United States v. Allen Smith

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

Nos. 13-1390, 13-1546, 13-1640 & 13-1718

_____________

UNITED STATES OF AMERICA

v.

ALLEN SMITH,

Appellant

(D.C. Crim. No. 06-cr-00377-002)

______________

UNITED STATES OF AMERICA

v.

ANTOINE NORMAN,

a/k/a Ant

ANTOINE NORMAN,

Appellant

(D.C. Crim. No. 06-cr-00377-004)

______________

UNITED STATES OF AMERICA

v.

CHARLES WHITE,

a/k/a Pooch

a/k/a Pooh

CHARLES WHITE,

Appellant

(D.C. Crim. No. 06-cr-00377-001)

______________

UNITED STATES OF AMERICA

v.

MICHAEL MERIN,

Appellant

(D.C. Crim. No. 06-cr-00377-003)

______________

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE EASTERN DISTRICT OF

PENNSYLVANIA

District Judge: Honorable R. Barclay Surrick

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Submitted Under Third Circuit LAR 34.1(a)

April 8, 2014

____________

Before: HARDIMAN, SLOVITER and BARRY,

Circuit Judges

(Opinion Filed: May 9, 2014)

____________

Peter A. Levin, Esq.

1927 Hamilton Street

Philadelphia, PA 19130

Counsel for Appellant Allen Smith

Kenneth C. Edelin, Jr., Esq.

Suite 1410

1500 John F. Kennedy Boulevard

Two Penn Center Plaza

Philadelphia, PA 19102

Counsel for Appellant Antoine Norman

David S. Rudenstein, Esq.

9411 Evans Street

Philadelphia, PA 19115

2

Counsel for Appellant Charles White

Lawrence J. Bozzelli, Esq.

Suite 701

211 North 13th Street

Philadelphia, PA 19107

Counsel for Appellant Michael Merin

Zane David Memeger, Esq.

United States Attorney

Robert A. Zauzmer, Esq.

Assistant U.S. Attorney

Chief of Appeals

David J. Ignall, Esq.

Assistant U.S. Attorney

Office of the United States Attorney

615 Chestnut Street

Suite 1250

Philadelphia, PA 19106

Counsel for Appellee

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OPINION OF THE COURT

____________

BARRY, Circuit Judge

Allen Smith, Antoine Norman, Charles White, and

Michael Merin were sentenced in 2008 for offenses related to

their participation in a conspiracy to defraud banks. On direct

appeal, we affirmed their convictions, but vacated their

sentences and remanded for the District Court to reconsider

two sentencing issues. Now, following resentencing, and in

four separate appeals that have been consolidated for

disposition, they challenge their new sentences and Smith

challenges his new order of restitution. We will vacate the

order of restitution and, in all other respects, we will affirm

the judgments of sentence.

3

I. BACKGROUND

A. Trial and the Initial Sentencing1

Between February 2004 and November 2005,

appellants participated in a scheme to defraud four banks—

Commerce Bank, Wachovia Bank, M&T Bank, and PNC

Bank—out of hundreds of thousands of dollars. Although

appellants each had individual responsibilities in the scheme,

they worked together to steal the personal identification

information of account holders at the four banks. Check-

runners, sometimes using false identification cards provided

by appellants, would then pose as those account holders and

withdraw money from their accounts, at times doing so by

cashing counterfeit or closed-account checks.

On July 26, 2006, appellants and six co-defendants

were charged with various offenses in a 22-count indictment.

Following trial, appellants were each convicted of one count

of conspiracy to commit bank fraud and aggravated identity

theft, in violation of 18 U.S.C. § 371. They were also

convicted of one or more substantive counts of bank fraud, in

violation of 18 U.S.C. § 1344, and multiple counts of

aggravated identity theft, in violation of 18 U.S.C. § 1028A.

The District Court sentenced appellants at separate

hearings between September and December 2008, applying to

all of them several offense-level enhancements pursuant to

the Sentencing Guidelines. One was a four-level

enhancement under U.S.S.G. § 2B1.1(b)(2) for an offense

involving at least fifty victims. Various within-Guidelines

sentences of imprisonment were thereafter imposed, as well

as terms of supervised release, special assessments, and

orders of restitution. As relevant here, Smith was ordered to

pay restitution of $68,452.

1

Facts regarding the underlying offense conduct are taken

from United States v. Norman, 465 F. App’x 110 (3d Cir.

2012), in which we resolved the issues appellants raised on

direct appeal.

4

B. The Direct Appeal

On direct appeal, appellants alleged a number of trial

and sentencing errors. As we noted above, we affirmed their

convictions, but vacated their sentences and remanded for

reconsideration of certain sentencing issues.

The government conceded on direct appeal that

resentencing was necessary in light of our decision in United

States v. Kennedy, 554 F.3d 415 (3d Cir. 2009), which issued

subsequent to the sentencings in this case. The District Court

had found that appellants’ conduct injured 146 victims,

including many account holders who were eventually

reimbursed by the banks for their losses. Kennedy held,

however, that account holders who suffer only temporary

losses are not victims for purposes of the victim enhancement

under § 2B1.1(b)(2). 554 F.3d at 419. We, thus, determined

that it was appropriate to remand the case “for proceedings

consistent with our opinion in Kennedy.” Norman, 465 F.

App’x at 121. In doing so, we noted that, even under

Kennedy, reimbursed account holders “may nevertheless

qualify as victims if they ‘spent time or money seeking

reimbursement.’” Id. (quoting Kennedy, 554 F.3d at 422).

We left it “to the District Court’s discretion as to whether to

allow additional evidence” regarding the number of victims.

Id. We also determined that the District Court erred in

calculating Smith’s criminal history category. We vacated

appellants’ sentences and remanded for reconsideration of

these two issues.2

C. Resentencing Proceedings

On November 2, 2012, before it held individual

sentencing hearings, the District Court held a joint hearing to

ascertain, as to all appellants, the number of victims for

purposes of § 2B1.1(b)(2).

The government’s first witness was Marion Marcuggi,

2

On resentencing, the District Court lowered Smith’s

criminal history category from IV to III. Smith does not

challenge that before us, and we will not address it further.

5

a Commerce Bank customer. Marcuggi testified that, in

2004, Commerce Bank reported that a person using her name

made a number of suspicious withdrawals from various bank

locations. The next day, Marcuggi drove to her local branch,

reported that the transactions were fraudulent, and worked

with bank representatives to close her existing accounts and

open new ones. Within a few days, Commerce Bank

reimbursed the funds that had been taken from the account.

Before then, Marcuggi made several trips to the police station

to fill out reports and provide information for purposes of the

criminal investigation that ensued. She was not, however,

reimbursed for any of her time or travel expenses.

Elaine Ford, a PNC Bank customer, was next to

testify. After noticing a discrepancy between her bank

statement and check register in April 2005 and receiving

several late-payment notices during the following month,

Ford stated that she drove to her bank to report that money

was missing from her account. There, she met with the

branch manager, who flagged her account and, together, they

contacted the police. One week later, Ford closed her account

and opened a new one. She returned to the bank on another

occasion to confirm that she was not the individual captured

in surveillance footage conducting a transaction on her

account and that the signature the unidentified person

provided was not Ford’s own. Her two trips to the bank took

several hours. She also spent approximately three hours on

the phone with the bank to resolve the unauthorized activity.

PNC Bank replaced the stolen funds one month after Ford

first reported the suspicious transactions. The bank did not

reimburse her for her time or the cost of transportation to and

from the bank.

Postal Inspector Thomas Ninan, the agent assigned to

the case, was the government’s final witness. He testified

that, during the week leading up to the hearing, he

interviewed Sandra Posey, Arelis Diaz, Kim Cogswell,

Angela Peffley, Michelle Rosmarin, and Joanne Ponzio, all of

whom discovered fraudulent activity in their accounts that

was traced to appellants’ bank fraud operation, and all of

whom were eventually reimbursed by their respective banks

for the funds fraudulently taken. With the exception of

6

Ponzio, each of those account holders also prepared a written

statement.3 Ninan identified the written statements, and they

were admitted into evidence.

According to those statements, Posey, Diaz, Peffley,

and Rosmarin discovered that money had been removed from

their accounts without their authorization and Cogswell

learned from Commerce Bank’s fraud department that her

account had been closed when fraudulent activity was

detected.4 Each of the account holders traveled to her bank at

least once to report that she had not consented to the

transactions and to resolve issues related to the fraud. Two of

them, Posey and Diaz, were required to go to their banks

more than once. Posey went twice, initially to submit a

reimbursement form and four or five weeks later because the

money had not yet been restored to her account. Diaz visited

her bank, located five miles from her home, once or twice a

week for a period of two or three weeks, and called the bank

every other day inquiring about the status of its fraud

investigation and her promised reimbursement.

Some of the account holders stated that they needed to

take time off from work to tend to these matters. Cogswell

used a vacation day to meet with bank personnel, and Peffley

took two unpaid days to try to find out why money was

missing and her account overdrawn. Peffley and her husband

took another day without pay to attend court proceedings

relating to this case. For her part, Diaz cut short a planned

vacation to address the unaccounted-for withdrawal on her

account and, without adequate funds at her disposal, had to

use money intended for her vacation to pay bills that came

due.

3

Diaz, Cogswell, Peffley, and Rosmarin provided their

written statements directly to Ninan. Posey gave her

statement to another inspector, but Ninan confirmed that the

written statement matched in substance what Posey said

during his interview of her.

4

Cogswell did not specifically claim in her statement that

money was taken from her account, although Ninan’s

testimony suggests that she was at some point reimbursed for

stolen funds.

7

With respect to Ponzio, Ninan testified that she had

planned to appear as a witness but was unable to attend the

hearing due to complications from Hurricane Sandy and was

unable to provide a written statement. Ninan, therefore,

testified as to what she told him during the course of their

multiple conversations. In addition, he had prepared a

memorandum memorializing those conversations, a

memorandum the government provided to appellants on the

morning of the hearing. According to Ninan’s testimony,

Ponzio informed him that, in 2004, she discovered that money

was missing from her Commerce Bank account, leaving her

with a negative balance and causing some of her checks to

bounce. She took a vacation day from work and drove to the

bank to resolve the problem and seek reimbursement and to

the police station to report the theft. At some point after her

visit, Commerce Bank reimbursed Ponzio for the money

taken from her account, but did not reimburse her for her time

or travel expenses. Ninan testified that Posey, Diaz,

Cogswell, Peffley, and Rosmarin similarly made at least one

trip to their banks before being reimbursed.

Following the joint hearing, the parties submitted

supplemental memoranda addressing the application of the

victim enhancement. Appellants objected to the introduction

of additional evidence, arguing that the government could

have presented this evidence at the initial sentencing hearings

but failed to do so. They further asserted that the introduction

of witness testimony through Inspector Ninan violated their

constitutional rights both under the Confrontation Clause,

because they had no opportunity to cross-examine the account

holders themselves, and the Due Process Clause, because the

witness statements were unreliable and because appellants did

not receive those statements from the government until a day

or two before the hearing. The District Court rejected their

arguments and concluded that the offenses involved twelve

victims: the four banks that reimbursed their account holders’

losses and the eight account holders who provided statements

in court or through Ninan. That finding triggered a two-level

enhancement under § 2B1.1(b)(2)(A) for a theft or fraud

offense involving ten or more victims.

The District Court subsequently resentenced appellants

8

at individual hearings. The Court reduced the term of

imprisonment as to each one, imposed the same special

assessment, and maintained or lowered the term of supervised

release. It also confirmed the existing orders of restitution

against White, Norman, and Merin, but increased Smith’s

order of restitution by $9,000, from $68,452 to $77,452.

Appellants timely filed separate appeals that have been

consolidated for purposes of disposition.

II. ANALYSIS5

On appeal, appellants, in varying configurations, press

many of the same arguments presented to the District Court.

We address each in turn.

A. Reopening the Record

Smith and White renew their contention that the

District Court acted improperly by reopening the record and

permitting the government to introduce at the joint hearing

additional evidence regarding the number of victims. The

District Court’s decision to reopen the record is reviewed for

abuse of discretion. United States v. Coward, 296 F.3d 176,

180 (3d Cir. 2002).

When determining whether to reopen a proceeding, the

paramount factor for a district court to consider is whether

reopening, if permitted, would prejudice the party opposing it.

United States v. Kithcart, 218 F.3d 213, 220 (3d Cir. 2000).

Timing is key to this analysis. “If [reopening] comes at a

stage in the proceedings where the opposing party will have

an opportunity to respond and attempt to rebut the evidence

introduced,” the possibility of prejudice is greatly lessened.

Coward, 296 F.3d at 181 (quoting United States v.

Blankenship, 775 F.2d 735, 741 (6th Cir. 1985)). In addition,

a party that seeks to reopen a proceeding must provide a

reasonable explanation for its failure to initially present the

evidence. Kithcart, 218 F.3d at 220. In this regard,

5

The District Court had jurisdiction pursuant to 18 U.S.C. §

3231. We have jurisdiction pursuant to 18 U.S.C. § 3742(a)

and 28 U.S.C. § 1291.

9

“[c]onsideration should be given to whether the law on point

at the time was unclear or ambiguous.” Coward, 296 F.3d at

182.

Appellants were not prejudiced by reopening the

record. They received notice of the evidence to be offered by

the government prior to the November 2012 hearing and were

afforded an opportunity to respond to and rebut that evidence

through cross-examination of the witnesses who testified and

by the submission of post-hearing memoranda. Appellants

also had the opportunity to offer evidence of their own at the

hearing, and declined to do so.

Moreover, the government provided a reasonable

explanation for why it had not previously offered evidence

specifically addressing the unreimbursed costs incurred by

the account holders who were victimized by appellants. At

the time of the initial sentencings, we had not yet decided

whether an individual who recovers his or her losses is a

victim under § 2B1.1(b)(2), and the District Court accepted

the government’s theory that temporary losses were sufficient

to confer victim status. Certainly, the “prevailing rule of our

sister circuits” was that, to be a victim, an individual must

suffer a permanent monetary loss. Norman, 465 F. App’x at

121 (citing United States v. Conner, 537 F.3d 480, 489 (5th

Cir. 2008); United States v. Icaza, 492 F.3d 967, 969-70 (8th

Cir. 2007); United States v. Yagar, 404 F.3d 967, 971-72 (6th

Cir. 2005)). The decisions of the courts of appeals were not

unanimous, however. In United States v. Lee, 427 F.3d 881,

895 (11th Cir. 2005), the Eleventh Circuit suggested that even

a temporary loss rendered one a victim under the Guidelines.

Critically, we had not yet addressed the question, first doing

so and rejecting the government’s approach in United States

v. Kennedy, after appellants were sentenced. Thus, the

District Court was warranted in determining that the law on

point was “unclear or ambiguous” at the time of initial

sentencing.6 Coward, 296 F.3d at 182. In view of our

6

Disagreement over § 2B1.1(b)(2)’s definition of “victim”

has, in fact, persisted. Shortly after we decided Kennedy, the

First Circuit squarely rejected our interpretation, concluding

that, regardless of whether account holders are reimbursed,

10

acknowledgement that we would “leave it to the District

Court’s discretion as to whether to allow additional

evidence,” Norman, 465 F. App’x at 121, the District Court

did not overstep the bounds of that discretion when it decided

to do just that.

B. Adequacy of Evidence and Notice

Appellants also contend that the government’s

introduction of evidence at the joint hearing violated their

constitutional rights and did not comply with the Federal

Rules of Evidence. They maintain that the hearing in

question was not a sentencing hearing, but was instead an

evidentiary hearing at which their Sixth Amendment rights

applied. Consequently, according to appellants, the

introduction of witness testimony through the witnesses’

written statements and Ninan’s testimony deprived them of

their right under the Confrontation Clause to confront adverse

witnesses and constituted impermissible hearsay. In addition,

they argue that the unreliability of the hearsay statements and

the government’s failure to provide them with adequate

notice of the evidence it intended to present abridged their

right to due process. We review de novo whether the

Constitution and Federal Rules of Evidence incorporate the

rights envisioned by appellants. United States v. One Toshiba

Color Television, 213 F.3d 147, 151-52 (3d Cir. 2000) (en

banc); United States v. Pelullo, 964 F.2d 193, 199 (3d Cir.

1992).

As a preliminary matter, appellants are simply wrong

when they argue that the November 2012 joint hearing was

something other than part of, and integral to, the resentencing

process, even though each appellant may have been sentenced

individually at a subsequent proceeding. The joint hearing

was held to resolve the applicability of a particular Guideline

enhancement pertinent to all appellants. The fact that the

District Court heard evidence on this subject, a practice

they sustain an “actual loss” in economic terms and qualify as

“victims” if money is taken out of their accounts without

authorization. United States v. Stepanian, 570 F.3d 51, 55-58

& n.6 (1st Cir. 2009).

11

contemplated by both Federal Rule of Criminal Procedure

32(i) and § 6A1.3 of the Guidelines, does not alter the nature

of the hearing. Indeed, on direct appeal we made clear that

the only substantive matter on remand was sentencing, and

that the District Court could, if it chose, allow additional

evidence. See Norman, 465 F. App’x at 126-27.

That being so, appellants were not entitled, as a

constitutional matter, to confront the account holders whose

statements were introduced as evidence at the joint hearing.

Indeed, we have held that, according to “well settled”

precedent, “the Confrontation Clause does not apply in the

sentencing context and does not prevent the introduction of

hearsay testimony at a sentencing hearing.” United States v.

Robinson, 482 F.3d 244, 246 (3d Cir. 2007); accord United

States v. Powell, 650 F.3d 388, 392-93 (4th Cir. 2011)

(explaining that the courts of appeals have uniformly held and

recent Supreme Court cases further suggest that

Confrontation Clause rights apply only “during the

determination of [defendants’] guilt or innocence” and not

during the sentencing phase).

This conclusion also disposes of appellants’ hearsay

objection. In sentencing proceedings, the Federal Rules of

Evidence do not apply and a district court may rely on

hearsay. Fed. R. Evid. 1101(d)(3); United States v. Miele,

989 F.2d 659, 663 (3d Cir. 1993).

That does not mean, of course, that a sentencing

court’s consideration of hearsay is unbounded. Pursuant to

the Due Process Clause, hearsay statements may be used at

sentencing only if they bear “some minimal indicium of

reliability beyond mere allegation.” Robinson, 482 F.3d at

246 (internal quotation omitted). The evidence offered

through Inspector Ninan surely satisfied that standard. The

statements of the account-holder victims, just like the victim-

impact statements routinely considered at sentencing

hearings, involved matters within the knowledge of each

declarant and were made in the course of interviews by one or

more law enforcement officials. Ninan confirmed that he had

interviewed each victim and that each statement submitted to

the District Court was either drafted during the course of his

12

interview or, in the case of Posey, consistent with information

she had provided to him and to another inspector. Ninan’s

testimony as to what Ponzio told him during their

conversations is also sufficiently reliable. We have long

accepted an agent’s recitation of information obtained from a

third party who appears credible, and the District Court was

presented with no reason to doubt Ponzio’s credibility. See,

e.g., United States v. Paulino, 996 F.2d 1541, 1548 (3d Cir.

1993) (finding at least minimally reliable an agent’s

recounting of a conversation with “a reliable confidential

informant”).

We are not unmindful of appellants’ argument that

Ninan did not interview the account holders until days before

the hearing, the topics discussed in each statement were quite

similar, none of the interviews was taped, and—with the

exception of the Ponzio interview—Ninan did not take notes.

Nevertheless, these arguments are not sufficient to render the

account holders’ statements unreliable, particularly given that

the record was devoid of anything to contradict their

recounting of events. Indeed, appellants offered nothing

aside from bare speculation to suggest that Ninan exercised

undue influence over what the account holders reported in

their statements. As the District Court noted, it was

reasonable for Ninan to ask each one similar questions given

the narrow sentencing issue before the Court, i.e., whether she

suffered unreimbursed losses due to the fraud on her account.

And there was nothing in Ninan’s testimony to suggest that

the questions posed were in any way leading or improper.

Moreover, the District Court, before which, of course, Ninan

testified, deemed his testimony to be credible. That

assessment is entitled to substantial deference. United States

v. Givan, 320 F.3d 452, 464 (3d Cir. 2003).

Finally, appellants offer no authority—either binding

or even persuasive—for the proposition that due process

obligates the government to supply a criminal defendant with

advance notice of evidence it intends to present at a

sentencing hearing. Certainly, neither the Supreme Court nor

this Court has interpreted the Due Process Clause to require

13

any such thing.7 United States v. Reynoso, 254 F.3d 467, 473

(3d Cir. 2001); United States v. Jackson, 649 F.2d 967, 978-

79 (3d Cir. 1981) (observing the lack of any precedent

holding that due process requires the government to give

notice of the evidence it will offer at sentencing). Appellants’

due process challenge is, therefore, unavailing.

C. Judicial Factfinding

White and Norman argue, as they did on direct appeal,

that the District Court violated their Sixth Amendment rights

by enhancing their Guidelines range on the basis of judge-

found facts. They contend that a jury, not a sentencing judge,

must find any facts that increase a defendant’s sentence, even

if, as in this case, the sentence implicated neither a mandatory

minimum nor a statutory maximum. Our review over this

issue of law is plenary. United States v. Barbosa, 271 F.3d

438, 452 (3d Cir. 2001).

Whatever support White and Norman’s position may

find from non-authoritative sources, it is foreclosed by our

precedent. We have stated, sitting en banc, that the

constitutional rights to a jury trial and proof beyond a

reasonable doubt attach only to facts that “constitut[e] the

elements of a crime,” which are those facts that increase the

maximum statutory punishment to which the defendant is

exposed. United States v. Grier, 475 F.3d 556, 562 (3d Cir.

2007) (en banc) (relying on Apprendi v. New Jersey, 530 U.S.

466 (2000)). Facts relevant to the application of various

Guidelines provisions, which are advisory only, do not

implicate these rights. Id. at 567-68. A district court may,

7

We have, on the other hand, interpreted Federal Rule of

Criminal Procedure 32 to require pre-hearing disclosure of

documents on which a district court will rely at sentencing.

United States v. Nappi, 243 F.3d 758, 764 (3d Cir. 2001).

Appellants have not lodged an objection under Rule 32,

however, and, even if they had, there was no violation of that

Rule. Given the limited number and uncomplicated nature of

the statements here, notice of that evidence one or two days

prior to the hearing was sufficient to satisfy the Rule’s

disclosure requirement. See id. at 765.

14

consistent with the Fifth and Sixth Amendments, engage in

additional factfinding, using a preponderance-of-the-evidence

standard, to select an appropriate sentence up to the statutory

maximum based on application of the Guidelines. Id. at 562-

68. Indeed, we held as much when this very issue was raised

on direct appeal. Norman, 465 F. App’x at 120-21.

The Supreme Court’s recent decision in Alleyne v.

United States, 133 S. Ct. 2151 (2013), has not changed the

field of play. Alleyne simply held that, as with facts

necessary for the imposition of a statutory maximum

sentence, facts that trigger a statutory mandatory minimum

sentence must, under the Sixth Amendment, also be

submitted to a jury. Alleyne, 133 S. Ct. at 2160. Alleyne did

not curtail a sentencing court’s ability to find facts relevant in

selecting a sentence within the prescribed statutory range. Id.

at 2163. Thus, the District Court did not commit legal error

in so doing.

D. 10-Victim Enhancement

The central issue on appeal is whether the District

Court correctly determined the number of appellants’ victims,

as defined in § 2B1.1(b)(2). We exercise plenary review over

the District Court’s interpretation of the Guidelines and

review its factual findings for clear error. Grier, 475 F.3d at

570.

Under the Guidelines, a defendant convicted of a theft

or fraud offense is subject to a two-offense-level

enhancement if the offense “involved 10 or more victims.”

U.S.S.G. § 2B1.1(b)(2)(A). The Commentary to the 2005

version of the Guidelines, which all parties agree is the

version applicable to sentencing in this case, defined “victim”

as “any person who sustained . . . actual loss.” Id. § 2B1.1

cmt. n.1.8 “Actual loss,” in turn, is defined as “the reasonably

8

Guidelines Commentary “that interprets or explains a

guideline is authoritative unless it violates the Constitution or

a federal statute, or is inconsistent with, or a plainly erroneous

reading of, that guideline.” Stinson v. United States, 508 U.S.

15

foreseeable pecuniary harm that resulted from the offense.”

Id. cmt. n.3(A)(i). The Application Notes explain that

“‘[p]ecuniary harm’ means harm that is monetary or that

otherwise is readily measurable in money,” and, therefore,

does not include non-economic harm. Id. cmt. n.3(A)(iii).

Certain forms of economic damages are also excluded from

the Guidelines’ definition of “actual loss.” These include

“costs incurred by victims primarily to aid the government

in[] the prosecution and criminal investigation of an offense.”

Id. cmt. n.3(D).

As we mentioned at the outset of this Opinion, we

interpreted § 2B1.1(b)(2)’s victim enhancement provision in

United States v. Kennedy. The defendant in Kennedy used

her position as a manager of senior citizen benefits accounts

to steal money from 34 individual account holders. After

reviewing the statutory language in light of the Commentary

which, we note, is still applicable in this case, we held that

only those parties who suffer permanent “pecuniary harm”

constitute “victims” under § 2B1.1(b)(2). Kennedy, 554 F.3d

at 419. We, therefore, found that the district court in Kennedy

erred by including as victims individual account holders who

were later reimbursed the money that the defendant had

removed from their accounts. The government, we stated,

“failed to meet its burden to prove that the account holders

even knew that their funds had been stolen before they were

completely reimbursed.”9 Id.

36, 38 (1993); see also United States v. Keller, 666 F.3d 103,

108 (3d Cir. 2011).

9

The government correctly points out that, later in 2009, the

Commentary to § 2B1.1 was amended and expanded the

definition of “victim” to include not only persons who

suffered actual loss but also those “whose means of

identification [were] used unlawfully or without authority.”

U.S.S.G. § 2B1.1 cmt. n.4(E)(ii). In making this change, the

Sentencing Commission cited our decision in Kennedy. The

Commission explained that any individual whose identity is

stolen should be considered a victim for purposes of the

enhancement, “even if fully reimbursed,” because a target of

identity theft “must often spend significant time resolving

credit problems and related issues, and such lost time may not

16

Our opinion in Kennedy went on to explain that our

interpretation was consistent with the law of other circuits,

and we surveyed opinions of several of our sister courts of

appeals. Chief among them was the Sixth Circuit’s decision

in United States v. Yagar. Yagar held that an account holder

who is fully reimbursed for stolen funds cannot be considered

a victim under the Guidelines. Id. at 419-20 (reviewing

Yagar, 404 F.3d at 971). Yagar suggested, however, that

account holders who recoup those monies might still be

victims if, as a practical matter, they suffered some additional

pecuniary harm. Id. at 420. Drawing on this “Yagar carve-

out,” the Second, Ninth, and Eleventh Circuits found that

individuals who expend time, effort, and money before

successfully obtaining reimbursement suffer an actual loss

and remain victims under § 2B1.1(b)(2). 10 Id. at 421-22

be adequately accounted for in the loss calculations under the

guidelines.” Id. app. C (2011) (discussing amendment 726).

No party contends that this change has any bearing on this

case.

10

For his part, Norman contends that the account holders

cannot be victims because their monetary losses were not

specifically calculated and counted as part of the District

Court’s loss calculation. The Second, Ninth, and Tenth

Circuits have all found that a party may be considered a

victim only if the party’s loss was included in the court’s

overall loss estimate. Armstead, 552 F.3d at 780-81;

Abiodun, 536 F.3d at 169; United States v. Leach, 417 F.3d

1099, 1106-07 (10th Cir. 2005). Norman did not raise this

argument in the District Court, however, and we, therefore,

review for plain error. United States v. Russell, 564 F.3d 200,

203 (3d Cir. 2009); Fed. R. Crim. P. 52(b). To prevail on

appeal under plain error review, a defendant “must establish

an error that is plain, which affect his substantial rights, and

which, if not rectified, would seriously affected the fairness,

integrity or public reputation of judicial proceedings.” United

States v. Ward, 626 F.3d 179, 183 (3d Cir. 2010). Here,

Norman fails to satisfy that standard because he has not

established an error that was plain. We note that, unlike the

Second, Ninth, and Tenth Circuits, we have not spoken as to

how district courts must account for the number of victims in

the loss calculation, and we decline to do so here.

17

(discussing United States v. Abiodun, 536 F.3d 162 (2d Cir.

2008); United States v. Armstead, 552 F.3d 769 (9th Cir.

2008); United States v. Pham, 545 F.3d 712 (9th Cir. 2008);

Lee, 427 F.3d at 895). We agreed with the general approach

of those courts, and stated that “had the Government shown

that the account holders that Kennedy defrauded spent time or

money seeking reimbursement, this would be a closer case.”

Id. at 422. No such evidence had been presented, however.

Our apparent approval of the carve-out recognized in “the

Yagar line of cases” was, therefore, obiter dictum. Id.

This case presents the opportunity to adopt Kennedy’s

dicta as a holding of our Court: a party that is reimbursed for

stolen funds but, as a practical matter, suffers additional

pecuniary harm may qualify as a victim suffering “actual

loss” under § 2B1.1(b)(2).11 We see no need to define the full

scope of pecuniary harm capable of conferring victim status.

For purposes of this case, it is sufficient to hold that one

example of cognizable pecuniary harm is the expenditure of

time and money to regain misappropriated funds and replace

compromised bank accounts. This interpretation of “actual

loss” and “victim” comports with both the Guidelines and the

conclusions of coordinate appellate courts, not to mention the

commonsense proposition that an account holder who must

spend time and resources to dispute fraudulent activity,

recoup stolen funds, and repair his or her credit and financial

security has suffered a monetizable loss that is a reasonably

foreseeable and direct consequence of the defendant’s theft or

fraud. See, e.g., Pham, 545 F.3d at 721; Abiodun, 536 F.3d at

168-69.

Here, the District Court did not clearly err in

determining that appellants’ offenses involved twelve victims,

11

Again, the 2009 amendments to the Guidelines

Commentary, which do not apply in this case, appear to make

it easier for targets of identity theft to qualify as victims.

Thus, what we say here regarding the requirements for victim

status may not necessarily extend to the subjects of identity

theft under the revised Guidelines Commentary. See Keller,

666 F.3d at 108 (finding that we are bound by amendments to

Guidelines Commentary).

18

a number sufficient to trigger the ten-or-more-victims

enhancement. The parties, save one, agree that the four banks

from which funds were taken constitute victims of appellants’

bank fraud conspiracy.12 The government also presented

evidence that the eight individual account holders suffered

actual, pecuniary losses as a result of appellants’ conduct.

Appellants are correct that the time and money spent by these

account holders to assist in the investigation by law

enforcement and the eventual prosecution—their trips, e.g., to

the police station and to court—cannot be deemed actual loss.

U.S.S.G. § 2B1.1 cmt. n.3(D)(ii). Even so, the account

holders suffered monetizable harm in their efforts to regain

the funds taken from their accounts, efforts that necessarily

included reporting the fraud to their respective banks and

disputing the unauthorized activity in the first instance.

After noticing suspicious activity and prior to being

reimbursed by her bank, each of the eight account holders

traveled to a branch office at least once to deal with the fraud.

Some of them were required to make multiple trips or phone

calls to have their funds restored and establish new accounts,

spending hours of their time to do so. These account holders

were not reimbursed for the expenses involved with their trips

or the time spent in communication with the banks.

Additionally, Ponzio, Cogswell, and Peffley had to take time

off from work and use vacation days to attend meetings at

their banks, Diaz was forced to cut short her vacation to

resolve her financial troubles, and Rosmarin paid a credit

service to investigate her credit rating in the wake of the

unauthorized account activity she had suffered. These are the

very sorts of actual losses recognized by courts following

Yagar, and are sufficient to confirm the eight account

holders’ status as victims under the Guidelines. See Pham,

545 F.3d at 721 (finding forfeited vacation days and the cost

12

Only Smith disagrees. He challenges the inclusion of M&T

Bank as a victim of his conduct, as he was acquitted of the

bank fraud charge with respect to it. His claim is of dubious

merit, given that he was convicted of conspiracy to commit

bank fraud and the conspiracy’s activity targeted that bank.

But even if we do not consider M&T Bank’s victim status as

to Smith, there remain ten or more victims of his conduct.

19

of gas for trips to and from banks, telephone calls, stamps,

and replacement checks related to resolution of disputed

account activity and initiation of fraud investigations with

credit reporting services could constitute “actual loss” under

the Guidelines); Abiodun, 536 F.3d at 168-69 (finding the

value of “lost time” spent securing reimbursement could

constitute “actual loss”); cf. Conner, 537 F.3d at 491 (noting

the possibility that the value of “business time” spent paying

fraudulent charges could be considered an “actual loss”).

Appellants counter that it is only the expenditure of

substantial or appreciable amounts of time and money that

constitutes actual loss—far more, they suggest, than that

spent by the account holders here. It is certainly true that

Yagar found that the account holders in that case could not

qualify as victims because the money taken from their

accounts was “immediately covered by a third-party” and

their losses were “short-lived.” Yagar, 404 F.3d at 971.

Other courts, relying on this language, have intimated that the

speed of reimbursement or the magnitude of costs realized

bears on whether an account holder has suffered an actual

loss. See, e.g., Pham, 545 F.3d at 719-20; Lee, 427 F.3d at

895. But the controlling question for the Yagar court was

whether the account holders “suffered [an] adverse effect as a

practical matter from [the defendant’s] conduct,” not the

number of days or amount of money it took to regain their

stolen funds.13 Yagar, 404 F.3d at 971. In Yagar’s factual

recitation, there is simply no indication that the account

holders had to expend any time or resources to secure

reimbursement.

In view of Yagar’s rationale, which we adopt, we see

no principled reason to treat only appreciable or substantial

13

Indeed, the Yagar court went so far as to analyze whether

there was sufficient evidence to find that six account holders

suffered pecuniary harm when they had to order new checks.

Yagar, 404 F.3d at 971-72. Although the court found that the

record failed to establish who ultimately paid for the new

checks, the account holders or their banks, it did not find that

reordering checks, which assuredly requires minimal time and

money, was too small a cost to constitute an “actual loss.”

20

expenditures of time and money as “actual losses” under the

Guidelines. The size of the loss has no bearing on its ability

to be monetized, its foreseeability to the defendant, or its

nexus to the offense conduct. Nor would the lack of an

“appreciable” loss requirement transform every customer

whose account is invaded into a Guidelines victim, rendering

superfluous the “actual loss” element. As the facts of

Kennedy demonstrate, some account holders may be

reimbursed before they even realize that money has been

taken from their accounts. See Kennedy, 554 F.3d at 419. In

sum, the account holders in this case suffered unreimbursed,

albeit small, losses in attempting to redress the fraudulent

activity perpetrated by appellants. We hold that they are

victims under the Guidelines.

Smith makes one last argument against application of

the victim enhancement, an argument that need not long

detain us. He argues that a separate Guideline provision, §

2B1.6, renders the § 2B1.1(b)(2) victim enhancement

inapplicable. The Application Notes to § 2B1.6 state that, if a

sentence for aggravated identity theft under 18 U.S.C. §

1028A is imposed in conjunction with a sentence for a

separate, underlying offense, as it was in this case, the district

court should not apply an enhancement “for the transfer,

possession, or use of a means of identification when

determining the sentence for the underlying offense.”

U.S.S.G. § 2B1.6 cmt. n.2. Quite plainly, the victim

enhancement under § 2B1.1(b)(2) is not an enhancement

based on the use of a “means of identification”; it is an

enhancement based on the number of victims. Section 2B1.6

does not preclude application of the victim enhancement with

respect to appellants’ bank fraud offenses.

E. The Order of Restitution as to Smith

In its initial judgment of sentence, the District Court

ordered Smith to pay restitution in the amount of $68,452.

This amount reflected losses incurred by Commerce Bank

and Wachovia Bank. Although Smith’s pre-sentence report

identified a $9,000 loss to M&T Bank, as well, the Probation

Department took no position as to whether Smith should be

held responsible for that amount or for any loss to PNC Bank.

21

(Smith PSR ¶¶ 68, 170.) Those losses were certainly

attributable to the activities of the conspiracy, but Smith had

been acquitted of the substantive fraud counts relating to

those institutions. At sentencing, the District Court did not

hold Smith responsible for the losses to M&T Bank or PNC

Bank, and neither Smith nor the government appealed that

ruling.

During Smith’s resentencing, however, the District

Court, at the parties’ urging, revisited the matter of his

restitution. The government argued that Smith should be held

jointly and severally liable for repaying the $9,000 loss

incurred by M&T Bank because it was a reasonably

foreseeable consequence of and attributable to the conspiracy

of which he was a member. Smith maintained that his order

of restitution should be reduced to $0. He argued that his

acquittal on the substantive count relating to M&T Bank

precluded any responsibility as to him for the loss realized by

that institution, and that he should not be ordered to pay

restitution to the other banks because they failed to submit

loss reports to the Probation Department. The District Court

agreed with the government, and increased the amount of

Smith’s restitution by $9,000 to $77,452.

On this appeal, Smith again contends that his

restitutionary obligation should be extinguished; however, the

government has altered its position. It now contends that the

initial order of restitution in the amount of $68,452 should be

reinstated, and concedes that the District Court exceeded the

scope of our remand by reconsidering that issue. We exercise

plenary review as to whether the District Court properly

interpreted and applied our mandate. Kilbarr Corp. v. Bus.

Sys. Inc., B.V., 990 F.2d 83, 87-88 (3d Cir. 1993).

The government is correct. The District Court

exceeded the scope of our mandate when it revisited its initial

order of restitution against Smith, although in so doing it was

clearly doing what counsel had asked it to do. Our mandate

identified only two sentence-related issues for the District

Court to reconsider on remand: (1) the determination of the

number of victims for purposes of a particular Guideline

enhancement and (2) the calculation of Smith’s criminal

22

history category. Norman, 465 F. App’x at 126-27;

Judgment, United States v. Norman, 465 F. App’x 110 (3d

Cir. 2012) (No. 08-3969). At no point did we authorize the

parties to reargue or the District Court to revisit its ruling on

the amount of restitution ordered against Smith.

That aside, the parties waived any argument that the

amount of restitution as to Smith should be different. A party

may not litigate on remand or subsequent appeal issues that

“were not raised in [the] party’s prior appeal and that were

not explicitly or implicitly remanded for further proceedings.”

Skretvedt v. E.I. DuPont De Nemours, 372 F.3d 193, 203 (3d

Cir. 2004). We will, therefore, vacate the revised restitution

order as to Smith and remand for the District Court to

reinstate its initial order in the amount of $68,452.

F. Merin’s Remaining Argument

Merin raises one additional argument. He contends

that the evidence at trial failed to establish an agreement on

his part to undertake or aid all of the conspiracy’s bank fraud

activity, and so the District Court erred in attributing to him

the full loss caused by the conspiracy. Merin raised, and we

rejected, this same loss-calculation argument on direct appeal.

Norman, 465 F. App’x at 123-25. That decision is law of the

case, and Merin has not shown the “extraordinary

circumstances” we generally require before we will revisit a

prior decision in the same action.14 Feesers, Inc. v. Michael

Foods, Inc., 591 F.3d 191, 207 (3d Cir. 2010).

III. CONCLUSION

For the foregoing reasons, we will affirm the

judgments of sentence, but will vacate the order of restitution

imposed against Smith and remand with instructions to

reinstate the initial order of restitution of $68,452.

14

To the extent that Merin also challenges the sufficiency of

the evidence underlying his conspiracy conviction, he failed

to raise this argument on direct appeal and it is, accordingly,

waived. See Skretvedt, 372 F.3d at 203.

23