March 2, 1995
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 91-1963
UNITED STATES,
Appellee,
v.
THOMAS E. NEWMAN,
Defendant, Appellant.
ERRATA SHEET
ERRATA SHEET
The opinion of this Court issued on February 28, 1995, is
amended as follows:
Page 1: change "Ronald R. Lagueux, U.S. District Judge" to
"Francis J. Boyle, Senior U.S. District Judge".
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 91-1963
UNITED STATES,
Appellee,
v.
THOMAS E. NEWMAN,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Francis J. Boyle, Senior U.S. District Judge]
Before
Selya, Circuit Judge,
Campbell, Senior Circuit Judge,
and Stahl, Circuit Judge.
John A. Macfadyen for appellant.
Margaret E. Curran, Assistant United States Attorney, with whom
Sheldon Whitehouse, United States Attorney, and Edwin J. Gale,
Assistant United States Attorney, were on brief for appellee.
February 28, 1995
2
CAMPBELL, Senior Circuit Judge. Defendant Thomas
Newman appeals from final judgment and sentence entered by
the district court after a three-week criminal trial. The
jury convicted Newman of five counts of wire fraud (18 U.S.C.
1343 (1988)) and four counts of transporting stolen
property in interstate commerce (18 U.S.C. 2314 (1988)),
all arising out of his allegedly fraudulent acquisition of an
insurance company and the diversion of almost $400,000 of its
funds for his personal use. Newman alleges that the district
court committed a variety of errors at trial and at
sentencing. We affirm the judgment, and most, but not all,
aspects of the sentence.
I.
I.
In late 1989, Newman, a self-described businessman,
met with the owner and officers of Rumford Property and
Liability Insurance Company ("RPLIC") to discuss his possible
purchase of the Rhode Island-based insurance company. After
a series of discussions and negotiations, Newman purchased
RPLIC for $200,000 on December 11, 1989. RPLIC's stock was
immediately transferred to the newly-created Rumford Holding
Company ("RHC"), which was wholly owned by Newman.
Prior to the purchase, RPLIC had been facing
financial difficulties. In part because of these
difficulties, RPLIC had been under investigation by Rhode
Island's Department of Business Regulation ("DBR") and had
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entered into several consent orders concerning its
operations. The most recent of these orders, dated May 1989,
was still in effect at the time of purchase and restricted,
inter alia, certain uses of RPLIC's assets without DBR
approval. At the time of purchase, these assets consisted of
approximately $1.2 million in cash, $1 million in common
stock, $200,000 in bonds, and various other assets. RPLIC's
liabilities exceeded its assets. Under Rhode Island law, a
sale of an insurance company is subject to approval by the
DBR. R.I. Gen. Laws 27-35-2. When first notified of the
possibility that RPLIC might be sold, the DBR indicated that
it would not approve the sale unless the purchaser added $2.5
to $5 million in capital.
At the time of the purchase, Newman was aware of
these facts. During the course of the negotiations, various
drafts of the purchase agreement were circulated, all of
which referred to the consent order and the need to obtain
approval from the DBR. Newman had also been given a letter
documenting RPLIC's financial condition and indicating that
its liabilities exceeded its assets. The final agreement
required Newman to seek DBR approval of the sale immediately.
Furthermore, at the closing on December 11, Newman read the
most recent consent order, dated May 1989. Although Newman
first expressed surprise and concern over the content of the
consent order, he was assured that it would not bar the
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normal operation of the business, although it would bar any
extraordinary transfers of funds. After a lengthy discussion
Newman went ahead and purchased RPLIC, as noted above, for
$200,000 ($100,000 in cash, which he had borrowed, and
$100,000 in a promissory note).1
The next day, December 12, Newman met with a number
of RPLIC officers and announced that he needed to make
disbursements of approximately $400,000 from RPLIC's
accounts. Over their objections, Newman directed them to
transfer from RPLIC's accounts (and the accounts of RPLIC's
subsidiaries) the following funds: a $120,000 check from a
RPLIC subsidiary's checking account; $79,100 from various
money market accounts; and $184,3002 from a number of
brokerage accounts. The check was given to Newman
personally, and the other funds were transferred to a
checking account in the name of Rumford Holdings, for which
Newman was the sole signatory. Altogether, $380,400 was
removed from RPLIC's accounts.
Newman subsequently used the $120,000 check to pay
back the loan that he had taken out for the cash he had
needed at the closing. From the Rumford Holdings checking
1. Under Rhode Island law, the signing of a purchase
agreement without prior DBR approval is permitted. However,
final legal control over the company does not change hands
until the purchase has been approved.
2. This sum consisted of four separate transfers, which
formed the basis of counts I through IV (wire fraud).
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account, Newman made the following disbursements: $150,000
to the brokerage firm that had helped him acquire RPLIC;
$21,0003 in a check payable to himself; $7,000 in cash to
himself; $15,0004 in three checks, one to himself and two to
his wife; and $50,0005 in a wire transfer to an account in
his name and that of his wife at the First Virginia Bank.
The funds from this last transfer were used to pay his
personal bills, including mortgage payments on a house.
Included in the above were the disbursements and transfers
that formed the basis for the five counts of wire fraud and
four counts of interstate transport of stolen property set
forth in the indictment. Newman subsequently made additional
transfers of funds from RPLIC,6 although these transfers
were not a part of the indictment. Although the purchase
agreement required Newman to seek DBR approval of the sale
immediately, he did not notify the DBR of the sale until
3. This sum formed the basis of count VI (interstate
transport).
4. These three checks formed the basis of counts VII
through IX (interstate transport).
5. This sum formed the basis of count V (wire fraud).
6. In January of 1990, Newman leased office space in
Washington D.C., for which Rumford Holdings paid the rent.
In February, Newman appointed himself the president, chief
executive officer, and chairman of the board of Rumford
Holdings, and began to draw an annual salary of $100,000.
Between February and July, Newman charged approximately
$50,000 in personal expenses on the Rumford Holdings credit
card.
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March of 1990. In April, the DBR sent a letter to Newman
demanding that he formally seek approval from the DBR by
filing a "Form A" by mid-April. Then in May, the DBR learned
that Newman had diverted nearly $490,000 of RPLIC's funds.
The DBR wrote Newman, notifying him that he had no authority
to divert the funds and demanding that he return the funds to
RPLIC immediately. After receiving no response from Newman,
the DBR in June of 1990 petitioned for an order placing RPLIC
in receivership.
Newman was indicted in February of 1991. The
government argued that Newman had acquired the company with
no intent of revitalizing it, but with the sole intent to
divert its assets for his own personal use. The government
contended that Newman knew that RPLIC was in financial
trouble and that the consent order precluded transfer of
RPLIC's assets, yet removed those assets without making any
attempt to provide the company with the needed capital
infusion.
Newman's defense at trial was that he was an
innocent victim who had been deceived by the other
participants involved in the purchase of RPLIC, namely, the
former owner, various RPLIC executives, and the broker of the
purchase. Newman claimed that he was unaware of RPLIC's dire
financial position and that his counsel had advised him that
the consent order did not apply to him. Newman further
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claimed that, after the purchase of RPLIC, he had tried
desperately to find investors to provide the necessary
capital, and that the transferred funds were simply loans
that he intended to repay. Newman also argued that he failed
to seek DBR approval because he believed he had more time
under the contract before he was required to do so.
The jury convicted Newman of all nine counts. In
September of 1991, the district judge sentenced Newman to
concurrent terms of 71 months for the four counts of
interstate transport of stolen property and 60 months for the
five counts of wire fraud. The judge also imposed concurrent
three-year terms of supervised release on the condition that
Newman pay $489,779 in restitution and the costs of his
supervised release.7
II.
II.
Newman argues that the district court made errors
at the trial and at sentencing. These errors can be grouped
into four categories: (1) the district court excluded
7. The government in its brief acknowledges that, although
Newman has not raised this point, the district court appears
to have erred in imposing the costs of supervised release.
Such costs constitute an additional fine that can only be
imposed in conjunction with a punitive fine. See United
States v. Brandon, 17 F.3d 409, 461 (1st Cir.), cert. denied,
115 S. Ct. 80 (1994). Because the district court did not
impose a fine, the government asks this court to vacate that
part of the judgment. United States v. Pineda, 981 F.2d 569,
576 (1st Cir. 1992). As requested, we accordingly vacate the
part of the sentence imposing the costs of supervised
release.
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8
evidence that should have been allowed; (2) the district
court allowed evidence that should have been excluded; (3)
the district court permitted the prosecutor to question
Newman unfairly; and (4) the district court erroneously
applied the sentencing guidelines. Only in the last category
do we find any claim of merit.
A. Improperly Excluded Evidence
Newman argues that the district court abused its
discretion in refusing to admit into evidence a series of
letters exchanged in May of 1990 between Newman and Daniel K.
Jackson & Associates, an investment firm. The correspondence
included a form filled out by Newman containing basic
information about RPLIC and requesting investment capital.
The correspondence also included a response from the company
indicating it was interested in perhaps arranging financing.
According to Newman, the correspondence was clearly relevant
in that it corroborated his testimony at trial that he was in
fact actively seeking capital investment for the continuing
operation of RPLIC. It would supposedly have rebutted the
government's contention that Newman had bought the company
with the sole intent of diverting its assets.
We agree with the government that the district
court did not abuse its discretion in excluding the evidence
as irrelevant. The correspondence was exchanged in May of
1990, four months after Newman had purchased RPLIC and
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diverted its assets. Given the timing of the correspondence,
the district court could reasonably have found that it said
nothing about the relevant issue: Newman's state of mind at
the time of the purchase and diversion of assets. The
correspondence, moreover, was cumulative. Even assuming
arguendo its relevance, its exclusion was unprejudicial,
since Newman had already testified that he sought investment
financing from Daniel K. Jackson & Associates as well as a
number of other investment companies, and the government
never disputed this assertion.
Newman next argues that the district court abused
its discretion when it excluded certain proffered testimony
by the director of the DBR. This testimony concerned the
circumstances that led up to the consent orders entered into
with RPLIC prior to Newman's purchase of the company. The
district court concluded that this testimony was not relevant
to whether Newman had known of the consent orders. Newman
argues, however, that the testimony would have indicated that
the consent orders had been entered into prior to his
involvement with RPLIC and were directed primarily at RPLIC's
former owner. This, Newman suggests, would have bolstered
his claim that his lawyers had advised him that the consent
orders did not apply to him, thereby countering the
government's argument that Newman's flagrant violation of the
consent orders was evidence of his intent to defraud.
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10
Again, we think that this evidentiary ruling did
not constitute an abuse of discretion. The district court
could reasonably have concluded that the specific events that
led up to the consent orders were not relevant to whether
Newman was aware of the restrictions imposed by the decrees
at the time he purchased RPLIC. The testimony sought by
Newman concerned the events that led up to the consent order;
it did not suggest that Newman was unaware of the order or
the limits it imposed on the transfer of RPLIC's assets.
Indeed, the consent order clearly stated on its face the
restrictions imposed upon RPLIC, and it is undisputed that
Newman had read the order prior to his purchase of the
company. Newman, moreover, could not have been prejudiced by
exclusion of this testimony since there was already
considerable testimony from other witnesses concerning the
history of the consent orders.
Finally, Newman argues that the district court
abused its discretion when it excluded a DBR report from a
1987 investigation of RPLIC. The report indicated that RPLIC
was in financial trouble and that RPLIC's records were in
such disarray that it was difficult to determine whether
RPLIC was solvent. Newman contends that an RPLIC executive
first received a copy of this report in January of 1990, but
failed to show it to Newman (who by then had purchased the
company). Newman argues that the report is therefore
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relevant in that the failure to show it to him supports his
claim that the same executives withheld information about the
financial status of RPLIC from him before his decision to
purchase RPLIC.
The district court did not abuse its discretion in
excluding the report as irrelevant. The report was received
by RPLIC after Newman had already purchased the company and
thus says nothing about what information might have been
withheld from him before the purchase. The report, moreover,
was cumulative of other evidence and its exclusion could not
have prejudiced Newman. The record shows that Newman had
repeatedly been informed of RPLIC's precarious financial
state prior to his purchase of the company. In particular,
the $200,000 purchase price and the letter stating that
RPLIC's liabilities exceeded its assets would have told
Newman of RPLIC's situation.
B. Improperly Included Evidence
Newman argues that the district court erred in
allowing testimony by the government's witnesses to the
effect that Newman's actions violated the law. Specifically,
Newman points to the following three pieces of evidence:
1. a letter from the DBR director to
Newman dated May 16, 1990, stating: "It
has come to our attention . . . that
certain funds have been diverted from
these Companies in violation of the laws
of the State of Rhode Island . . . . The
transactions referred to are grave
violations of the insurance laws of the
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12
State of Rhode Island and subject both
the Companies and the individuals
involved to criminal penalties."
2. DBR legal counsel's testimony that
she told the broker of the sale of the
company "that I believed that he should
return [the broker's fee], because it had
been illegally appropriated."
3. RPLIC counsel's testimony that he
told RPLIC's comptroller that Newman
should return "the monies which had been
wrongfully taken immediately."
Newman argues that these statements amounted to legal
opinions about Newman's guilt, and were hence inadmissible
and extremely prejudicial in that they effectively told the
jury what result to reach. See, e.g., Hygh v. Jacobs, 961
F.2d 359, 363 (2d Cir. 1992); Torres v. County of Oakland,
758 F.2d 147, 150 (6th Cir. 1985); see also Marx & Co. v.
Diners' Club, Inc., 550 F.2d 505, 512 (2d Cir.) ("It is not
for witnesses to instruct the jury as to applicable
principles of law, but for the judge."), cert. denied, 434
U.S. 861 (1977).
We agree that opinions as to the ultimate legal
issue of guilt or innocence are generally not admissible.
See, e.g., United States v. Espino, 32 F.3d 253, 257 (7th
Cir. 1994); Hogan v. American Telephone & Telegraph Co., 812
F.2d 409, 411-12 (8th Cir. 1987); Fed. R. Evid. 704 advisory
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committee's notes.8 However, Newman failed to object to the
first two statements, and, absent any objections, the
district court had little reason to exclude the statements on
its own accord. The above statements were not offered as
opinion testimony per se; rather, the DBR director's opinion
was part of a letter demanding that Newman return the
diverted assets, and the second statement was offered in the
ordinary course of describing certain events and discussions
surrounding the discovery of Newman's diversion of funds.
Without objection to the specific items, the district court
could well have concluded that the evidence, overall, was
helpful to the jury in understanding the course of events.
Admission of the first two statements clearly did not rise to
the level of plain error. See United States v. Williams, 809
F.2d 75, 82 (1st Cir. 1986), cert. denied, 482 U.S. 906
(1987).
Newman did object to the third statement, and while
its admission was erroneous, the error was harmless. The
8. Although Newman couches his argument in terms of
improper expert opinion (which he apparently argues is
inadmissible under Fed. R. Evid. 702), we construe his
argument as objecting to improper lay opinion (subject to
Fed. R. Evid. 701), since the above statements were not
offered as expert testimony. This does not significantly
alter Newman's argument, however, as ultimate legal opinion
may be equally inadmissible under both Fed. R. Evid. 701 and
702. See Fed. R. Evid. 704 advisory committee's notes
("Rules 701 and 702 . . . afford ample assurances against the
admission of opinions which would merely tell the jury what
result to reach . . . .").
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general concern with statements of ultimate legal opinions is
that juries may be confused or may accept the offered
opinions in lieu of the legal rulings of the judge. See 3
Jack Weinstein & Margaret Berger, Weinstein's Evidence
704[02] (1994). The third statement did not present this
risk. Like the second statement, it was made in the course
of describing events and discussions surrounding Newman's
diversion of the funds. The statement was made in passing
and was not held out as authoritative or expert opinion on
Newman's guilt for the charges on trial. See, e.g., Hygh,
961 F.2d 363 (finding that erroneous admission of legal
opinion was harmless error).
C. Prosecutorial Misconduct
Newman argues that the district court erred in
allowing the government to ask him grossly improper and
argumentative questions during the opening of the cross-
examination. Newman points to two specific sets of
questions. In the first, the prosecutor asked Newman if he
knew the meaning of the terms "intent" or "state of mind."
We find these questions to be clearly harmless. Indeed,
Newman does not indicate that this line of questioning
unfairly prejudiced him in any way.
The second set of questions is more troublesome:
PROSECUTOR: Do you know what a con man
is, sir?
NEWMAN: What a what, I'm sorry?
P: A con man, C-O-N?
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N: I've seen it on
television.
P: Is that the only place?
N: Yes.
P: Con man stands for
confidence man, is that
correct?
N: I don't know that.
P: You don't know that?
N: No.
P: Con game stands for
confidence game, doesn't
it?
N: If you say so, I don't
know that.
P: You don't know that?
N: No.
P: Are you telling this jury
you don't know what a con
man is?
N: I said I saw it on
television, I didn't
really know what the word
meant in the sense of what
it wasan abbreviation for.
P: And you don't know what
confidence game is?
N: I've heard of confidence
games, yes.
P: But you don't know what
they are?
N: Well, purely from the
superficial point of view.
P: Well, superficially a
confidence game is a game,
is it not, conducted by a
con man where through
certain representations or
through an absence of
providing certain
information, the victims
of the con game will do
something or refrain from
doing something that they
would otherwise do without
those misrepresentations,
correct?
N: Are you asking me if
that's the definition of a
con man?
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P: Is that an accurate
definition?
N: I don't know.
P: You were blessed with a
good education, is that
correct, sir?
N: I was blessed with an
education, yes, God
allowed me to get an
education, a good
education.
Newman argues that these questions had nothing to do with his
guilt or innocence, but were designed solely to discredit him
by insinuation. Newman argues that this constituted
prosecutorial misconduct and that the district court erred in
allowing it to occur. Newman urges us to use our supervisory
powers to reverse his conviction in order to deter future
such misconduct. See United States v. Capone, 683 F.2d 582,
585-86 (1st Cir. 1982). We agree with Newman that the
prosecutor's questions were extremely inappropriate. There
seems to have been no justifiable purpose for that line of
questioning, other than, as Newman suggests, to discredit him
by insinuation. Not directed at ascertaining any relevant
fact, the questions should not have been allowed.
Newman did not, however, object to the questioning.
Our review is therefore limited to determining if the judge's
failure to cut off the questioning sua sponte amounted to
plain error. See United States v. Smith, 982 F.2d 681, 682
(1st Cir. 1993). We conclude that they did not. See United
States v. Sgro, 816 F.2d 30, 34 (1st Cir. 1987), cert. denied
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484 U.S. 1063 (1988). The questioning was only a small part
of the lengthy cross-examination; it was isolated and not
characteristic of other questioning by the prosecutor. The
judge, on several occasions during the trial, advised the
jury that questions asked by the attorneys were not evidence.
The evidence of Newman's guilt was extensive. In all the
circumstances, the prosecutor's improper questions did not
"so poison[] the well" that the verdict was affected and a
new trial is required. See Smith, 982 F.2d at 682; Sgro, 816
F.2d at 34.
D. Sentencing Guidelines Errors
Newman argues that the district court wrongly
applied the sentencing guidelines. Specifically, the
district court allegedly erred: (1) in enhancing the sentence
for "abuse of a private trust"; (2) in enhancing the sentence
for violation of a consent order; and (3) in imposing
restitution in the amount of $489,779.
1. Abuse of Private Trust
Newman argues that the district court erred in
enhancing his sentence under U.S.S.G. 3B1.3 for abuse of a
position of private trust.9 The district court found that
9. U.S.S.G. 3B1.3 provides in relevant part:
If the defendant abused a position of
public or private trust . . . in a manner
that significantly facilitated the
commission or concealment of the offense,
increase by two levels.
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the insurance industry is heavily regulated and that persons
in control of insurance companies occupy a position of trust
which obligates them to act in the interests of their
policyholders and employees. The district court found that,
by diverting RPLIC's funds for his own use, Newman abused
this position of trust. Newman argues, however, that the
enhancement does not apply since he never legally occupied a
"position of trust." Newman argues that he technically never
obtained legal control of RPLIC, having failed to obtain
approval of the purchase from the DBR as required under Rhode
Island law. At most, Newman argues, the evidence suggests
that he committed an ordinary fraud. Never having occupied
the position legally, Newman argues, he cannot be subject to
the enhancement.10
While Newman may never have legally occupied the
position, he indisputably had de facto control over the
company and thus in fact occupied a position of trust. The
application note to the sentencing guidelines in effect at
the time of sentencing provides that: "[t]he position of
trust must have contributed in some substantial way to
10. The government argues that, although Newman objected to
this enhancement at sentencing, he did not object on this
precise ground and this argument is therefore not properly
preserved on appeal. See United States v. Ortiz, 966 F.2d
707, 717 (1st Cir. 1992), cert. denied, 113 S. Ct. 1005
(1993). Since it is not entirely clear to us that Newman
failed to object on this ground, we choose instead to dispose
of the claim on its merits.
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facilitating the crime and not merely have provided an
opportunity that could as easily have been afforded to other
persons." U.S.S.G. 3B1.3 comment. (n.1) (1991). Newman's
position and his effective discretionary control over the
company enabled him to transfer the funds for his own use.
This is exactly the type of behavior that the enhancement was
aimed at. It would be perverse to allow the lack of formal,
legal control, for which Newman was responsible by failing to
file the appropriate forms, to insulate him from the
consequences of his breach of trust. Cf. United States v.
Innamorati, 996 F.2d 456, 489-90 (1st Cir.), (former state
registry police officer subject to enhancement where prior
position of trust facilitated his crime), cert. denied, 114
S. Ct. 409 (1993).
Newman also argues that the enhancement cannot
apply to him since his acquisition of the position of trust
was itself a part of the crime. Drawing an analogy to cases
dealing with enhancements under 3B1.3 for abuse of "special
skills", see United States v. Young, 932 F.2d 1510, 1513-14
(D.C. Cir. 1991), he argues that the enhancement applies only
to the abuse of a preexisting position of trust, and
therefore cannot apply to him. However, even assuming
arguendo that this theory has validity, Newman misconstrues
the crimes of which he was convicted. He was not convicted
of the fraudulent acquisition of an insurance company.
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Rather, he was convicted of wire fraud and interstate
transport of stolen property, crimes which were substantially
facilitated by his prior acquisition of control over the
insurance company. His abuse of the position was precisely
the behavior targeted by the enhancement. We find no error
in the application of this sentence enhancement.
2. Violation of Consent Order
Newman further argues that the district court erred
in imposing a two-level increase under U.S.S.G.
2F1.1(b)(3)(B) for a knowing violation of the consent
order.11 Newman argues that the enhancement applies only
when a defendant violates an order directed at the defendant
personally or at an entity that is controlled by the
defendant. Newman argues that the order was not directed at
him personally nor was he a party to the order, as it was
entered into prior to his purchase of the company. Newman
further argues, as above, that he never legally controlled
RPLIC, since the DBR never approved the sale. Accordingly,
Newman argues, the enhancement could not apply to him.
We find no error in the district court's
application of this enhancement. The commentary to the
11. U.S.S.G. 2F1.1(b)(3)(B) provides in relevant part:
If the offense involved . . . violation
of any judicial or administrative order,
injunction, decree or process, increase
by two levels.
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guidelines provides: "If it is established that an entity the
defendant controlled was a party to the prior proceeding, and
the defendant had knowledge of the prior decree or order,
this provision applies even if the defendant was not a
specifically-named party in that prior case." U.S.S.G.
2F1.1, comment. (n.5) (1991). Even though not a party to the
order, Newman was subject to the enhancement if he controlled
the company and knew of the prior order. As already said,
Newman had de facto control of the company. Moreover, he was
aware of the consent order and could be found to have acted
in deliberate contravention of it. Newman's violation of the
order was thus subject to enhancement under
2F1.1.(b)(3)(B).12
3. Restitution
Newman argues that the district court erred in
ordering, as a condition of his supervised release,
restitution in the amount of $489,179 under the Victim and
Witness Protection Act, 18 U.S.C. 3663-3664 (1988). Newman
first argues that the court erred when it failed to consider
Newman's inability to pay restitution. In fashioning a
restitution order, a court must consider "the amount of the
12. Newman additionally argues that the enhancement does not
apply since it requires that the defendant have controlled
the entity at the time the order was entered into. The
guideline, however, contains no such requirement of
contemporaneousness, and Newman cites no cases imposing such
a requirement.
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loss sustained by any victim as a result of the offense, the
financial resources of the defendant, the financial needs and
earning ability of the defendant and the defendant's
dependents, and such other factors as the court deems
appropriate." 18 U.S.C. 3664(a) (1988). Newman argues
that nothing in the district court opinion indicates that the
court considered Newman's financial resources. Newman points
to his presentence report which indicates that he is
currently indigent, has a negative net worth, and "has little
current ability to pay a fine."13 Newman further argues
that he has no reasonable prospect of paying the restitution
in the future. Accordingly, he argues, the district court's
imposition of restitution despite evidence of his inability
to pay evinced a lack of adequate consideration of the
statutory factors and constituted abuse of discretion. See
United States v. McIlvain, 967 F.2d 1479, 1481 (10th Cir.
1992); United States v. Ramilo, 986 F.2d 333, 336 (9th Cir.
1993).
13. The presentence investigation report detailed Newman's
employment history and then stated: that Newman's only asset
is $50,000 in equity in his former residence; that Newman has
$68,000 in outstanding liabilities; that Newman has no
current income; and that Newman's monthly expenses are
currently $1,476. The report concluded: "Based upon the
defendant's financial profile, it would appear that he has
little current ability to pay a fine; however, once his legal
matters are resolved, he would be in a position to secure
gainful employment."
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Although the district court did not explicitly
consider Newman's ability to pay the restitution, the court
was not required to make specific findings of fact. See
United States v. Savoie, 985 F.2d 612, 618 (1st Cir. 1992).
Rather, it is sufficient if "the record on appeal reveals
that the judge made implicit findings or otherwise adequately
evinced his consideration of those factors." Id. Here, the
record is sufficient to indicate that the district court
considered the requisite factors in arriving at the
restitution amount. The district court considered and
explicitly adopted the findings in the presentence report,
which included information about Newman's financial
condition, earning ability, and ability to pay. Although we
agree that the evidence in the presentence report may not be
able to support a finding that Newman has the ability to pay
restitution in that amount, the statute does not require such
a finding; it requires only that the district court consider
the defendant's financial resource as a factor in arriving at
the figure. See United States v. Lombardi, 5 F.3d 568, 573
(1st Cir. 1993). Newman's possible future ability to pay may
also be sufficient to support a restitution order. See
United States v. Brandon, 17 F.3d 409, 461 (1st Cir.)
(imposing $500,000 restitution order, even though defendant
had no current ability to pay, based on defendant's future
prospects of employment), cert. denied, 115 S. Ct. 80 (1994);
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Lombardi, 5 F.3d at 573. Here, the presentence report stated
that "once [Newman's] legal matters are resolved, he would be
in a position to secure gainful employment." Thus, we cannot
say that it was an abuse of discretion for the district court
to impose restitution. See Lombardi, 5 F.3d at 573 ("While
the judgment requiring restitution may be fruitless, it may
also be of some use if [the defendant] ever secures new
assets . . . . In all events, the statute merely requires
the court to 'consider' financial condition, among other
factors; there is no requirement that the defendant be found
able to pay now.") (citations omitted).
Newman further argues that, even if the district
court adequately considered his ability to pay, the court
erred in fixing the amount of restitution at $489,179, as
that amount far exceeds the unlawful transfers for which he
was convicted. Newman notes that, in this circuit,
restitution under the pre-November 1990 version of 3663(a)
is limited only to loss caused by the conduct for which the
defendant has been convicted. United States v. Cronin, 990
F.2d 663, 666 (1st Cir. 1993).14 The $489,179 represents
all of the sums paid out by RPLIC as a result of Newman's
fraudulent scheme. However, the indictment charges Newman
14. As the offenses occurred in 1989 and early 1990, Newman
is subject to the restitution statute as it stood prior to
amendment in November of 1990 by Pub. L. No. 101-647, 2509,
104 Stat. 4789, 4863 (1990).
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only with the diversion of $184,300. Thus, Newman argues,
the court erred in charging Newman with the entire sum.
We agree. Under the law in this circuit, the
district court should have fixed the amount of restitution at
$184,300, the amount that Newman was convicted of diverting.
See Cronin, 990 F.2d at 666. The government concedes that
under Cronin restitution is limited to that lesser sum, but
urges nonetheless that we adopt the alternative position,
taken by a minority of circuits, under which a court may
award restitution for all of the harm caused by the scheme to
defraud, not simply the specific harm for which the defendant
was convicted. See, e.g., United States v. Stouffer, 986
F.2d 916, 929 (5th Cir.), cert. denied, 114 S. Ct. 115
(1993). In most circumstances, a panel in this circuit is
bound to adhere to precedent established by a prior panel
unless departure is mandated legislatively or by the Supreme
Court. The en banc court alone can reconsider circuit
precedent. We follow our precedent in Cronin.
III.
III.
For the reasons set forth above, we affirm Newman's
conviction. We also affirm all aspects of Newman's sentence
except: (1) the restitution order, which we direct the
district court to reduce from $489,179 to $184,300; and (2)
the order to pay the costs of supervised release, which we
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direct the district court to vacate per the government's
request, see supra, note 7.
So ordered.
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