United States v. Bates

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 95-50111
Summary Calendar
_____________________

UNITED STATES OF AMERICA

Plaintiff-Appellee,

versus

DARRELL LENARD BATES,

Defendant-Appellant.

_________________________________________________________________

Appeal from the United States District Court
for the Western District of Texas
________________________________________________________________
September 21, 1995

Before KING, SMITH, and BENAVIDES, Circuit Judges.

PER CURIAM:*

Appellant Darrell Lenard Bates was indicted on ten counts of

tax fraud and aiding and abetting in violation of 18 U.S.C. §§

287 and 2. In accordance with a plea agreement, Bates pleaded

guilty to a one-count information charging him with filing a tax

*
Local Rule 47.5 provides: "The publication of opinions
that have no precedential value and merely decide particular
cases on the basis of well-settled principles of law imposes
needless expense on the public and burdens on the legal
profession." Pursuant to that Rule, the court has determined
that this opinion should not be published.

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return with false and fraudulent statements in violation of 26

U.S.C. § 7206. The district court departed upward and sentenced

Bates to imprisonment for 36 months, one year of supervised

release, and the special assessment. Upon Bates's timely appeal

of his sentence, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

On December 21, 1993, a federal grand jury returned a one-

count indictment charging Bates with Filing False, Fictitious or

Fraudulent Claims in violation of 18 U.S.C. § 287. Then, on

January 18, 1994, Bates, along with codefendants Soul Sabastian

Dickey, Dorothy Jo Fields, Anthony Lee Garrett, Geary Don Tatum

and Jacquelyn Denise Manning, was named in a Superseding

Indictment, charging them with ten counts of tax fraud and aiding

and abetting in violation of 18 U.S.C. §§ 287 and 2. The

Superseding Indictment named Bates in all ten counts.

The facts underlying the Superseding Indictment involved a

lengthy series of fraudulent claims made to the Internal Revenue

Service requesting undeserved refunds for federal fuel taxes.

Specifically, the government charged that, for tax years 1986 to

1989, Bates filed federal income tax returns claiming credit for

federal tax on fuels totaling $73,295 and received payments from

the IRS totaling $71,633. Bates, however, was not in business in

that period, had little or no income, and was due no credits for

fuel tax. For part of the time in which he filed the returns, he

was incarcerated in the Dallas County jail and the Texas

2
Department of Corrections.

The indictment also charged that Bates instructed and

assisted fellow inmates in filing their own fraudulent returns

claiming fuel-tax credits. With Bates's assistance, inmates and

codefendants Anthony Lee Garrett, Soul Sabastian Dickey, and

Geary Don Tatum--whose return Bates was said to have actually

prepared--filed fraudulent returns. Bates also helped his

girlfriend, Dorothy Jo Fields, as well as Garrett's sister,

Jacqueline Denise Manning, claim and receive fraudulent fuel-tax

refunds. Finally, Bates allegedly prepared a fraudulent return

in his brother's name, and later, when subsequently questioned

about the return, falsely represented himself as his brother to

authorities. Bates allegedly admitted to officers of the IRS

Criminal Investigation Division both that he filed the fraudulent

returns that bore his name and also that he assisted Fields in

fraudulently obtaining her refund.

In total, Bates and his codefendants claimed $310,655 in

refunds and received $245,119 in payments from the IRS. After

discovering the scheme, the Government recovered only $21,001.

On October 18, 1994, after four of his codefendants had pled

guilty to various charges, Bates pled guilty to a one-count

Superseding Information, in accordance with a plea agreement.

This Information, filed on October 13, 1994, charged him with

Fraud and False Statements on an Individual Income Tax Return, in

violation of 26 U.S.C. § 7206. The charges involved a tax return

filed on January 7, 1989, in which Bates claimed a refund in the

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amount of $23,595.13. The plea agreement provided that, in

exchange for Bates's plea of guilty, the United States Attorney

would dismiss the Superseding Indictment. The government also

agreed that it would not prosecute Bates for further Title 18 or

26 offenses with regard to the facts that gave rise to the

Superseding Indictment, and that, in particular, it would not

pursue charges concerning a 1989 Form 1040 claiming a refund of

$37,070. The government did, however, reserve its right to move

for an upward departure from the guidelines upon sentencing.

In the Revised Presentence Investigation Report ("PSR"),

which incorporated several objections raised by Bates, Bates was

assigned a base offense level of six, in accordance with U.S.S.G.

§ 2T1.3 ("Fraud and False Statements Under Penalty of Perjury,"

in violation of 26 U.S.C. § 7206). The Probation Office

suggested an upward adjustment of two levels pursuant to U.S.S.G.

§ 3B1.1 because Bates organized other fuel-tax refund claimants,

thus playing an aggravating role in the offense. It also

recommended an upward adjustment of two points pursuant to

U.S.S.G. § 3G1.1 for obstructing the investigation, resulting in

a total offense level of ten. Further, the Probation Office

assigned no reduction for acceptance of responsibility pursuant

to U.S.S.G. § 3E1.1, because, even though Bates pled guilty, and

admitted some fraudulent filings, he still denied his involvement

in much related conduct. The Probation Office computed Bates's

criminal history category as IV, to yield, when combined with a

total offense level of 10, a Guidelines sentencing range of 15 to

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21 months. Lastly, the PSR suggested that the court may consider

an upward departure pursuant to U.S.S.G. § 5K2.0 based on the

fact that the entire scope of Bates's conduct was not adequately

addressed by the applicable offense guideline. Bates's

objections that did not lead to direct changes in the Parole

Department's recommendations were included in a lengthy addendum

to the Report.

Prior to the sentencing hearing, the Government moved for an

upward departure pursuant to section 5K2.0, for two reasons.

First, the Government asserted that an upward departure was

warranted because § 2T1.3(a)(2), applied by the Probation Office,

did not provide an increase either for more than minimal planning

or for the amount of fraud, as did section 2F1.1, the Guidelines

section originally applied prior to Bates's objections. The

Government also asserted that a departure was appropriate because

Bates's sentence should be similar to that of his codefendants,

in particular, that of Garrett.

At the sentencing hearing, the court heard testimony from

Bates, as well as from two government witnesses. It also heard

oral argument on Bates's objections to the PSR and the possible

upward departure. In overruling Bates's objections to the PSR,

the court specifically found that Bates had assisted Dickey,

Garrett, Manning, Tatum and Fields in preparing fraudulent

returns, and also that Bates had previously admitted to federal

agents that he planned to use the fraudulent refunds as a "loan"

from the government to purchase drugs. Further, the court held

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that, even though the amount of the fraud that Bates was involved

with was not relevant to his Guideline range (as there was no

increase in his offense level based on the dollar amount of the

relevant conduct under the governing provision), the court

nonetheless was ruling on the specific factual objections because

of their applicability to a possible upward departure, about

which Bates had been reasonably forewarned. The court also ruled

that for purposes of the possible upward departure, it would

consider both the total fraudulent amount claimed in refunds

($310,655) and the amount actually issued by the IRS in refunds

($245,119). The court overruled objections to the aggravating-

role adjustment, criminal history point assessment, and the

denial of the reduction for acceptance of responsibility.

Accordingly, the court granted the Government's motion to

upwardly depart on the ground that the Guidelines range does not

adequately represent the total harm caused by Bates's conduct.

The court added that one of the purposes of the Guidelines is to

mete out similar sentences to persons who commit similar offenses

in similar manners, and a Guidelines sentence for Bates would

create an inequity between Bates and his codefendants. Citing

U.S.S.G. § 5K2.0, "Grounds for Departure (Policy Statement)", the

court increased Bates's total offense level by five levels, from

10 to 15, yielding a sentencing range of 30 to 37 months, and

sentenced Bates to 36 months imprisonment. In its written

reasons for the upward departure, the court stated that the

applicable guideline did not adequately consider Bates's conduct

6
or the total harm that he caused, and that defendants who commit

similar offenses should receive similar sentences.

Bates directly appeals his sentence on seven grounds. For

the reasons stated below, we affirm the decision of the trial

court in all respects.

II. DISCUSSION

A. Standard of Review

We review the sentencing court's interpretations of the

Sentencing Guidelines, being conclusions of law, de novo. United

States v. McCaskey, 9 F.2d 368, 372 (5th Cir. 1993), cert.

denied, 114 S. Ct. 1565 (1994). The Guidelines applications must

be based on factual findings supported by a preponderance of the

evidence, and we review such factual findings under the clearly

erroneous standard. A factual finding is clearly erroneous if it

is not plausible in light of the record taken as a whole.

Anderson v. City of Bessemer City, 470 U.S. 564, 573-76 (1985).

Further, we review the district court's decision to depart

from the Sentencing Guidelines under an abuse of discretion

standard. United States v. Chappell, 6 F.3d 1095, 1102 (5th Cir.

1993). A trial court departing from the Guidelines must

articulate reasons for doing so and must have a reasonable basis.

United States v. Chappell, 6 F.3d 1095, 1102 (5th Cir. 1993).

B. The district court did not err by departing
upwardly from the guidelines because the

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 departure was supported by an adequate legal ground.

Bates argues that the district court erred when it upwardly

departed to equalize his sentence with the sentences of his

codefendants. Bates opposed the departure in the district court.

A sentencing court may depart when it finds "an aggravating

or mitigating circumstance of a kind, or to a degree, not

adequately taken into consideration by the Sentencing Commission

in formulating the guidelines that should result in a sentence

different from that described." 18 U.S.C. § 3553(b); United

States v. Lambert, 984 F.2d 658, 661 (5th Cir. 1993) (en banc).

We affirm an upward departure if the sentencing court offers

acceptable reasons and the departure is reasonable. Id. at 663.

When the sentencing court offers both acceptable and unacceptable

reasons, this court will affirm if we are convinced that, without

the unacceptable reasons, the sentencing court would have imposed

the same sentence. Id. at 663 n.11.

In this case, the trial court appropriately found that the

governing Guideline section did not sufficiently address the harm

caused by Bates's criminal conduct. Guideline Section 2T1.3 --

the section under which Bates was sentenced -- applies generally

to crimes that are analogous to tax evasion. U.S.S.G. § 2T1.3,

comment (back'g). For offenses committed to facilitate tax

evasion, the offense level is determined by the magnitude of the

tax loss, providing for offense levels ranging from six to 18.

U.S.S.G. §§ 2T1.3(a)(1), 2T4.1. For all crimes under the section

that are not committed to facilitate tax evasion, the offense

8
level is six. U.S.S.G. § 2T1.3(a)(2). The guideline is silent

about the magnitude of an offense that does not facilitate tax

evasion. Id. Under this Guideline provision, Bates's base

offense level was determined to be six.

In 1990, the Sentencing Commission amended the Guidelines to

account for the magnitude of the loss. U.S.S.G. §§ 2T1.3

(Historical Note), 2T1.1(a), (c)(4), 2T4.1 (1994). The

Commission's amendment strongly suggests that, prior to the

amendment, the Guidelines had not adequately taken the magnitude

of a fraudulent refund claim into consideration. Faced with the

omission of the Guidelines to take the magnitude of the fraud

into consideration, the district court did not err in doing so by

way of an upward departure. See 18 U.S.C. § 3553(b); Lambert,

984 F.2d at 661.

If the current version of the Sentencing Guidelines had been

applied in Bates's sentencing, the amount of loss for sentencing

purposes would have been the total of all of the refunds that

Bates fraudulently claimed and assisted others in fraudulently

claiming. U.S.S.G. §§ 2T1.1(c)(1), 2T1.1, comment. (n.2) (1994).

In this case, that amount exceeded $300,000, which would have

called for a base offense level of 14. U.S.S.G. § 2T41.(K)

(1994). That is an eight-level increase over the base offense

level that was actually assigned to Bates's crime, which the

district court increased by only five levels in the upward

departure.

Thus, because Bates would have received a higher sentence

9
had he been sentenced pursuant to the version of the Guidelines

released in 1990, when the Commission explicitly accounted for

the magnitude of the refund fraud, the actual, less onerous

upward adjustment is objectively reasonable. See United States

v. Harotunian, 920 F.2d 1040, 1046 (1st Cir. 1990).

Further, Bates argues that the upward departure must be

vacated because it was based on an impermissible consideration --

the desire to equalize his sentence with that of his

codefendants. Although the district court did err by basing its

upward departure in part on codefendant parity, United States v.

Alvarez, 51 F.3d 36, 39 (5th Cir. 1995), we need not vacate the

departure, because it was adequately supported by a legitimate,

primary reason. United States v. Davidson, 984 F.2d 651, 654 -

57 and n.9 (5th Cir. 1993).

Bates also argues that the upward departure is not supported

by sufficiently specific reasons. While we do require the

sentencing court to state specific reasons for a departure, and

generalized reasons are unsatisfactory because they make

appellate review of the propriety of the reasons impossible,

United States v. Mourning, 914 F.2d 699, 708 (5th Cir. 1990), we

do not require the district court to expound extensively on the

reasons. Even a "spartan" record can reveal adequate reasons

for a departure. United States v. Helmstetter, 56 F.3d 21, 23

(5th Cir. 1995).

In the instant case, as discussed above, the sentencing

court heard argument on the question whether the 1988 Guidelines

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adequately took the scope of Bates's offense into consideration,

and determined that they did not -- a decision confirmed by the

subsequent Guidelines amendment. This reason is sufficiently

specific to allow appellate review of its propriety. We conclude

that it is proper, and the upward departure is affirmed.

C. The district court did not err by considering
dismissed charges and uncharged misconduct as
relevant conduct for purposes of the upward departure.

Bates argues that, for departure purposes, the district

court improperly considered all of the conduct charged in the

original indictment which was subsequently dismissed, including

his alleged conduct in helping others to claim fraudulent

refunds, rather than limiting itself to consideration of conduct

underlying the count of conviction, which charged the filing of

only one fraudulent return. However, in upwardly departing, a

sentencing court may rely on conduct charged in dismissed counts

if that conduct is related to the conduct charged in the count of

conviction. United States v. Ashburn, 38 F.3d 803, 807 (5th Cir.

1994) (en banc), cert. denied, 115 S. Ct. 1969 (1995).

In this case, the conduct underlying the dismissed

indictment is clearly related to the conduct underlying the

charge to which Bates pled guilty. The district court did not

err in considering it, and we thus affirm its decision to do so.

D. The district court properly used relevant conduct
in adjusting Bates's base level upward based on his
aggravating role in the offense.

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 Bates argues that the district court improperly increased

his offense level for his aggravating role pursuant to U.S.S.G. §

3B1.1, by considering his organizing of the codefendants to file

fraudulent returns. He argues that the Guidelines were amended

in 1990 for consideration of such an aggravating role, and

therefore, the application of the amended Guidelines, violates

the Ex Post Facto Clause, since his offense conduct occurred

prior to the effective date of the amendment.

We apply retroactively Guideline amendments that clarify,

rather than substantively amend. United States v. Maseratti, 1

F.3d 330, 339 (5th Cir. 1993), cert. denied, 114 S. Ct. 1096,

1552, 115 S. Ct. 282 (1994). Section 3B1.1 of the 1988

Guidelines Manual, captioned "Aggravating Role," provided for a

two-level increase based on the defendant's role in the offense

if he was an organizer of others. Effective November 1990, the

Sentencing Commission added a commentary stating that a

defendant's role in an offense is to be determined on the basis

of all conduct that comes within the scope of § 1B1.3, "Relevant

Conduct." U.S.S.G. App. C. ¶ 345. Although Bates argues that

his organization of others should not be considered because

relevant conduct was not part of the determination of his role in

the offense under the 1988 Guidelines, the Guidelines explicitly

provide that the amendment to § 3B1.1 at issue is a clarifying

amendment. U.S.S.G. App. C. ¶ 345; United States v. Mir, 919

F.2d 940, 945 (5th Cir. 1990).

Accordingly, the district court did not err in applying the

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1990 Guideline commentary retroactively by considering relevant

conduct. No ex post facto problem arose. On this issue, again,

the district court is affirmed.

E. The district court did not err by its "double counting"
of relevant conduct.

Bates argues that the district court impermissibly "double

counted" his relevant conduct by considering it as a basis for

increasing his offense level by two points and denying him a

decrease for acceptance of responsibility, while at the same time

using the same relevant conduct as a basis for departing upward

from the Guidelines. Bates, however, did not raise this issue in

the district court. Although he points to various places in the

record where he objected to the use of relevant conduct, he can

point to no place in the record where the issue of double

counting was actually raised before the district court. Thus we

must consider the issue to be forfeited.

We exercise our discretion to correct forfeited errors

pursuant to Federal Rule of Criminal Procedure 52 only in the

most "exceptional" cases. United States v. Calverley, 37 F.3d

160, 162-64 (5th Cir. 1994) (en banc) (citing United States v.

Olano, 113 S. Ct. 1770, 1776-79 (1993)), cert. denied, 115 S. Ct.

1266 (1995). In these circumstances, we follow the plain error

standard, requiring that the error be both "plain" and "affect

substantial rights," and, assuming that these requirements are

met, we do not correct forfeited errors unless they "seriously

affects the fairness, integrity, or public reputation of judicial

13
proceedings." Id. at 160. Accordingly, following direction from

the Supreme Court, we have set out a three-part test for

determining when a forfeited error shall be corrected: when the

appellant shows that (1) there is an error, (2) that is "plain"

and (3) that affects his "substantial rights." Id.

First, because Bates has not demonstrated either that the

double counting, if an error, is "plain," or that it affects his

"substantial rights," as will be discussed below, we need not

decide whether the double counting he describes constitutes an

error.

Second, Bates has not shown that, if an error, the trial

court's "double counting" was an error that was "plain." We have

held that "plain" in this context is synonymous with "clear or

obvious," and, that, at a minimum, it contemplates "an error

which was clear under current law at the time of trial."

Calverley, 37 F.3d at 162-63. Bates does not, and cannot meet

this requirement, as we have recently opined that the Sentencing

Guidelines "do not prohibit all double counting." United States

v. Box, 50 F.3d 345, 359 (5th Cir. 1995), petition for cert.

filed, Nos. 95-5128 & 95-5164 (July 10 & 11, 1995). Double

counting is prohibited only if the particular guidelines at issue

forbid it, and the prohibition must be in express language. Id.

Since no prohibition against double counting exists in the tax

fraud guideline, § 2T1.3; the relevant conduct guideline, §

1B1.3; or the departures policy statement, §5K2.0, the district

court's decision to "double count" Bates's relevant conduct, even

14
if error, was not "plain."

Finally, because Bates has not shown that the outcome of the

sentencing proceeding would have been affected had this conduct

not been double-counted, he has not shown that the error has

affected his "substantial rights." Calverley, 37 F.3d at 164-65.

For these reasons, the decision of the district court on

this issue is affirmed.

F. The district court's factual findings as to Bates's
assistance of codefendants were not clearly erroneous.

Bates argues that the district court erred in finding that

he aided and abetted his codefendants in filing fraudulent

returns. We review factual findings made by the district court

under a clearly erroneous standard, and the district court may

consider any evidence that has "sufficient indicia of reliability

to support its probable accuracy." U.S.S.G. § 6A1.3, comment.;

United States v. Manthei, 913 F.2d 1130, 1138 (5th Cir. 1990). A

Presentence Investigation Report generally bears sufficient

indicia of reliability to be considered by the trial court as

evidence in making the factual determinations required by the

Sentencing Guidelines. United States v. Gracia, 983 F.2d 625,

629 (5th Cir. 1993); United States v. Robins, 978 F.2d 881, 889

(5th Cir. 1992). A district court may rely on the PSR's

construction of the evidence to resolve a factual dispute, rather

than relying on the defendant's version of the facts. Robins,

978 F.2d at 889.

The Government bears the burden of establishing sentencing

15
facts by a preponderance of the evidence. United States v.

Galvan, 949 F.2d 777, 784 (5th Cir. 1991). A defendant who

objects to consideration of information by the sentencing court

bears the burden of proving that it is "materially untrue,

inaccurate or unreliable." United States v. Angulo, 927 F.2d

202, 205 (5th Cir. 1991).

In this case, the district court's factual findings were

more than sufficiently supported by reliable evidence, set forth

both in the PSR and in testimony given at the sentencing hearing.

In compiling the PSR, the Probation Office relied on reports of

IRS investigators, at least one of whom actually testified at the

sentencing hearing. Even though Bates denied the factual

allegations made by the investigators, and filed an affidavit

disputing the report, the court was entitled to reject Bates's

self-serving testimony in favor of that provided by the

government.

Bates urges this court to follow a case in the Eighth

Circuit, which has held that when a defendant objects to the PSR,

the sentencing court must either make a finding that a disputed

fact exists or state that it will not consider the disputed

matter. If the court chooses the former, it must rely on

evidence outside the PSR to resolve the dispute. United States

v. Greene, 41 F.3d 383, 386 (8th Cir. 1994). In this court,

however, a sentencing court may simply choose to reject a

defendant's self-serving denials. United States v. Brown, 54

F.3d 234, 240 (5th Cir. 1995); United States v. Buenrostro, 868

16
F.2d 135, 138 (5th Cir. 1989), cert. denied, 494 U.S. 923 (1990).

We see no reason to deviate in this case from our well-

established rule.

The district court, therefore, did not improperly overrule

Bates's denials, and the factual findings are therefore not

clearly erroneous.1

G. The district court did not err in the extent
of its upward departure.

Bates argues that the extent of the upward departure -- that

of five levels, adding an additional 15 months to his sentence --

was improper. As discussed in Part B supra, we review the

district court's decision to depart from the Sentencing

Guidelines under an abuse of discretion standard. United States

v. Chappell, 6 F.3d 1095, 1102 (5th Cir. 1993). In this case,

the court's decision to depart upward five levels was reasonable

in light of the nature, extent, and purpose of Bates's

involvement in the criminal conduct underlying the conviction.

The district court did not err, and again we affirm.

H. The district court correctly followed the preponderance
of evidence standard in making its factual determinations
for sentencing purposes.

Bates argues that the district court erred by basing its

1
We note in passing that, even if this court were to
follow the standard set out by the Eighth Circuit in Greene, the
district court still did not err, as it was presented with
evidence from two government witnesses on which it could have
based its decision to overrule Bates's factual allegations.

17
factual findings on a preponderance of the evidence and not on

clear and convincing evidence, and urges this court to reject the

former standard in favor of the latter. It is well settled in

this circuit, however, that the standard of proof governing a

district court's factual findings regarding sentencing is a

preponderance of the evidence, and we see no reason to reconsider

that well-established rule in this case. United States v.

Mergerson, 4 F.3d 337, 343 (5th Cir. 1993), cert. denied, 114 S.

Ct. 1310 (1994).

For this reason, the district court's actions in this regard

are affirmed.

III. CONCLUSION

In sum, Bates has shown no error in the sentence itself or

in the manner in which the district court determined it. For the

reasons discussed above, we therefore

AFFIRM.

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