United States v. Lilly

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 95-2191

UNITED STATES OF AMERICA,

Appellee,

v.

WILLIAM W. LILLY,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

Cyr, Boudin and Stahl,

Circuit Judges.

Morris M. Goldings with whom Richard S. Jacobs and Mahoney,

Hawkes & Goldings were on briefs for appellant.

John J. Falvey, Jr., Assistant United States Attorney, with whom

Donald K. Stern, United States Attorney, was on brief for the United

States.

April 3, 1996

BOUDIN, Circuit Judge. William Lilly appeals the denial

of his motion in the district court, brought under 28 U.S.C.

2255 and the prior version of Fed. R. Crim P. 35(a),

seeking relief as to sentence.1 In substance, Lilly asks

both for resentencing and for a determination that no term of

probation may be imposed upon him. He also challenges a

restitution order that is part of his present sentence. The

facts are set forth in detail in Judge Young's thorough

opinion in United States v. Lilly, 901 F. Supp. 25 (D. Mass.

1995), and we limit ourselves to a brief summary.

Lilly was indicted in 1990 on 30 counts of bank fraud.

Four charges were later dropped, but he was convicted by a

jury on the remaining 26 counts. This was a pre-guidelines

case, and in November 1991, Lilly was sentenced to five years

in prison on count 1, to be followed by concurrent five-year

suspended sentences on counts 2-7 and 12-29 accompanied by

five years' probation, and by a five-year suspended sentence

on count 30 consecutive to the other suspended sentences. He

was ordered to pay $5,071,751.59 in restitution.

Nearly two months later, and after Lilly had noticed an

appeal, the trial judge realized that a probation term

required by law had not been imposed on count 30. On

1Former Rule 35(a) permitted the court to correct an
"illegal sentence" at any time and continues to apply to
Lilly's sentence because his offenses were committed prior to
November 1, 1987.

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December 30, 1991, he issued a second judgment sua sponte,

which differed from the first judgment in two respects: it

made all of the suspended sentences run concurrently, and it

explicitly imposed five years' probation on count 30. Under

this second judgment, Lilly's effective sentence was five

years' imprisonment to be followed by a suspended sentence

and five years' probation.

Lilly's initial appeal from his convictions, argued

before this court in 1992, did not challenge his sentence.

Instead, he claimed that the indictment was multiplicitous in

treating as individual offenses the various frauds charged

under counts 1-29 against First Mutual Bank of Boston. That

argument proved successful and, in December 1992, this court

vacated his convictions on counts 2-7 and 12-29. United

States v. Lilly, 983 F.2d 300 (1st Cir. 1992).

However, this court also found that the multiplicity did

not impair the convictions on counts 1 and 30 and it affirmed

both convictions. Lilly, 983 F.2d at 306. Count 1 covered

the execution of the scheme to defraud directed at First

Mutual as to which counts 2-7 and 12-29 were multiplicitous;

count 30 involved execution of a separate scheme directed

against another bank and was unaffected by the multiplicity

ruling. This court remanded for entry of a revised judgment,

noting that a new sentencing proceeding was not required.

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In February 1993, the district judge entered a new

judgment on remand, representing the third judgment in this

case. In this third judgment, the court gave Lilly five

years in prison on count 1; on count 30, the court gave Lilly

a five year suspended sentence to run after the term of

imprisonment imposed on count 1 and again ordered restitution

of $5,071,751.59. The judgment referred to certain

conditions of probation, but in another apparent oversight

did not specify any probation term for count 30. Lilly did

not appeal this third judgment.

In February 1995, Lilly filed a motion to vacate his

sentence, pursuant to 28 U.S.C. 2255 and former Rule 35(a).

The district court treated the motion as one properly brought

under former Rule 35(a) to correct an illegal sentence but

denied it on the merits. On appeal, the government is

content to assume arguendo that the merits are properly

presented under former Rule 35(a), although it notes its

reservations as to Lilly's attack on the restitution order.

The essence of Lilly's argument as to probation is this:

the first and third judgments did not sentence him to

probation on count 30, and the second judgment, which

purported to do so was without effect because it was entered

in his absence and after he filed his notice of appeal.

Lilly says that, at minimum, the third judgment is unclear as

to probation and entitles him to resentencing. He further

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asserts that because probation was not imposed on count 30 in

the first judgment, the district court cannot now add it upon

resentencing without impermissibly increasing his sentence.

The problem here is more complicated than difficult, and

responds quickly to the application of common sense. The

first question is one of interpreting the prevailing third

judgment entered in February 1993; we must parse it to decide

whether it should be read to incorporate a five-year term of

probation, which the government claims is implicit. The

second question concerns the validity of the judgment, if so

read, as against Lilly's claim that such a reading would

unlawfully increase his sentence.

The parties agree that the applicable probation statute,

18 U.S.C. 3651 (since repealed), requires that a probation

period accompany any suspended sentence; this is a reading

not obvious from the statutory language but supported by the

cases and various policy considerations. Miller v. Aderhold,

288 U.S. 206, 210-11 (1933) (decided under predecessor to

section 3651); United States v. Elkin, 731 F.2d 1005, 1010

(2d Cir.), cert. denied, 469 U.S. 822 (1984). The first

judgment failed to specify a probation term on count 30, but

the second judgment swiftly corrected the error.

Therefore, when the case came up on appeal from the

convictions in 1992, the then-existing (second) judgment

reflected a five-year term of probation on count 30, which

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went unchallenged on the appeal. In affirming the

convictions on counts 1 and 30, this court specifically said

that no resentencing proceeding was required. Lilly, 983

F.2d at 306. In the new third judgment entered on remand,

the sentences on counts 1 and 30 mirrored those imposed on

counts 1 and 30 in the second judgment, save that (as in the

first judgment) the district court again overlooked the need

to refer specifically to probation in count 30.

We say "overlooked" because in our minds it is evident

that the district court intended count 30 to include a term

of probation, as the law requires, and intended it to be five

years. Both the first and second judgments provided for five

years' imprisonment followed by five years of probation.

Since the multiplicity determination did not alter the

substance of Lilly's misconduct, there was no reason why the

reduction in counts should have been expected to alter the

total sentence.2 Indeed, that is why we did not require a

new sentencing proceeding.

In addition, the third judgment expressly included

conditions of probation, conditions that would have been

2Lilly had secured a single large bank loan to buy an
apartment complex (submitting in support mortgage documents
for individual apartments units) containing false
representations. Although the original indictment treated
each apartment mortgage as a separate fraud count, this court
viewed the loan application to the bank as comprising the
execution of a single scheme to defraud. Lilly, 983 F.2d at

303.

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pointless without probation and signaled an intent that

probation be served. In these circumstances, and given that

probation was legally required for a suspended sentence and

had in fact been imposed on count 30 in the second judgment,

it is patent to us that the district court intended to

reimpose the same probation requirement in the third

judgment.

Finally, if we were in the slightest doubt about the

district court's intention, the doubt is clearly dispelled by

the district court's recent decision in the Rule 35(a)

proceeding where it explained its intent as to probation.

Lilly, 901 F.Supp. at 29. The district court's opinion makes

it perfectly clear that, whatever wording was overlooked, the

court intended in its third judgment--and its first as well--

to impose probation on count 30. A remand to clarify a

supposed "ambiguity" would be an errant waste of time.

Lilly knows full well that this is so, and the real

thrust of his objection is that the district court lawfully

could not when imposing the third judgment, or in any new

remand we might now order, add a term of probation to count

30. Lilly's reason is that probation was not included in

count 30 of the first judgment and would therefore enlarge

the original sentence long after its imposition. Lilly

thinks, quite mistakenly, that courts are automatically

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forbidden from increasing sentences after they have been

imposed.

The law on enlargement of sentences after their first

imposition is in fact complex. There are constitutional

limitations and issues of authority independent of the

Constitution, but there is no automatic bar to an increase in

all circumstances. See generally Bozza v. United States, 330

U.S. 160, 165-67 (1947); DeWitt v. Ventetoulo, 6 F.3d 32, 34

n.3 (1st Cir. 1993) (collecting cases), cert. denied, 114 S.

Ct. 1542 (1994). But the complexities need not be plumbed in

this case because there is no enlargement even if we assume

that count 30 did not incorporate a term of probation.

In practical terms, the present judgment does not

enlarge the overall sentence originally imposed for Lilly's

misconduct. As already noted, in the first judgment the

explicit sentence for the package of counts included five

years' imprisonment followed by a suspended sentence and five

years' probation. That is also the sentence under the third

judgment if read to incorporate five years' probation. The

number of counts fell but the underlying misconduct remained

the same. See United States v. Pimienta-Redondo, 874 F.2d 9,

16-17 (1st Cir.) (en banc), cert. denied, 493 U.S. 890

(1989).

Lilly's remaining claims relate to the restitution

order. Lilly asserts that the district court miscalculated

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the loss figures used to determine the amount of restitution

and failed to make express findings to confirm Lilly's

ability to pay restitution. Independently, Lilly argues that

the restitution order is illegal because the district court

delegated to the probation officer the authority to determine

when Lilly was obliged to make installment payments.

Former Rule 35(a) permits a challenge to an "illegal

sentence" and it is questionable whether all of Lilly's

attacks on the restitution order, even if sound, would render

the restitution order "illegal." One might think that the

first two are fairly routine claims of mistake that are not

fundamental infirmities and do not make the sentence

"illegal." As for the third, Lilly has a somewhat more

plausible claim that improper delegation would render the

order "illegal" on its face. Cf. United States v. Ahmad, 2

F.3d 245, 248-49 (7th Cir. 1993).

The case law under former Rule 35(a) reflects varying

definitions of "illegality" and some disagreement as to what

makes a sentence "illegal." Compare, e.g., United States v.

Padgett, 892 F.2d 445 (6th Cir. 1989), with United States v.

Celani, 898 F.2d 543 (7th Cir. 1990). There is little First

Circuit law on the subject. However, without deciding the

jurisdictional issue, we are entitled to affirm on the merits

where this will save time, United States v. Connell, 6 F.3d

27, 29 n.3 (1st Cir. 1993), and that course is doubly

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appropriate here since former Rule 35(a) is a subject of

diminishing importance.

Lilly first says the restitution order was not based on

a proper theory of loss. His argument appears to be that the

district court attributed to him much or all of the losses

suffered by the First Mutual Bank when it subsequently

collapsed, despite the court's finding that Lilly's frauds

were only a contributing factor in the bank's demise. But it

is evident from the sentencing colloquy and the restitution

amount that the court did not rely on this more speculative

bank-collapse theory. Instead, the district judge figured

losses by looking at Lilly's specific transactions with the

bank.

As detailed in the government's sentencing memorandum

and discussed by Lilly's counsel at the sentencing hearing,

the restitution total reflected the difference between the

amounts in default on the mortgages that Lilly sold to the

bank and the lesser appraised value of the properties held as

collateral. Lilly is correct that the calculations relied to

some extent on estimates of property values, but this does

not preclude restitution where, as here, a reasonable

approximation can be made. United States v. Savoie, 985 F.2d

612, 617 (1st Cir. 1993).

Lilly also asserts the trial judge did not make adequate

findings regarding his ability to pay the ordered

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restitution. His theory is that because the statute requires

the court to consider ability to pay, 18 U.S.C. 3664(a),

the restitution order is invalid if no findings of ability

are made on the record. Although this view prevails in some

circuits, we have held that the statutory obligation--not

very demanding by its own terms--does not require express

record findings and generally is satisfied where, as here,

the court relies on a presentence report detailing the

defendant's financial condition. Savoie, 985 F.2d at 618-19.

Nor does the statute require a record basis for finding

that a defendant can presently pay restitution. The prospect

of future income is sufficient. United States v. Newman, 49

F.3d 1, 10-11 (1st Cir. 1995). Lilly does not attempt to

argue that no such likelihood exists, so we reserve for

another occasion the question of what circumstance, if any,

would preclude a district court from ordering restitution

based on prospective income.

Lilly's third claim is that the district court

improperly delegated authority to the probation officer to

set a payment schedule. Several circuit courts have held

that the responsibility for deciding when payments must be

made inheres in the district court, and that it would be

improper for the court to delegate this authority to a

probation officer. E.g., United States v. Porter, 41 F.3d

68, 71 (2d Cir. 1994); Ahmad, 2 F.3d at 248-49. Lilly's

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claim turns on the cryptic statement in the third judgment

that Lilly make restitution "as directed" by the probation

officer.

Whatever ambiguity may have existed has been removed by

Judge Young's recent opinion which makes clear that the third

judgment does not give the probation officer authority to set

a binding payment schedule. Lilly, 901 F. Supp. at 32.

Rather, it is Judge Young's intention that Lilly be

supervised by the probation officer to ensure good faith

compliance; and if any question arises as to whether Lilly is

complying, it will be resolved by the district court. This

limited role has been approved by other circuits, e.g.,

Ahmad, 2 F.3d at 249, and is a reasonable enlistment of the

probation officer's services.

Affirmed.

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