 million.” That’s a big
variance, isn’t it?
12 No. 07-2729
T HE W ITNESS: Yes. And I think that the issue is . . . that
the definition of “authorized indebtedness” sets forth
all those items which are authorized pursuant to
the agreement, which lists all of (i) through (vi), and
then has a second catch-all which would cover any-
thing that wasn’t covered through (i) through (vi).
T HE C OURT: But they were trying to get their money
guaranteed and not put themselves in a position they’d
have to fight anybody else, right?
T HE W ITNESS: Yes, sir.
These leading questions read like a cross-examination.
The first question forced Davis to speculate without
foundation as to the materiality of Barnhart’s representa-
tions, and it also tacitly rejected the defense theory that
DuPont was sufficiently informed of the status of Blue
Star’s debt by the prospectus Barnhart provided months
before the loan closed. The second and third questions
largely dismissed Davis’s proffered interpretation of the
contract, by which he tried to explain the variance
between Blue Star’s actual indebtedness and Barnhart’s
representation on Exhibit B. In short, the exchange
strongly suggests that the district judge doubted the
plausibility of both Davis’s testimony in particular as well
as the overall defense theory that Barnhart merely misun-
derstood the terms of the loan agreement and did not
knowingly deceive DuPont.
Barnhart also directs us to several questions from the
judge which served to emphasize uncontested facts that
were highly unfavorable to the defense. For example, the
judge repeatedly asked Davis and Barnhart to admit that
No. 07-2729 13
Barnhart controlled access to all of Blue Star’s financial
information. Davis had already testified that Barnhart
never shared Blue Star’s balance sheet with him and
explained that he usually does not see a client’s financial
information. When Davis moved on to explain what he
meant by the phrase “undocumented loans,” the judge
interrupted his explanation to return to his testimony
that Barnhart never supplied him with Blue Star’s finan-
cial statements.3 The judge also jumped in during a series
of questions to Davis about what Barnhart was required
3
Davis testified on cross-examination that he told DuPont that
the loans were “undocumented.” The prosecutor showed him a
copy of Blue Star’s balance sheet to demonstrate that the loans
were reflected on the company’s books. Davis said that
was not what he meant by “undocumented” and tried to
explain that he was referring to a loan without a promissory
note setting forth repayment terms or interest rates. The judge
interrupted:
T HE C OURT : Had [Barnhart] ever presented this [balance
sheet exhibit], a copy of this to you?
T HE W ITNESS : Not this balance sheet, no.
T HE C OURT : Had anybody—or, well, had [Barnhart]
presented to you the number of $433,532.57 [the loan
amount specified on the balance sheet]?
T HE W ITNESS : I knew that that’s the approximate
amount of [Schwartz’s] initial, her initial investment. Yes.
T HE C OURT : Okay. And that came from him?
T HE W ITNESS : Correct. And it was, it was—again, when
we originally met, that was—it was supposed to be a
million dollars; but, again, that number came from
[Barnhart].
14 No. 07-2729
to disclose concerning Blue Star’s indebtedness.4 Later,
when Barnhart contended that the prospectus he sent to
Dupont had sufficiently disclosed Blue Star’s financial
situation, the judge interrupted to get him to confirm he
had never given Davis a copy of the prospectus.5 These
4
Davis continued to press the notion that the only debt that
needed to be reported on Exhibit B was unauthorized debt and
explained that all other debt would have been disclosed on the
balance sheets. The following exchange then followed between
the district judge, Davis, and the government:
T HE C OURT : And any balance sheet that was sent to
DuPont by Mr. Barnhart, you never saw that?
T HE W ITNESS : I did not see those balance sheets. No.
M R . B ASS: So you’re not disputing that DuPont had asked
for and was interested in finding out about what debt,
regardless of what it was, Blue Star had before it made this
loan . . .[?]
T HE W ITNESS : I’m not disputing that . . . . The only thing
I was disputing was what would fall on Exhibit B.
5
At this point in Barnhart’s cross-examination, the prosecutor
showed Barnhart a copy of the prospectus, which contained an
explanation that Blue Star anticipated approximately $1 million
in debt when it opened its doors. Barnhart testified that he gave
this prospectus to his contact at DuPont in either February or
March of 2004. The judge then asked:
T HE C OURT : And I think you presented it to [the contact]?
T HE W ITNESS : That’s correct.
T HE C OURT : And Mr. Davis testified that he never saw
that; is that correct?
(continued...)
No. 07-2729 15
questions gave the impression that the judge was skeptical
of Barnhart’s claim that he did not willfully withhold
information about Blue Star’s debt.
The judge also questioned the government’s witnesses,
and although most of this was innocuous,6 we are troubled
by one particular passage in the testimony. During cross-
examination of Lierman, Blue Star’s accountant, Barnhart’s
trial counsel was attempting to establish that the concept
of “insolvency” could have a different meaning to a
certified public accountant than to a lay businessperson.
Barnhart’s counsel asked Lierman to restate the defini-
tion of the term she had used on direct examination so
he could compare it to his own proposed layperson’s
5
(...continued)
T HE W ITNESS : Yeah. He would not have.
T HE C OURT : Okay.
6
For example, near the end of Paolini’s direct examination, the
judge asked her to confirm that “[b]ased on the representa-
tions made, you made a business decision that the business
could have sufficient income to pay that monthly . . . debt [on
the loan]?” Even though this question asked Paolini to sum-
marize a portion of her testimony that was detrimental to
Barnhart, it was well within the appropriate zone of discretion;
judges are permitted to ask witnesses to summarize their
testimony as an aid to jurors. Although we have previously
held that too many clarifying questions may operate to
impermissibly reinforce testimony detrimental to the de-
fendant and amount to improper judicial signaling, see United
States v. Paladino, 401 F.3d 471, 478 (7th Cir. 2005), this is not
such a question.
16 No. 07-2729
definition. After Lierman restated the definition, the
judge said to her: “And so that’s what you would define
then as insolvency with your 30-year experience, your
education, is that there’s not sufficient money coming in
to pay the bills that need to be paid on a monthly basis?”
This attempt to bolster the prosecution’s witness took the
wind out of the sails of the defense attorney’s cross-
examination.
Considered as a whole and in light of the entire trial, the
judge’s questioning of the witnesses went beyond mere
clarification and instead gave the impression that the
judge disbelieved Barnhart’s defense.7 Trial judges need
not be silent spectators, but they are neutral arbiters; the
quantity and quality of the judge’s questions in this case
conveyed an improper skepticism about Barnhart’s de-
fense. This was error, but whether it affected Barnhart’s
substantial rights is another matter.
To establish prejudice, Barnhart must show that but for
the judge’s improper questioning, he probably would not
have been convicted. See United States v. Olano, 507 U.S.
725, 734 (1993). That is, if the evidence of guilt is over-
7
Barnhart’s argument properly takes issue with the effect of
the judge’s questions and not with the effect of damaging
responses to otherwise neutral clarifying questions. The distinc-
tion is critical in cases alleging improper judicial signaling.
“[T]he rule concerning judicial interrogation is designed to
prevent judges from conveying prejudicial messages to the
jury. It is not concerned with the damaging truth that the
questions might uncover.” Martin, 189 F.3d at 554.
No. 07-2729 17
whelming, this type of error can be considered harmless.
See United States v. Paladino, 401 F.3d 471, 478 (7th Cir.
2005). Although the trial judge’s influence on the jury is
ordinarily “of great weight,” Quercia v. United States, 289
U.S. 466, 470 (1933) (quotation marks omitted), the risk
of prejudice from judicial questioning can be minimized
if, as here, the judge issues an instruction at the close of
the case reminding the jury that nothing he said should
be construed as an opinion about the evidence or to
suggest what the jury’s verdict should be. See, e.g., McCray,
437 F.3d at 644. Such an instruction might not entirely
erase the suggestive effect of one-sided questions from
the judge,8 but it limits the degree of influence the ques-
tions might otherwise have on the jury’s deliberations
and may permit a conclusion that the judge’s error
was not prejudicial. This is especially true where, as here,
the evidence of guilt is very strong. We are confident
that the judge’s questions to the witnesses, though they
crossed the line, did not affect the outcome of this trial.
The basic facts of the case—the details of the DuPont loan
transaction, Blue Star’s indebtedness and insolvency, and
Barnhart’s misappropriation of the loan proceeds for
personal use—were not in dispute. The verdict turned
8
Although jurors are presumed to follow limiting or curative
instructions, in this as in other contexts, a limiting instruction
may be insufficient to fully or even partially cure a trial error.
Cf. United States v. Smith, 308 F.3d 726, 739 (7th Cir. 2002)
(“[J]urors are presumed to follow limiting and curative in-
structions unless the matter improperly before them is so
powerfully incriminating that they cannot reasonably be
expected to put it out of their minds.”).
18 No. 07-2729
on the question of Barnhart’s intent—whether he intended
to defraud DuPont when he represented that Blue Star
had no indebtedness and was solvent, and when he used
$30,000 of the loan funds for personal expenses, including
the purchase of a 50-inch plasma television, a hot tub,
an all-terrain vehicle, and payment of back child support.
Let’s start with the misuse of the $30,000. Barnhart
claimed that he honestly thought he could use the loan
proceeds to pay general business expenses, including
“payroll,” and that the $30,000 represented his salary.
Implausible on its face, the prosecution’s evidence over-
whelmingly contradicted this claim. First, using any of
the loan money for “payroll” was plainly in violation of
the loan agreement, which stipulated that the funds
were to be used only for purchasing auto-body machinery.
Second, that the $30,000 went primarily toward the pur-
chase of luxury personal items severely undermines the
already implausible claim that the money represented
Barnhart’s “salary.” Finally, Barnhart’s history of fraud—
as represented by his cynical deception of Schwartz and
his convictions for theft and deceptive practices—made
his claim of innocent intent simply unbelievable.
Likewise, Barnhart’s efforts to explain away his misrep-
resentations regarding Blue Star’s solvency and lack of
indebtedness must be seen in light of the obviously
fraudulent endgame of this scheme, as well as his
ongoing fraud against Schwartz and his other convic-
tions. Whatever plausibility his innocent explanation
for these misrepresentations might have had (and there
wasn’t much), it evaporates when considered in light of
No. 07-2729 19
the rest of his conduct. The best piece of evidence in his
favor was Paolini’s acknowledgment that he had given
her a copy of Blue Star’s prospectus in February 2004; it
listed roughly $1.1 million in expenditures, and Barnhart
argued that DuPont should have realized that these
expenditures would be liabilities by April 2004 when the
parties negotiated and executed the loan agreement. But
what DuPont should have known is not really the point;
the rest of the evidence overwhelmingly established
Barnhart’s intent to defraud.
In short, although the judge’s questions went too far,
Barnhart has not established that they were prejudicial.
Accordingly, while we agree there was error, it was not so
significant as to affect his substantial rights or require
correction under plain-error review.
B. “Parading” Barnhart’s Prior Conviction
Barnhart also claims that the government improperly
“paraded” the facts underlying his convictions for theft
and deceptive practices, admitted for impeachment
purposes. He acknowledges that the government was
permitted to go beyond establishing the mere fact of these
convictions (permitted under Rule 609(a)(1) of the
Federal Rules of Evidence) and question him regarding
the specific conduct underlying his convictions pursuant
to Rule 608(b) (permitting cross-examination regarding
specific instances of conduct bearing on a witness’s charac-
ter for truthfulness). Barnhart argues instead that the
government went too far and exploited the facts involved
in his theft and deceptive-practices convictions. For
20 No. 07-2729
support he relies on United States v. Smith, 454 F.3d 707
(7th Cir. 2006); United States v. Robinson, 8 F.3d 398 (7th
Cir. 1993); and Campbell v. Greer, 831 F.2d 700 (7th Cir.
1987), but those cases are inapplicable. Both involved
impeachment by prior conviction when the conviction
was offered under Rule 609, which restricts the intro-
ducing party to “identify[ing] the particular felony
charged, the date, and the disposition of a prior convic-
tion.” Smith, 454 F.3d at 716.
Here, as we have noted, Rule 608(b) permitted the
government to cross-examine Barnhart regarding the
facts underlying his theft and deceptive-practices convic-
tions because he was a witness and the convictions
related to his character for truthfulness. Rule 403 may in
some cases limit or prohibit this line of questioning if
its prejudicial effect would substantially outweigh its
probative value. But that’s not the case here. The central
focus of this case was Barnhart’s intent to defraud. The
underlying facts of his theft and deceptive-practices case
involved a $40,000 fraud on a friend in connection with
the ostensible purchase of a luxury suite at the Daytona
Speedway. This course of conduct is highly relevant to
Barnhart’s character for truthfulness. The government’s
cross-examination on the specifics of Barnhart’s prior
convictions was entirely appropriate.
C. Barnhart’s Sentence and Restitution Order
Barnhart challenges his sentence and restitution order
on two grounds. First, he argues that the district judge
erred in determining the amount of loss by including the
No. 07-2729 21
funds Schwartz provided through loans and credit-card
charges as relevant conduct. Second, Barnhart contends
that the court erred in ordering him to pay restitution
based on this relevant conduct. The government correctly
concedes that the district court erred in its restitution
order; losses resulting from relevant conduct are not
properly within the scope of restitution. See United States
v. Frith, 461 F.3d 914, 920-21 (7th Cir. 2006). Barnhart is
entitled to a remand for modification of the judgment
to remove that amount from the restitution order.
As for the loss amount, the district court concluded
that Barnhart caused a total of $1,104,070.42 in losses—
$604,070.42 to Schwartz and $500,000 to DuPont. Specifi-
cally, the court found that the fraud against Schwartz
was “inextricably intertwined” with the fraud against
DuPont and could be considered relevant conduct
under U.S.S.G. § 1B1.3(a)(2). We review this determina-
tion for clear error. Frith, 461 F.3d at 917. Barnhart chal-
lenges this loss calculation on two grounds. He claims
there is no evidence Schwartz’s loss resulted from
criminal conduct, and he argues it was not sufficiently
related to the scheme to defraud DuPont to count as
“relevant” conduct. Both arguments are without merit.
“A defendant who challenges a district court’s loss
calculation carries a heavy burden, for he must show that
the calculation was not only inaccurate, but also outside
the realm of possible computation.” United States v.
Wheeler, 540 F.3d 683, 693 (7th Cir. 2008) (quotation marks
omitted). Under the guidelines relevant conduct includes
“all acts and omissions . . . that were part of the same
course of conduct or common scheme or plan as the
22 No. 07-2729
offense of conviction.” U.S.S.G. § 1B1.3(a)(2). Applying
this standard, the district court properly concluded that
Barnhart’s deceit of Schwartz amounted to a criminal
fraud. Schwartz loaned Barnhart in excess of $500,000
based on his false promise that she would have an 85%
ownership interest in Blue Star. Barnhart instead used
much of this money for personal expenses, including
luxury personal items and a trip to the Cayman Islands.
Considered in light of his fraudulent schemes against
DuPont and Paul Tatman, his deception of Schwartz
easily qualifies as a criminal fraud.
Barnhart’s claim that this conduct was not suf-
ficiently intertwined with his fraud on DuPont is equally
unavailing. The commentary to the guidelines notes that
a “common scheme or plan” for purposes of a relevant-
conduct finding exists where the two acts are “substan-
tially connected to each other by at least one common
factor, such as common victims, common accomplices,
common purpose, or similar modus operandi.” Id. § 1B1.3
cmt. n.9(A). The commentary further states that two
acts are part of the same course of conduct if they are
“sufficiently connected or related to each other as to
warrant the conclusion that they are part of a single
episode, spree, or ongoing series of offenses.” Id.
cmt. n.9(B). The two frauds at issue here easily satisfy
this standard. They overlapped in time, in context, and in
their ultimate objective. Both the fraud on Schwartz and
the fraud on DuPont involved Barnhart’s use of Blue Star
to obtain money for his personal use. Barnhart’s ongoing
deception of Schwartz helped make his deception of
DuPont possible.
No. 07-2729 23
This case is not, as Barnhart claims, like United States
v. Coffman, 94 F.3d 330, 337 (7th Cir. 1996). There, we
concluded that a fraudulent scheme to induce one group
of investors to purchase stock was not sufficiently
related to a separate fraudulent scheme two years later to
borrow money from a bank using the same stock as
security. Here, in contrast, Barnhart’s two fraudulent
schemes were nearly contemporaneous and so inter-
twined that it would have been difficult to carry out
each one independently.
Accordingly, for the foregoing reasons, we conclude
that although the district court’s questioning of the wit-
nesses during Barnhart’s trial was improper, this error
did not prejudice Barnhart’s substantial rights in light of
the overwhelming evidence against him. There was no
evidentiary error in the use of Barnhart’s prior convic-
tions for theft and deceptive practices, and the district
court’s loss calculation was correct. The restitution order,
however, should not have included amounts attributable
to loss from relevant conduct. Accordingly, we A FFIRM
the convictions and sentence but V ACATE the restitution
order and R EMAND for limited further proceedings con-
sistent with this opinion.
3-26-10