PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v. No. 09-4018
PAUL WILKINSON,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
William M. Nickerson, Senior District Judge.
(1:07-cr-00570-WMN-2)
Argued: October 29, 2009
Decided: January 4, 2010
Before SHEDD, Circuit Judge, HAMILTON, Senior Circuit
Judge, and Norman K. MOON, United States District Judge
for the Western District of Virginia, sitting by designation.
Vacated and remanded by published opinion. Senior Judge
Hamilton wrote the opinion, in which Judge Shedd joined.
Judge Moon wrote a separate opinion concurring in part and
dissenting in part.
COUNSEL
ARGUED: Nickolai Gilford Levin, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Appel-
2 UNITED STATES v. WILKINSON
lant. Gordon Mehler, LAW OFFICE OF GORDON
MEHLER, PLLC, New York, New York, for Appellee. ON
BRIEF: Scott D. Hammond, Acting Assistant Attorney Gen-
eral; Mark W. Pletcher, John F. Terzaken, Portia R. Brown,
John J. Powers, III, UNITED STATES DEPARTMENT OF
JUSTICE, Antitrust Division, Washington, D.C., for Appel-
lant. Rebecca Stack Campbell, LAW OFFICE OF GORDON
MEHLER, PLLC, New York, New York, for Appellee.
OPINION
HAMILTON, Senior Circuit Judge:
In this appeal, the government challenges the probationary
sentence of Paul Wilkinson (Wilkinson) in connection with
his guilty plea to various fraud charges stemming from his
participation in a government procurement fraud scheme
involving aviation fuel contracts. The government also chal-
lenges the district court’s failure to award the Defense Energy
Support Center (DESC) $592,922.00 in restitution under the
Mandatory Victims Restitution Act of 1996 (the MVRA), 18
U.S.C. §§ 3663A-3664. For reasons that follow, we vacate
Wilkinson’s sentence and remand with instructions for: (1)
resentencing; and (2) reconsideration of the district court’s
determination that DESC was entitled to no restitution under
the MVRA.
I.
A. Charges and Guilty Plea.
On December 5, 2007, a federal grand jury sitting in the
District of Maryland indicted Wilkinson on one count of con-
spiracy to defraud the United States (Count I), 18 U.S.C.
§ 371, one count of conspiracy to commit wire fraud (Count
II), id. § 1349, and one count of conspiracy to steal trade
UNITED STATES v. WILKINSON 3
secrets (Count III), id. § 1832(a)(5). Pursuant to a plea agree-
ment (the Plea Agreement), on July 29, 2008, Wilkinson pled
guilty to Counts I, II, and III, as charged in the indictment.
The Plea Agreement incorporated the allegations contained in
the indictment by reference, which allegations Wilkinson
"knowingly, voluntarily, and truthfully" admitted as fact. (J.A.
28). The Plea Agreement also specified that the parties would
"contest the amount of loss intended or occasioned by [Wil-
kinson’s offense] conduct, and thus leave to the judgment of
the Court the appropriate Guidelines enhancement under
U.S.S.G. § 2B1.1(b)(1)," (J.A. 30-31), and that the govern-
ment "w[ould] not argue that the loss results in more than an
eighteen-level increase pursuant to U.S.S.G.
§ 2B1.1(b)(1)(J)." (J.A. 31). Additionally, Wilkinson agreed
"to the entry of a restitution order for the full amount of the
victims’ actual losses pursuant to" the MVRA, "as determined
by the Court at sentencing." (J.A. 32).
B. Facts of Wilkinson’s Offense Conduct Relevant to the
Issues on Appeal.
DESC, a logistics agency of the United States Department
of Defense, is responsible for procuring into-plane and posts,
camps, and stations (PC&S) aviation fuel supply contracts to
service United States military and civilian activities through-
out the world. In carrying out this responsibility, DESC con-
ducts a full and open, multi-stage, competitive procurement
process with respect to each contract. Competing offerors
submit initial bids by a given date, which bids are then
reviewed by DESC. Subsequently, competing offerors are
permitted to submit best and final bids by a given date. To
ensure fairness in the bidding process, competing offerors are
not permitted to share initial or best and final bid information.
Wilkinson’s convictions in this case stem from his criminal
activities with respect to three aviation fuel supply contracts
awarded by DESC—two into-plane contracts and one PC&S
contract. In general, a single DESC into-plane solicitation will
4 UNITED STATES v. WILKINSON
contain line items for numerous airports within a broad geo-
graphical area, but offerors are not required to submit an offer
with respect to each airport. Rather, each airport may be
awarded as a separate contract or, where a single offeror is
awarded multiple airports from the same solicitation, a single
contract for all such locations is awarded. DESC awards
PC&S contracts for delivery of aviation fuel into authorized
storage facilities at destinations world wide.
Prior to DESC’s issuances of the three bid solicitations
involved in this case, Wilkinson and Christopher Cartwright
(Cartwright) had co-founded Far East Russia Aircraft Ser-
vices (FERAS) and Aerocontrol, Ltd. (Aerocontrol). The pair
served as managing co-directors of each company, are citi-
zens of the United States, and, at all times relevant to this
case, resided in the Czech Republic. For ease of reference, we
will treat FERAS and Aerocontrol as a single entity and refer
to it as FERAS/Aerocontrol.
Beginning in February 2005, Wilkinson and Cartwright
entered into a consultancy agreement (the Consultancy Agree-
ment) with Matthew Bittenbender (Bittenbender), an
employee of FERAS/Aerocontrol’s direct competitor Avcard,
LLC (Avcard), whereby Bittenbender would secretively feed
them Avcard’s confidential bid information for various into-
plane and PC&S aviation fuel solicitations in exchange for
money.1 Bittenbender had easy access to such information,
because one of his primary job responsibilities for Avcard
was to prepare Avcard’s bid packages for submission to
DESC. The Consultancy Agreement provided that, with
1
The indictment in this case charged Cartwright as a codefendant with
respect to Counts I, II, and III. Pursuant to a plea agreement, Cartwright
pled guilty to Count II (the count alleging conspiracy to commit wire
fraud) and the remaining counts against him were dismissed. The district
court sentenced Cartwright to three years’ probation and 500 hours of
community service. Because Cartwright is not a party to the present
appeal, our remaining recitation of the facts will focus only upon Wilkin-
son’s conduct.
UNITED STATES v. WILKINSON 5
respect to every into-plane location that
FERAS/Aerocontrol’s bid would win through the aid of Bit-
tenbender, Wilkinson would pay Bittenbender a flat fee, plus
ten percent commission on the profits. With respect to any
PC&S aviation fuel contract that FERAS/Aerocontrol would
win through the aid of Bittenbender, the Consultancy Agree-
ment provided that Wilkinson would pay Bittenbender a per-
centage of the fuel sales.
DESC issued the first bid solicitation at issue in February
2005 (Bid Solicitation One). Bid Solicitation One pertained to
into-plane aviation fuel supply with respect to 109 airports
throughout Asia and Eastern Europe. After an amendment
changed the initial due date, DESC required initial bids to be
submitted on April 11, 2005, and required best and final bids
with respect to some airports to be submitted on or around the
first week of August 2005. Ultimately, DESC awarded
FERAS/Aerocontrol into-plane aviation fuel supply contracts
for seven locations under Bid Solicitation One.
The second bid solicitation at issue was issued in May
2005, when DESC re-opened a bid solicitation for an into-
plane aviation fuel supply contract with respect to an airport
in Baku, Azerbaijan (Bid Solicitation Two). DESC awarded
the corresponding contract to FERAS/Aerocontrol on or
around May 10, 2005.
On or about June 16, 2005, DESC issued the third bid
solicitation at issue—one for a PC&S aviation fuel supply
contract with respect to Bagram Air Field, Afghanistan (Bid
Solicitation Three). DESC originally required initial bids to
be submitted by July 1, 2005, but subsequently postponed the
deadline to March 31, 2006. Best and final bids were due by
July 13, 2006. On August 16, 2006, DESC awarded the corre-
sponding contract to a company unaffiliated with
FERAS/Aerocontrol named Red Star. FERAS/Aerocontrol
had withdrawn from the bidding process prior to the final
award.
6 UNITED STATES v. WILKINSON
With respect to Bid Solicitations One, Two, and Three, Bit-
tenbender fed Wilkinson confidential information regarding
Avcard’s participation in the bidding process. Wilkinson
knowingly and willfully accepted such information with the
intent to gain unfair advantages for FERAS/Aerocontrol in the
respective bidding processes.2
C. Sentencing.
Upon accepting Wilkinson’s guilty plea to Counts I, II, and
III, the district court ordered the United States Probation
Office to prepare a Presentence Report (the PSR) for Wilkin-
son. The PSR submitted in response specified: (1) a base
offense level of 7 under the United States Sentencing Com-
mission, Guidelines Manual, (Nov. 2007) (USSG or the Guide-
lines),3 see USSG § 2B1.1(a)(1); (2) an 18 level enhancement
on the basis that the loss in this case was at least
$2,500,000.00, see id. § 2B1.1(b)(1)(J); (3) a 2 level enhance-
ment because a substantial part of Wilkinson’s offense con-
duct was committed from outside the United States, see id.
§ 2B1.1(b)(9)(B); (4) a 2 level reduction for acceptance of
responsibility, see id. § 3E1.1(a); and (5) an additional 1 level
reduction for acceptance of responsibility, in anticipation of a
motion by the government to that effect, as agreed upon in the
Plea Agreement, see id. § 3E1.1(b). All of this resulted in a
total offense level of 24. When combined with Wilkinson’s
criminal history category of I, an offense level of 24 produced
an advisory Guidelines sentencing range of 51 to 63 months’
imprisonment. Additionally, the PSR stated that, pursuant to
18 U.S.C. § 3561(c)(1), Wilkinson was eligible for not less
than 1 nor more than 5 years’ probation. However, the PSR
2
Notably, with respect to Bid Solicitation Two, the confidential bid
information that Bittenbender fed Wilkinson enabled FERAS/Aerocontrol
not only to underbid Avcard and win the contract, but also increase its
profit margin.
3
The Plea Agreement specifies that the November 1, 2007 edition of the
Guidelines apply in sentencing Wilkinson.
UNITED STATES v. WILKINSON 7
also stated that because the applicable advisory Guidelines
sentencing range was in Zone D of the Sentencing Table, Wil-
kinson was actually ineligible for probation. See USSG
§ 5B1.1, comment. (n.2); USSG § 5C1.1(f).
Wilkinson was originally scheduled to be sentenced on
October 30, 2008. Ultimately, he was sentenced on November
26, 2008, following a two-day sentencing hearing. Prior to
such hearing, on October 20, 2008, the government submitted
its initial sentencing memorandum to the district court,
requesting that the district court sentence Wilkinson to 51
months’ imprisonment, the low end of the advisory Guide-
lines sentencing range recommended in the PSR. With respect
to restitution due Avcard under the MVRA, the government
submitted that Avcard was due $286,236.00 ($40,927.00 for
its loss of Bittenbender’s honest services and the balance for
its losses from DESC contracts not awarded to it because of
Wilkinson’s offense conduct).4 With respect to restitution due
DESC under the MVRA, the government submitted that
DESC was due $592,922.00 ($26,813.00 for loss to DESC
from administrative costs in resoliciting and reawarding the
contracts tainted by Wilkinson’s offense conduct; $91,423.00
for loss to DESC from higher spot fuel purchases; and
$474,686.00 for loss to DESC from higher contract prices on
the reawarded contracts). The government’s sentencing mem-
oranda had three attachments in the form of tables that per-
tained to the government’s actual pecuniary loss calculations
with respect to DESC. Table 1 was entitled "Loss to DESC
in Administrative Costs." (J.A. 65). Table 2 was entitled
"Loss to DESC from Higher Spot Prices." (J.A. 66). Table 3
was entitled "Loss to DESC from Higher Contract Prices."
(J.A. 67).
On October 20, 2008, Wilkinson submitted his initial sen-
4
The $40,927.00 figure represented the prorated portion of Bitten-
bender’s $54,569.00 annual salary over the nine months’ duration of Wil-
kinson’s offense conduct.
8 UNITED STATES v. WILKINSON
tencing memorandum to the district court, seeking a non-
Guidelines sentence to be no greater than that to be given
Cartwright, who was already scheduled to be and was sen-
tenced just nine days later on October 29, 2008. By the time
Wilkinson submitted his response to the government’s initial
sentencing memorandum on November 20, 2008, Wilkinson
took the position that his advisory Guidelines sentencing
range should be 10 to 16 months’ imprisonment, based on an
intended loss to Avcard of $39,741.00, and that he should
nonetheless receive the same non-Guidelines sentence as did
Cartwright of 3 years’ probation and 500 hours of community
service. Wilkinson also took the position that Avcard had sus-
tained no actual pecuniary loss as the result of his offense
conduct, reasoning that Avcard’s estimated profit of
$8,964.00 with respect to the locations on which
FERAS/Aerocontrol bid against Avcard and won was entirely
offset by Avcard’s profits on untainted contracts awarded to
it because of Wilkinson’s offense conduct. Of specific rele-
vance to the issues on appeal, Wilkinson took the position that
DESC had suffered no actual pecuniary loss as the result of
his offense conduct and, therefore, DESC was due no restitu-
tion under the MVRA. According to Wilkinson, DESC "did
not sustain an actual pecuniary loss because, . . . rebidding the
contracts awarded to [FERAS/Aerocontrol] did not involve
additional overtime or other avoidable costs attributable
solely to the offense conduct." (J.A. 131-32).
Wilkinson’s sentencing hearing lasted two days, November
25-26, 2008, with the primary focus on calculating Avcard’s
intended and actual losses.5 The hearing only secondarily
focused on issues with regard to DESC’s actual losses. While
DESC’s actual losses are the primary subject of the present
appeal, Avcard’s losses, either intended or actual, are not at
issue.
5
The Guidelines provide that loss is to be determined by the greater
amount of intended or actual loss suffered by the victim(s) of the defen-
dant’s fraudulent acts. See USSG § 2B1.1, comment (n.3).
UNITED STATES v. WILKINSON 9
In support of its loss figures for DESC, the government
offered the live testimony of Dr. Charles Untiet (Dr. Untiet),
who holds a Ph.D. in economics from Stanford University.6
He also testified that he has "quite a bit of experience in the
petroleum industry." (J.A. 436). Dr. Untiet calculated DESC’s
actual loss from Wilkinson’s offense conduct at $592,922.00,
comprising three components of loss: (1) DESC’s administra-
tive costs of $26,813.00 in preparing new bid solicitation
packages for the contracts tainted by Wilkinson’s offense con-
duct and in evaluating and reawarding untainted contracts; (2)
DESC’s costs of $91,423.00 in procuring fuel on the open
market using spot purchases between the time it cancelled the
tainted contracts and the time it obtained untainted replace-
ment contracts; and (3) $474,686.00, representing the differ-
ence in costs to DESC between the tainted contracts and the
untainted replacement contracts. Dr. Untiet prepared Tables 1,
2, and 3, which were attached to the government’s initial sen-
tencing memorandum. Each table corresponded to one of the
three components of DESC’s loss identified by Dr. Untiet.
With respect to the administrative costs to resolicit and rea-
ward the untainted contracts, Dr. Untiet testified that he
obtained the information to create the table (e.g., labor costs)
"from a personnel person at the DESC." (J.A. 440). With
respect to creating the table regarding spot fuel costs, Dr.
Untiet testified:
I got data on spot [fuel] sales from the DESC. I
asked them for each spot [fuel] sale record. What
was the date, what was the quantity. What was the
spot [fuel] price the DESC paid. And what would
have been the [tainted] contract price had it still been
enforced.
6
At the time of Wilkinson’s sentencing hearing, Dr. Untiet was
employed as an economist in the Antitrust Division of the United States
Department of Justice. He described his job as trying to ascertain the com-
petitive effects of mergers and looking at the competitive effects of regula-
tion.
10 UNITED STATES v. WILKINSON
(J.A. 441). In response to an immediate follow-up question by
the government, Dr. Untiet testified that the data that he
obtained from DESC was on actual spot liftings at each of
these locations. With respect to creating the table regarding
the increased costs to DESC resulting from the difference in
price for aviation fuel under the tainted contracts versus the
untainted contracts, Dr. Untiet consulted published pricing
indexes and the contracts themselves. Out of the eight
untainted contracts, Dr. Untiet concluded that DESC paid
more for aviation fuel under seven as compared to the tainted
contracts. Dr. Untiet also testified that DESC resolicited and
reawarded the contracts that had been tainted by Wilkinson’s
offense conduct, because "DESC has a policy not to deal with
criminals whenever possible." (J.A. 439). At no time did the
government produce, through Dr. Untiet or otherwise, any of
the underlying data on which Dr. Untiet relied in order to per-
form his loss calculations or create Tables 1, 2, and 3.
At the sentencing hearing, Wilkinson challenged the gov-
ernment’s proposed loss figures for DESC on three basic
grounds. First, Dr. Glenn Meyers (Dr. Meyers), a Ph.D. in
economics from Columbia University, testified in support of
Wilkinson’s position that DESC suffered no actual pecuniary
loss. According to Dr. Meyers, Dr. Untiet miscalculated
DESC’s increased fuel costs under the untainted contracts by
assuming, unrealistically, that Avcard would have performed
under the contracts, but at FERAS/Aerocontrol’s prices. Sec-
ond, Wilkinson argued the government had provided no docu-
mentary evidence to support its $592,922.00 total loss figure.
For example, with respect to the government’s loss figure
regarding DESC’s fuel purchases on the spot market, Wilkin-
son pointed out that the government had not offered any
proof, such as invoices, that DESC had actually purchased
aviation fuel on the spot market for airport locations that were
the subject of the tainted contracts. For a second example,
Wilkinson contended that DESC suffered no actual pecuniary
loss in resoliciting bids for the tainted contracts, because
DESC’s employees are salaried, and there is no evidence that
UNITED STATES v. WILKINSON 11
such employees performed overtime in order to carry out the
resolicitations.
In rebuttal, the government contended that its expert wit-
ness "testified that he reviewed all the underlying data from
DESC, including the actual liftings, including the hourly wage
reports, and these various things to make his calculations, and
that he presented a series of graphs that represented his con-
clusions as to loss. That’s evidence." (J.A. 650). See also (J.A.
651) (government: "DESC has the data, it provided it to Dr.
Untiet, he testified to the Court. Same thing as to the adminis-
trative calculations."). Additionally, the government argued
that Application Note 3(A)(v)(II) to USSG § 2B1.1 expressly
permitted it to count as loss the monetary compensation that
DESC paid its employees for their time in resoliciting bids for
the tainted contracts regardless of whether those employees
performed such work during overtime hours. See USSG
§ 2B1.1, comment. (n.3(A)(v)(II)) ("Procurement Fraud
Cases.—In the case of a procurement fraud, such as a fraud
affecting a defense contract award, reasonably foreseeable
pecuniary harm includes the reasonably foreseeable adminis-
trative costs to the government and other participants of
repeating or correcting the procurement action affected
. . . .").
After considering the parties’ opposing positions on the
actual pecuniary loss suffered by DESC as the result of Wil-
kinson’s offense conduct, the district court stated, in relevant
part:
Having heard the testimony from expert witnesses
yesterday on both sides, and argument this morning,
all of that has helped me to reach a conclusion with
regard to an appropriate guideline loss calculation. I
have to say that I found both of the expert wit-
nesses to be knowledgeable, both to be credible,
which is unusual when you have such diverging
opinions about things. But I believe that each one
12 UNITED STATES v. WILKINSON
of them presented their calculations and their
opinions straight forwardly and as honestly as
any fact finder could hope for. What I come away
convinced of is that with respect to the economic
issues that are involved in considering loss valua-
tions in this particular matter, the complexities and
the variables are uniquely difficult to analyze and
evaluate in a meaningful way.
To support its proposed loss figures, of course, the
Government must satisfy me that those figures are
proven by a preponderance of the evidence. That in
my view, having heard all that I have heard, is a bur-
den that the Government simply cannot meet on the
basis of the facts presented in this record. . . .
***
The Government’s claim of additional losses to
DESC, of course, is discussed at considerable length
in the sentencing memoranda, spoken to at consider-
able length here yesterday and today. The Govern-
ment relies on figures that are set out in tables 1
though 3 of Appendix A to its initial memorandum.
My assessment of these claimed losses is that they
are simply not sufficiently supported by facts to
persuade me that they constitute losses that more
likely than not were caused by this defendant’s
conduct. Even assuming that loss was caused to
the Government, my conclusion is that I would
have to engage in speculation to assess any dollar
value to it.
(J.A. 657-59) (emphasis added). The district court then went
on to state: "So for the guideline calculation, by way of a rea-
sonable estimate, the best I can do with it is to accept the
defendant’s recalculated figure of intended loss to AVCARD
$39,741." (J.A. 659). Such figure increased Wilkinson’s base
UNITED STATES v. WILKINSON 13
offense level under the Guidelines by six levels, and with the
other sentencing adjustments applied by the district court (two
levels added because a substantial part of the fraudulent
scheme was committed from outside the United States, USSG
§ 2B1.1(b)(9)(B), and two levels subtracted for acceptance of
responsibility, id. § 3E1.1(a)),7 the district court determined
Wilkinson’s advisory Guidelines sentencing range to be 12 to
18 months’ imprisonment.
After hearing more argument from counsel for both sides,
statements from Wilkinson’s wife, mother, and Wilkinson
himself, the district court stated that, in its perspective, the
Guidelines calculation regarding loss was
so tenuous as to be anything but reliable in terms of
fashioning a sentence that comports with the sen-
tencing factors set out in Title 18, section 3553. And
so the sentence that I am imposing is going to be a
variance sentence. And it’s based upon my conclu-
sions and observations with regard to the following
3553 factors.
(J.A. 727). The district court then went on to address the
§ 3553 factors in a manner favorable to Wilkinson, stating at
one point that it was "convinced that what took place here
with respect to the criminal conduct would most likely not
have happened but for the aggressive intervention of Mr. Bit-
tenbender." (J.A. 731). The district court ultimately sentenced
Wilkinson to a three-year term of probation as to Counts I, II,
and III, to run concurrently, and to 800 hours of community
service. Additionally, the district court ordered Wilkinson to
pay a $20,000.00 fine, a $300.00 special assessment, and
$40,962.75 in restitution to Avcard under the MVRA.
7
The district court did not subtract an additional level under USSG
§ 3E1.1(b) for acceptance of responsibility, because the offense level
determined prior to subtracting two levels for acceptance of responsibility
under USSG § 3E1.1(a) was not a level 16 or greater. See id. § 3E1.1(b).
14 UNITED STATES v. WILKINSON
II.
The government’s challenge to Wilkinson’s sentence
focuses on the district court’s finding that DESC suffered no
actual pecuniary loss as the result of Wilkinson’s offense con-
duct for purposes of applying USSG § 2B1.1(b)(1), and the
government’s challenge to the district court’s refusal to award
DESC restitution focuses on the same finding for purposes of
applying the MVRA. Under the Sentencing Guidelines, "‘Ac-
tual loss’ means the reasonably foreseeable pecuniary harm
that resulted from the offense," USSG § 2B1.1, comment.
(n.3(A)(i)), and "‘reasonably foreseeable pecuniary harm’
means pecuniary harm that the defendant knew or, under the
circumstances, reasonably should have known, was a poten-
tial result of the offense," id. (n.3(A)(iv)). Moreover, of par-
ticular relevance in the present appeal, Application Note
3(A)(v)(II) to USSG § 2B1.1 specifies:
In the case of a procurement fraud, such as a fraud
affecting a defense contract award, reasonably fore-
seeable pecuniary harm includes the reasonably fore-
seeable administrative costs to the government and
other participants of repeating or correcting the pro-
curement action affected, plus any increased costs to
procure the product or service involved that was rea-
sonably foreseeable.
id. § 2B1.1, comment. (n.3(A)(v)(II)).
Additionally, the amount of any restitution due DESC
under the MVRA is the amount of actual loss to DESC
directly and proximately caused by Wilkinson’s offense con-
duct. 18 U.S.C. § 3663A(a)(2). Indeed, the MVRA defines the
term "victim" as
a person directly and proximately harmed as a result
of the commission of an offense for which restitution
may be ordered including, in the case of an offense
UNITED STATES v. WILKINSON 15
that involves as an element a scheme, conspiracy, or
pattern of criminal activity, any person directly
harmed by the defendant’s criminal conduct in the
course of the scheme, conspiracy, or pattern.
Id. § 3663(a)(2). Under the MVRA, the government bears the
burden of proving a victim’s loss by a preponderance of the
evidence. Id. § 3664(e); United States v. Harvey, 532 F.3d
326, 339 (4th Cir. 2008).
On appeal, the government challenges Wilkinson’s sen-
tence on the basis that the district court’s finding that DESC
suffered no actual pecuniary loss as the result of Wilkinson’s
offense conduct is clearly erroneous. With respect to calculat-
ing DESC’s actual pecuniary loss under USSG § 2B1.1(b)(1),
the government argues that had the district court properly
applied Application Note 3(A)(v)(II) to USSG § 2B1.1, the
district court necessarily would have found that DESC had
suffered $592,922.00 in such loss as the result of Wilkinson’s
offense conduct.8 Such a finding, according to the govern-
ment, would have resulted in an adjusted offense level under
the Guidelines of 20 and an advisory Guidelines sentencing
range of 33 to 41 months’ imprisonment. Because the district
court improperly calculated Wilkinson’s advisory Guidelines
sentencing range, as the government’s argument goes, we
cannot uphold the district court’s sentence as procedurally
reasonable nor reach the issue of its substantive reasonable-
ness. Therefore, the government posits, we should vacate Wil-
kinson’s sentence and remand for resentencing with the
instruction that the district court calculate DESC’s actual
pecuniary loss pursuant to proper application of Application
Note 3(A)(v)(II) to USSG § 2B1.1. See United States v.
Carter, 564 F.3d 325, 328 (4th Cir. 2009) (improperly calcu-
lating advisory Guidelines sentencing range constitutes proce-
dural error in sentencing which requires remand for
8
The government contends that the district court either did not apply
Application Note 3(A)(v)(II) at all or incorrectly applied it sub silentio.
16 UNITED STATES v. WILKINSON
resentencing without addressing whether sentence is substan-
tively reasonable under abuse of discretion standard). With
respect to the restitution issue, the government posits that if
we "hold[] that the district court clearly erred in finding no
[actual pecuniary loss to DESC], DESC will be entitled to res-
titution to the full extent of its losses determined on remand."
(government’s Reply Br. at 7-8).
On a macro level, Wilkinson defends the judgment below
on the ground that the district court’s finding that DESC suf-
fered no actual pecuniary loss as the result of his offense con-
duct is not clearly erroneous. On a micro level, Wilkinson
argues that the government failed to carry its burden of proof
on DESC’s actual pecuniary loss, because "the government’s
case for actual loss to DESC rested on three conclusory charts
the government’s expert created with numbers he had
received from an interested party, had not corroborated, and
on which he could not be cross-examined." (Wilkinson’s Br.
at 26).
Our review of Wilkinson’s sentence must take place in two
sequential steps. Carter, 564 F.3d at 328. In the first step, we
must ensure that the district court did not commit a significant
procedural error in sentencing Wilkinson. Id. If it did, we
must vacate and remand for resentencing. Id. at 329-30. Only
if we conclude that the district court committed no significant
procedural error in sentencing Wilkinson, may we move on to
the second step of considering the substantive reasonableness
of his sentence under an abuse of discretion standard. Id. at
328.
The government is correct that Wilkinson would need to be
resentenced if we were to conclude that the district court’s
finding that DESC suffered no actual pecuniary loss as the
result of Wilkinson’s offense conduct is clearly erroneous.
This is because proper calculation of the advisory Guidelines
sentencing range is dependent upon a non-clearly erroneous
finding of such loss, USSG § 2B1.1(b)(1), and improper cal-
UNITED STATES v. WILKINSON 17
culation of such range as well as selecting a sentence based
on a clearly erroneous factual finding are procedural errors
that require correction before we can review Wilkinson’s sen-
tence for substantive reasonableness, Carter, 564 F.3d at 328.
See also id. at 330 n.4 ("Having found the sentence procedur-
ally unreasonable, however, we cannot review the sentence
for substantive reasonableness.").
In reviewing a district court’s finding of fact made at sen-
tencing, we are mindful that the traditional rules of evidence
are not applicable to sentencing proceedings. See Fed. R.
Evid. 1101(d)(3). Rather, a sentencing court may give weight
to any relevant information before it, including uncorrobo-
rated hearsay, provided that the information has sufficient
indicia of reliability to support its accuracy. United States v.
Bowman, 926 F.2d 380, 381 (4th Cir. 1991); USSG 6A1.3(a),
p.s. "[W]here the reliability of evidence is an issue the court
should conduct an evidentiary hearing to determine the same."
Bowman, 926 F.2d at 381; see also USSG 6A1.3(b), p.s.
Unfortunately, the district court did not provide us anything
close to a sufficient explanation of its rationale in making its
loss finding with respect to DESC that would enable us to
review such finding under the clearly erroneous standard. For
example, the district court gave no explanation for its seem-
ingly inconsistent position in finding the government’s expert
witness regarding DESC’s actual pecuniary loss knowledge-
able and credible, but nonetheless rejecting his loss calcula-
tions in toto without explanation, making it totally incapable
of meaningful appellate review. For a second example, we
agree with the government that Wilkinson’s argument to the
effect that in order for DESC to have suffered an actual pecu-
niary loss in the form of administrative costs, the government
had to prove that DESC employees worked overtime in resoli-
citing bids and reawarding nontainted contracts is at odds
with the plain language of Application Note 3(A)(v)(II) to
USSG § 2B1.1. However, we have no idea whether the dis-
trict court accepted this argument or accepted Wilkinson’s
18 UNITED STATES v. WILKINSON
alternative argument that, assuming arguendo that DESC’s
administrative costs as calculated by the government are theo-
retically recoverable, the government nonetheless failed to
carry its burden of proof because it offered no documentary
evidence to support such costs (e.g., wage and hour records).
In order to address the government’s sentencing challenge,
we would have to know which argument (if any) the district
court accepted, and under Carter, we are prohibited from pre-
suming the sentencing court has "silently adopted arguments
presented by a party." 564 F.3d at 329. The same situation
holds true for the government’s spot pricing evidence as well
as its evidence regarding increased costs for aviation fuel
under the tainted contracts verses the untainted contracts. In
short, on the present record, we cannot hold Wilkinson’s sen-
tence procedurally reasonable. Id. at 328-30. Additionally, the
record is not amenable to appellate review with respect to the
government’s challenge to the district court’s finding that
DESC suffered no actual pecuniary loss for purposes of calcu-
lating restitution under the MVRA.
Accordingly, we vacate the sentencing portion of Wilkin-
son’s judgment and remand the case for resentencing with
instructions that the district court explain in detail why it
believes DESC’s claimed actual losses, as set forth in Tables
1, 2, and 3 of Appendix A to the government’s initial sentenc-
ing memorandum, are not sufficiently supported by the expert
testimony of Dr. Untiet, for purposes of calculating Wilkin-
son’s advisory Guidelines sentencing range and awarding
DESC restitution under the MVRA. For example, did the dis-
trict court accept Wilkinson’s argument that without any doc-
umentary evidence such as invoices, the government failed to
carry its burden of proving that it had made spot purchases of
aviation fuel for the airport locations that were the subject of
the tainted contracts during the interim time between DESC’s
cancelling of such contracts and their respective untainted rea-
ward? Moreover, as part of its explanation, we specifically
instruct the district court to explain the seeming inconsistency
UNITED STATES v. WILKINSON 19
between its zero-loss finding as to DESC and its declaration
that it found Dr. Untiet knowledgeable and credible. Notably,
if the district court reached its zero-loss finding under USSG
§ 2B1.1(b)(1) based upon its acceptance of Wilkinson’s lack
of over-time argument, the district court must revisit its calcu-
lation of DESC’s actual pecuniary loss under USSG
§ 2B1.1(b)(1), because such argument, as we have already
stated, is at odds with the plain language of Application Note
3(A)(v)(II) to USSG § 2B1.1.9
Having arrived once again at the advisory Guidelines sen-
tencing range stage,10 the district court must next allow the
government and Wilkinson "an opportunity to argue for what-
ever sentence" each "deem[s] appropriate." Gall v. United
States, 552 U.S. 38, 49 (2007). Following such arguments, the
district court should then proceed to render Wilkinson’s sen-
tence. In reaching such sentence, "[r]egardless of whether the
district court imposes an above, below, or within-Guidelines
sentence, it must place on the record an ‘individualized
assessment’ based on the particular facts of the case before it."11
9
We recognize that in making its loss finding with respect to DESC
under the MVRA, the district court is not bound by Application Note
3(A)(v)(II) to USSG § 2B1.1, and thus, the district court may reach a dif-
ferent loss finding for DESC under USSG § 2B1.1(b)(1) rather than under
the MVRA. See United States v. Allen, 529 F.3d 390, 397 (7th Cir. 2008)
(Application Notes to USSG § 2B1.1 not controlling in calculating loss
under the MVRA).
10
If the district court changes its loss finding under USSG § 2B1.1(b)(1)
with respect to DESC, depending upon the amount of loss found, such
finding has the potential to change the advisory Guidelines sentencing
range. However, we make clear that the district court may not revisit on
remand either the issue of Wilkinson’s intended pecuniary loss to Avcard
nor Avcard’s actual pecuniary loss, because the government does not chal-
lenge those loss findings on appeal. Thus, if the district court continues to
find that DESC suffered no actual pecuniary loss as the result of Wilkin-
son’s offense conduct, Wilkinson’s advisory Guidelines sentencing range
will remain at 12 to 18 months’ imprisonment.
11
In making this individualized assessment, the sentencing court must
apply the relevant factors of 18 U.S.C. § 3553 to the specific circum-
stances of Wilkinson’s case. Carter, 564 F.3d at 328.
20 UNITED STATES v. WILKINSON
Carter, 564 F.3d at 330 (quoting Gall, 552 U.S. at 50). Such
making of the record is critical, because "[i]n reviewing this
assessment, an appellate court may not guess at the district
court’s rationale, searching the record for statements by the
Government or defense counsel or for any other clues that
might explain a sentence." Carter, 564 F.3d at 329-330.
Finally, we instruct the district court to reconsider with care
its determination that DESC was not entitled to any restitution
under the MVRA. If, after such reconsideration, the district
court continues to adhere to its zero-loss finding with respect
to the government’s claim of restitution due DESC under the
MVRA, we instruct the district court to provide a detailed
rationale for such finding on the record in order that we may
review it under the clearly erroneous standard. If, however,
after such reconsideration, the district court finds that DESC
is entitled to a particular amount of restitution under the
MVRA, we instruct the district court to order restitution to
DESC in such amount and to provide a detailed rationale for
such loss finding on the record in order that we may review
it under the clearly erroneous standard.
III.
In conclusion, we vacate Wilkinson’s sentence and remand
with instructions for: (1) resentencing; and (2) reconsideration
of the district court’s determination that DESC was entitled to
no restitution under the MVRA, accompanied by an order of
restitution if the district court finds that DESC is entitled to
a particular amount of restitution under the MVRA.
VACATED AND REMANDED
MOON, District Judge, concurring in part and dissenting in
part:
I concur with the majority regarding the administrative cost
finding. Because the district court may have erred as a matter
UNITED STATES v. WILKINSON 21
of law, I agree that we should remand as to that element of
loss. However, I find no clear error in the loss findings with
regard to either the higher spot fuel purchases or the higher
contract prices. Accordingly, I would affirm the district court
as to those findings.
The majority holds that the district court failed to suffi-
ciently explain its zero-loss finding. However, the sentencing
judge concluded that the government had not met its burden
of proof to establish loss. (J.A. 658). The sentencing judge
observed that, although he found both the government expert
and defense expert to be "credible," he nevertheless found the
defense expert more "compelling," stating that:
I find one of [the defendant’s expert’s] primary opin-
ions to be particularly compelling. And that was a
statement that he made to the effect that the defen-
dant’s calculations are probably about as accurate
as one could hope for in situations like this."
(J.A. 658) (emphasis added). Moreover, the sentencing judge
stated that his "assessment of [the government’s] claimed
losses is that they are simply not sufficiently supported by the
facts to persuade me that they constitute losses that more
likely than not were caused by this defendant’s conduct."
(J.A. 659).
The record discloses that the district court sufficiently justi-
fied its factual finding of zero loss to DESC as to the higher
spot fuel prices and higher contract prices. That the sentenc-
ing court did not describe in greater detail the rationale under-
lying its factual finding is not sufficient grounds for remand,
and is outside the scope of the particularity requirements
announced in Carter. In my view, Carter requires a sentenc-
ing court to state with particularity the reasons supporting a
chosen sentence.* It does not address, however, the degree of
*See Carter at 328 ("When rendering a sentence, the district court
‘must make an individualized assessment based on the facts presented.’"
22 UNITED STATES v. WILKINSON
specificity required when making a finding of fact upon
which a sentence is to be predicated.
(quoting Gall v. United States at 39) (first emphasis added)); see also id.
(when stating its reason for imposing a sentence, a sentencing court need
only "‘set forth enough to satisfy the appellate court that he has considered
the parties’ arguments and has a reasoned basis for exercising his own
legal decisionmaking authority.’" (quoting Rita v. United States, 551 U.S.
338, 339 (2007))).