United States v. Lopez, Angel C.

In the

United States Court of Appeals

For the Seventh Circuit

No. 99-1724

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

ANGEL C. LOPEZ,

Defendant-Appellant.

Appeal from the United States District Court

for the Central District of Illinois.

No. 97 CR 20014--Michael M. Mihm, Judge.

Argued October 27, 1999--Decided August 17, 2000

Before FLAUM, Chief Judge, HARLINGTON WOOD, JR. and

EVANS, Circuit Judges.

HARLINGTON WOOD, JR., Circuit Judge. Angel Lopez

("Lopez") pleaded guilty to conspiracy to

embezzle and misapply credit union funds and

conspiracy to execute a scheme to defraud. Lopez

was sentenced to thirty-eight months in prison

and to pay restitution in the amount of

$1,029,867. Lopez challenges the sentencing

determination and the amount of restitution. We

affirm.

I. BACKGROUND

It is necessary to try to unravel the

convoluted and complicated transactions involved.

Credit Union One ("CU1") was a state-regulated

credit union incorporated under the laws of

Illinois, but also falling within the regulatory

authority of the National Credit Union

Administration ("NCUA"), which organizes and

approves federal credit unions. CU1 was federally

insured by the National Credit Union Share

Insurance Fund ("NCUSIF").

Lopez graduated from high school and began

working in the financial field in 1959. He was

hired by CU1 in 1976 as assistant general

manager. He was promoted to general manager in

1978. In 1979, his title was changed to

president. Less than a year later, Lopez became

a member of CU1’s board of directors. All board

members were required to sign an oath of

fiduciary duty to act in the best interests of

the credit union and to consider the interests of

the credit union before their own personal

interests. Board members were to receive no

compensation for their services, other than

reasonable and necessary reimbursement for

expenses incurred while on official credit union

business. The board of directors provided

oversight and direction for the operation of the

credit union, with the primary goal of offering

high savings rates. To offset the higher savings

rate, CU1 charged higher interest rates on loans.

Unfortunately, this left a large pool of tempting

cash.

Richard Binet ("Binet") was CU1’s chairman of

the board throughout Lopez’s employment. Binet

managed an investment portfolio of approximately

$82 million on a yearly average from 1986 to

early 1990. Lopez testified that he and Binet did

not sit down and form an elaborate plan on how

they would defraud CU1; it was basically an

arrangement where Lopez and others supported

Binet’s actions and were consequentially rewarded

by Binet. Lopez stated that anyone who objected

to Binet’s activity was quickly removed from the

board. During his tenure as president, Lopez

authorized at least $400,299 in direct and

indirect consulting fees to Binet, in addition to

authorizing CU1 purchases of two automobiles for

Binet at a total cost of $40,644.

Binet had CU1’s board contract with CUSI, Ltd.,

a corporation formed by Binet, which received

payments totaling approximately $17,000

authorized by Lopez. According to Binet, the

services CUSI was to provide were illusory and of

no value. Lopez was also an officer of CUSI.

After CUSI stopped receiving money for Binet, he

created Credit Union Management, Inc. to receive

CU1 money for his benefit.

Binet also had CU1 create a travel agency known as

CU1 Travel. Lopez was listed as the "owner" of CU1

Travel and his wife as manager. Following an audit

by Deloitte & Touche in 1989, travel agency losses

of $141,231 were listed for 1988 and subsidiary

losses of $25,539 for 1989.

Binet, after complaining to the board about the

marketing efforts being made on CU1’s behalf,

proposed that Hana Advertising Associates, Inc.

be given the marketing contract for CU1. The

board agreed. During interviews with the FBI,

after making a proffer (use immunity) agreement,

Lopez stated that he knew Binet owned numerous

companies, but that he (Lopez) was not involved

in any of the companies. Although Lopez stated

that "he had no involvement with a company called

. . . Hanah [sic]," Hana Advertising was

incorporated under the laws of Illinois with

Binet listed as president and Lopez as a

director. Without the board’s knowledge or

approval, Lopez ordered checks totaling

approximately $230,000 to be issued to Hana

Advertising from 1986 to 1987./1 Lopez stated

that he signed the contract and approved the

checks to Binet because "that [wa]s the way Binet

wanted it," and that Lopez’s relationship with

the board was basically, "You scratch my back,

I’ll scratch yours." Lopez stated that if Binet

left, Lopez knew his lucrative compensation

package/2 would be "seriously reduced."

Lopez also stated that he knew Binet owned or

controlled a company called Innovo, but did not

admit to any involvement with that company

either. However, Lopez later admitted to owning

a substantial amount of stock in Innovo Group

Inc., which was owned by Binet. Innovo received

a contract from CU1 in order to expedite the

purchase of plastic bags. Lopez eventually sold

his shares in Innovo, making a net profit of

approximately $100,000. Lopez also facilitated a

CU1 loan of approximately $100,000 to Innovo,

which was never paid back.

Having worked without a contract since 1976,

and being concerned about a retirement plan, in

1984 Lopez had his lawyer prepare an employment

contract which included a provision allowing

Lopez to retire after ten years of employment. If

Lopez exercised the retirement option, the

contract required CU1 to hire Lopez for a period

of not less than ten years as a "special

consultant" at an annual salary equal to fifty

percent of his highest annual salary earned while

president of CU1. The contract was self-renewing

every five years and specified Lopez could not be

terminated for "negligent or inadvertent

omissions or violations of regulatory rules or

laws." The board never reviewed or discussed this

contract. Under Binet’s direction, the contract

was bought out in 1988 for $580,000, which the

government argued was approximately $300,000 more

than its true value.

Lopez also stated that dealing with Binet

became a necessity after Binet decided that CU1

should invest in collateralized mortgage

obligations ("CMOs")/3 and collateralized

mortgage obligation residuals ("CMORs")./4 Both

Lopez and Binet stated that Binet was the only

person at CU1 who had any knowledge of CMOs/CMORs

and that they and the board did not want to hire

an outside consultant who might recommend

needless transactions in order to increase

commissions. Lopez authorized payments to Binet

as an investment advisor in the amounts of

$78,000 for 1988 and $45,500 for 1989.

Although Lopez continually denied awareness of

or participation in a CMOR transaction with Binet

for personal profit, Binet stated that in

February 1988, he and Lopez used $8.8 million of

CU1 money to purchase a CMOR, with CU1 owning

eighty percent of the investment and Lopez and

Binet owning twenty percent. Binet stated the

CMOR was sold for a $1 million gain. He also

testified that he had destroyed a fax from Lopez

on June 6, 1988, which showed a portion of the

money being returned to CU1. Lopez received part

of his profits in the form of a "deferred

compensation" payment of $250,000 orchestrated by

Binet, and through the transfer of a universal

life program insurance policy for Lopez which

Binet had CU1 purchase in 1986. The policy, known

as a "key man" policy, insured that if Lopez

died, CU1 would own the cash flow from the

policy. According to Binet, he had the ownership

of the policy changed from CU1 to Lopez and Lopez

was able to redeem the policy for a cash value of

$265,000.

In February 1989, Lopez received notice that

NCUA was going to conduct a review of CU1 in

connection with CU1’s status as an insured of the

NCUSIF. NCUA has mandatory regulations concerning

the buying and selling of CMOs and CMORs. As one

of NCUSIF’s insureds, CU1 had agreed to follow

the NCUA regulations. After the review, NCUA

notified Lopez of numerous concerns regarding the

fact that CU1 had nearly fifty percent of its

assets invested in CMOs/CMORs. CU1 agreed to sell

fifty percent of the CMO/CMOR investments by

December 31, 1989, and agreed to dispose of the

remaining fifty percent by the following year.

However, Binet and Lopez decided to seek private

insurance in order to distance CU1 from NCUA

examinations and federal regulations. Presented

as a money-saving step, the board voted to

terminate its share insurance with NCUA and

sought private share insurance coverage with the

National Deposit Insurance Corporation (now known

as "ASI"). On February 11, 1990, the insurance

conversion became effective and CU1 was relieved

of its obligation to comply with NCUA’s

requirements.

During a joint examination of CU1 by ASI and

the Illinois Department of Financial Institutions

("DFI") in February 1991, it was noted that CU1

was not acting on divesting the CMOs/CMORs. As a

result, CU1 entered into a Letter of

Understanding and Agreement with the DFI and ASI

promising to engage a portfolio manager to assist

in the pricing and sales of all the CMOs/CMORs

and immediately cease payment of all compensation

to the board of directors. Lopez admitted he

provided false information to the DFI regulators

about the CMOs/CMORs.

Lopez was removed as president and as a

director of CU1 in 1992 following an

investigation by the DFI. On February 14, 1997,

Lopez signed a proffer agreement which granted

him use immunity for any information he provided

which was relevant to the criminal activity

engaged in while at CU1. Lopez was interviewed by

government agents for three days and also

assisted the government in locating and arresting

Binet. On December 29, 1997, Lopez signed a plea

agreement and on January 5, 1998, reviewed the

plea agreement before the district court and

pleaded guilty to conspiracy to embezzle and

misapply funds belonging to CU1 and conspiracy to

execute a scheme to defraud.

The court’s sentencing calculations for fraud

began with a base offense level of 6 under sec.

2F1.1(a) of the 1989 United States Sentencing

Guidelines ("U.S.S.G." or the "Guidelines"),/5

with an 11 level increase incurred for a loss of

$1,051,043./6 U.S.S.G. sec. 2F1.1(b)(L).

Additional increases were applied as follows: 2

levels for more than minimal planning, U.S.S.G.

sec. 2F1.1(b)(2)(A); 2 levels for abuse of a

position of public or private trust and use of

his position which "significantly facilitated the

commission or concealment of the offense", sec.

3B1.3; and 2 levels for obstruction of justice

when testifying untruthfully before the grand

jury about the CMOR, sec. 3C1.1 comment. n.1(c).

These additions created an adjusted offense level

of 23. A 2 level downward adjustment for

acceptance of responsibility under sec. 3E1.1

comment. n.4, was also made, which resulted in a

total offense level of 21. With no prior criminal

history, Lopez’s Guideline range for sentencing

was thirty-seven to forty-six months. U.S.S.G.

sec. 5A. The district court sentenced Lopez to

thirty-eight months incarceration, and, under the

Mandatory Victim Restitution Act of 1996

("MVRA"), ordered restitution to CU1 in the

amount of $1,029,867./7

Lopez contends that the district court erred on

eight issues: (1) by violating the immunity

proffer to enhance Lopez’s sentence, (2) by

enhancing his sentence for obstruction of

justice, (3) by using gain to Binet as a

substitute for loss where there was no loss to

the victim, (4) by basing the estimated gain on

unreliable and contradictory evidence, (5) by

determining an arbitrary value for services

rendered by Binet, (6) by failing to reduce the

Guideline losses by the value of the cars

recovered by CU1, (7) by enhancing the loss

figure with bonuses paid to certain CU1

employees, and (8) by violating the Ex Post Facto

Clause in applying the MVRA.

II. ANALYSIS

A. Violation of Immunity Agreement

Lopez argues that the February 1997 proffer

agreement providing use immunity prohibited the

district court from using any information about

the personal CMOR transaction in Lopez’s

sentencing. The terms of the immunity agreement

provide:

[N]o statement made or information provided by

[Lopez] pursuant to this agreement may be used

directly against your client in any criminal

case, including sentencing . . . . [Lopez] will

provide complete and truthful information . . .

regarding his criminal conduct and everything he

knows or has reason to believe about the criminal

conduct of others. . . . Should [Lopez] knowingly

make any materially false statement or omission

in providing information under this agreement,

the government will be entitled to use his

statements and evidence he provides directly to

institute and support a criminal prosecution for

any offense as well as a prosecution for giving

false statements and perjury. . . . [Lopez] must

neither conceal or minimize his own actions or

involvement in any offense, nor conceal,

minimize, fabricate, or exaggerate anyone else’s

action or involvement in any offense. He must be

completely truthful about the facts whatever

those may be.

(Emphasis in original.)

After signing the proffer, Lopez testified

before government agents and the grand jury that

Binet supervised the CMO/CMOR investments for

CU1. He stated that when Binet approached him to

purchase a CMOR with CU1’s money for their own

profit, he refused to participate in such an

action and had no idea if Binet ever did so.

Binet later testified that he and Lopez made such

an investment, that Binet had had records of

Lopez’s participation which he had since

destroyed, and that Lopez personally benefitted

from the transaction. In addition, Lopez failed

to mention the fact that he had conspired to

alter the minutes of the board meetings, although

the minutes were discussed with the government

and Lopez knew the government was relying on the

minutes in its investigation.

"As a contract, a proffer agreement must be

enforced according to its terms." United States

v. Cobblah, 118 F.3d 549, 551 (7th Cir. 1997)

(citation omitted). As in Cobblah, the proffer

"contract" obligated Lopez to give statements

that were entirely truthful. See id. The proffer

emphasized that Lopez should not seek to conceal

or minimize his own actions in the offenses

involved and clearly stated that any false

statements or omissions could then be used

against him. Given the language of the proffer,

the government was within its rights to consider

the proffer agreement had been voided due to

Lopez’s omissions concerning the CMOR and the

alteration of the minutes. See id. We cannot say

the district court erred in its determination

that the government had established, by a

preponderance of the evidence, that Lopez did

know about the CMOR used for his and Binet’s

personal profit and that Lopez concealed the fact

that he and others changed the board minutes. See

id. Lopez violated the terms of the proffer,

making it unenforceable.

Furthermore, in his plea agreement, signed

December 29, 1997, ten months after the proffer,

Lopez admitted to the following:

On April 20, 1988, the defendant and Richard

Binet caused $8.8 million of CU1 funds to be used

to purchase a CMO residual with CU1 owning 80% of

the investment and the defendant and Binet owning

20% of said investment. Said use of CU1 funds was

never made known to the Board of Directors and

the defendant knew that individuals were not

entitled to own REMIC/8 investments. When said

investment was sold for a $1 million gain, the

defendant knew that the benefit was not provided

to CU1. The defendant himself did not take any of

these funds directly but benefitted from a

$250,000 cash payment under the heading of

Deferred Compensation Plan. Further, the

defendant benefitted when a life insurance policy

which had originally been purchased by CU1 as a

key-man policy, beneficiary of which was to be

CU1, was transferred to him personally.

Lopez also admitted in the plea agreement that he

conspired to alter the minutes of the board

meetings. The plea agreement also stated that the

government was requesting a 2 level enhancement

for obstruction of justice, based on Lopez’s

failure to fully disclose the CMOR transaction

and his failure to disclose alteration of the

minutes.

Lopez discussed the terms of the plea agreement

with the district court at the plea hearing.

Lopez stated that the plea agreement represented

"every understanding" he had with the government

and that he understood the terms of the plea

agreement. Lopez cannot invoke the proffer after

agreeing to the admissions and terms set forth in

the plea agreement.

B. Obstruction of Justice

The Guidelines provide for an increase of 2

levels if the offender obstructed justice during

the investigation or prosecution of his offense.

U.S.S.G. sec. 3C1.1./9 The plea agreement states

that "[p]ursuant to sec. 3C1.1, the defendant may

receive 2 points for obstructing or impeding the

administration of justice during the

investigation or prosecution of the instant

offense . . . ." More specifically, the plea

agreement notes that because Lopez admitted his

guilt after being confronted with evidence that

he caused the minutes to be altered, he would

fall into a sentencing category under sec. 3E1.1

comment. n.4, which allows for both an

obstruction of justice and an acceptance of

responsibility adjustment to be applied. Lopez

also admitted in the plea agreement to knowledge

of the CMOR transaction Binet engineered and to

receiving personal benefits from the profits of

that transaction.

"To establish an obstruction of justice, the

sentencing court must make an independent factual

finding that the defendant engaged in a willfull

attempt to provide false testimony." United

States v. Sinclair, 74 F.3d 753, 762 (7th Cir.

1996) (citing United States v. Dunnigan, 507 U.S.

87, 93-96 (1993)). This finding may be reversed

only if clearly erroneous. Id. (citation

omitted). Based on the evidence of Lopez and

Binet’s intertwined dealings, the substantial

amounts of money funneled to Lopez, and the

testimony of Binet about both the minutes and the

CMOR, the court determined that Lopez had

willfully withheld information about material

facts. The court stated, "I . . . believe there

were things you didn’t tell them that you were

aware of and should have told them and didn’t

until they were discovered somewhere else . . .

." Given these findings, we cannot say the

district court’s conclusion that Lopez’s

testimony was intentionally withheld, and not the

result of confusion, mistake, or faulty memory,

was clearly erroneous. See id. Moreover, because

the district court recognized this finding was a

factual determination based in large part on an

issue of credibility, such credibility

determinations "can virtually never be clear

error." United States v. Hickok, 77 F.3d 992,

1007 (7th Cir. 1996) (quoting Anderson v. Bessemer

City, 470 U.S. 564, 575 (1985)); see also United

States v. Fiore, 178 F.3d 917, 924 (7th Cir.

1999). We also note that the court’s enhancement

for obstruction of justice is not incompatible

with a reduction for acceptance of

responsibility. See United States v. Buckley, 192

F.3d 708, 711 (7th Cir. 1999); United States v.

Ramunno, 133 F.3d 476, 480 (7th Cir. 1998); United

States v. Lallemand, 989 F.2d 936, 938 (7th Cir.

1993).

C. Gain as Substitute for Loss

Lopez argues the district court erred in using

the estimated profit made on the CMOR transaction

by his co-conspirator Binet towards Lopez’s

sentence, even though the court determined that

there was no "actual loss" to CU1 because the

$8.8 million "borrowed" from CU1 was returned,

albeit with some (but not all) profit made on the

transaction. Lopez refers us to Application Note

8(b) to U.S.S.G. sec. 2F1.1 which, he asserts,

provides that a loss figure should be reduced "by

the amount the lending institution has recovered

or can expect to recover." There is no such

language in the 1989 Guidelines. This section

first appears in the 1991 Guidelines, sec. 2F1.1

comment. n.7(b), which deals specifically with

fraudulent loan application and contract

procurement cases, and pertains to a defendant

who understates debt information to obtain a

loan./10 There is no language in sec. 2F1.1 of

the 1989 Guidelines which requires the district

court to offset the amount of loss, although

comment. n.10 does allow for consideration that

a total dollar loss may overstate the seriousness

of a crime when "understating debts to a limited

degree in order to obtain a substantial loan

which the defendant genuinely expected to repay

. . . ." However, this language is not applicable

to the instant case, where Binet and Lopez did

not manufacture a "fraudulent loan" scheme but

simply took and used CU1’s money outright.

Under sec. 2F1.1 comment. n.8 of the 1989

Guidelines, "The offender’s gross gain from

committing the fraud is an alternative estimate

that ordinarily will understate the loss."

Section 2F1.1 "allow[s] the defendants’ gain to

be used as a basis for calculating an approximate

loss when evidence of the exact amount of loss is

not available." United States v. Andersen, 45

F.3d 217, 221 (7th Cir. 1995).

While the meaning of loss under sec. 2F1.1

presents a question of law subject to de novo

review, United States v. Holiusa, 13 F.3d 1043,

1045 (7th Cir. 1994), the district court’s finding

on the amount of loss is reviewed for clear error

only. United States v. Dillard, 43 F.3d 299, 309

(7th Cir. 1999).

Lopez argues that because the $8.8 million was

returned to CU1, there was no loss. He does not

deny the misapplication of funds for the CMOR

occurred. Lopez also maintains that because Binet

supervised and benefitted the most from the

transaction, he should not be held accountable

for Binet’s gain. Lopez admitted in his plea

agreement that he conspired with Binet to

embezzle, misapply, and defraud funds from CU1.

Section 1B1.3 comment. n.1, states:

In the case of criminal activity undertaken in

concert with others, whether or not charged as a

conspiracy, the conduct for which the defendant

"would be otherwise accountable" also includes

conduct of others in furtherance of the execution

of the jointly-undertaken criminal activity that

was reasonably foreseeable by the defendant.

Binet testified this particular CMOR transaction

was purportedly made on behalf of CU1, but that

twenty percent of the profit was to go to Lopez

and to him. He also testified that Lopez was

involved in helping to transfer and receive the

monies. The transfer of $8.8 million of CU1 funds

was documented by the government. Therefore, any

estimated profit which Binet made on the

investment was correctly determined to be a loss

to CU1. Binet’s profit from this particular

transaction would not have been realized without

his illegal use of CU1’s funds. See United States

v. Marvin, 28 F.3d 663, 665 (7th Cir. 1994). The

profits were "intertwined with and an ingredient

of [defendant]’s overall fraudulent scheme." See

id. Additional punishment is merited where

sufficient evidence provides for determination of

monetary loss. See United States v. Schneider,

930 F.2d 555, 559 (7th Cir. 1991).

The district court did not clearly err, based

on Binet’s statements that Lopez was involved in

this particular CMOR transaction, and Binet’s

testimony, along with Lopez’s testimony and

evidence in the record concerning benefits

received by Lopez, in determining that the

estimated profit from the CMOR transaction should

be applied as a factor in Lopez’s sentencing.

D. Estimated Gain Based on Unreliable Evidence

"Generally, the defendant’s gain may provide a

reasonable approximation of a victim’s loss, and

may be used when more precise means of measuring

loss are unavailable." Andersen, 45 F.3d at 221.

The amount of loss sustained by a victim must be

established by a preponderance of the evidence.

18 U.S.C. sec. 3664(d). In determining a sentence

under the Guidelines, the court has an

"obligation to employ fair procedures to

determine the accuracy of information used in

sentencing." United States v. Franz, 886 F.2d

973, 980 (7th Cir. 1989); see also United States

v. Agyemang, 876 F.2d 1264, 1270 (7th Cir. 1989).

"[T]he court properly discharge[s] its obligation

under sec. 2F1.1 of the Sentencing Guidelines by

reducing the available information to a

’reasonable estimate’ of the loss." United States

v. Haddon, 927 F.2d 942, 952 (7th Cir. 1991);

U.S.S.G. sec. 2F1.1 comment. n.8. "Every factual

inaccuracy does not amount to a constitutional

violation." Franz, 886 F.2d at 980 (citations

omitted). The burden of proof on appealing a

district court’s loss calculation requires the

defendant to show that the determination "was not

only inaccurate but outside the realm of

permissible computations." United States v.

Hassan, 211 F.3d 380, 383 (7th Cir. 2000) (quoting

United States v. Jackson, 25 F.3d 327, 330 (6th

Cir. 1994)).

Based on calculations from incomplete

documentation concerning the CMOR

transaction,/11 Binet stated that he believed

he, through his company, Credit Union Mortgage,

had received $1,360,000. He said, "I don’t know

the exact amount, but it was at least a million."

He also stated that he was certain that he had

received $800,000 because he used that amount to

fund Innovo, his company in Texas. Lopez argues

that because Innovo’s annual report listed a

"debt" balance of $413,754 during the relevant

period when Binet was siphoning off his profits

from the CMOR, that is the amount that should be

considered Binet’s profit. Binet also testified

that he recalled approximately $600,000 had been

funneled into Innovo by the time it went public.

Although the district court noted that Binet "had

a lot of things going on at that same time . . .

that he was the man in terms of all of this

movement of money from one place to another, and

I’m not sure that it’s totally clear in his mind

what he did," the court believed Binet had "made

an effort to be truthful in his testimony."

To the extent that the district court’s

findings rest on credibility determinations, they

command even greater deference than ordinary

factual findings. Fed.R.Civ.P. 52(a); see Johnson

v. Zerbst, 327 U.S. 106, 111-12 (1946). This

court may not re-judge credibility and may

reverse only if, after reviewing the record, we

are left with the firm belief that the district

court made a mistake. Zeige Distributing Co.,

Inc. v. All Kitchens, Inc., 63 F.3d 609, 612 (7th

Cir. 1995) (citation omitted). "Congress has

mandated this deferential standard of review, see

18 U.S.C. sec. 3742(e), and we do not second-

guess the sentencing judge." United States v.

McEntire, 153 F.3d 424, 431 (7th Cir. 1998)

(citations omitted).

The district court calculated the estimated

profit at $600,000. This amount was arrived at

after hearing Binet testify at an alleged co-

conspirator’s trial, in addition to three

separate sentencing hearings. The court reviewed

all of the available documentation concerning the

CMOR during the three sentencing hearings and

asked questions of both parties in seeking to

reconcile the documentation with the testimony.

The record indicates the district court’s

inquiries were sufficiently searching to ensure

the probable accuracy of the available evidence.

See United States v. Beler, 20 F.3d 1428, 1443

(7th Cir. 1994). The district court judge stated

repeatedly that "Mr. Binet has been credible in

his testimony." Although the district court

stated there was sufficient evidence to support

a finding of $800,000 or more, the court reduced

the amount of loss to $600,000, given the

"grossly incomplete" records of the CMOR

transaction. The court noted the $413,754 loan

amount but, from the documents and testimony,

believed the profit on the $8.8 million CMOR to

be more than that.

We are satisfied the district court "correctly

applied the guidelines to findings of fact that

do not leave us with the definite and firm

conviction that a mistake has been committed."

United States v. Jordan, 890 F.2d 968, 972 (7th

Cir. 1989). Based on the evidence available, the

district court did not clearly err in determining

the estimated profit loss to CU1 was $600,000 on

a CMOR transaction involving $8.8 million and in

applying that amount to Lopez’s sentence.

E. Arbitrary Determination of Binet’s Services

Binet received $399,500 during the four years

he managed CU1’s investment portfolio. Lopez

argues the entire amount should be deducted from

CU1’s losses because the portfolio earned money

during every year in question and Binet was worth

that much in managing a portfolio of

approximately $82 million on average. Of course,

this amount was "paid" to Binet through Lopez’s

manipulations and without the board’s knowledge.

The government proposed an offset based on the

annualized investment fees for 1988 and 1989,

$27,833.60 and $17,858.01 respectively, but

divided the figures in half to take into account

the amount of time Binet spent "working" at CU1

for personal gain. The defendants proposed fees

based on percentage points of the total of net

investments for each year, resulting in

calculations of approximately $300,000 for 1988,

$353,000 for 1989, and $428,000 for 1990.

The district court followed Schneider in

determining that there should be a certain offset

where the defendant provides a service. See 930

F.2d at 558./12 However, as the government

noted, when the NCUA, DFI, and ASI came in, they

all agreed that CU1 was not being managed well

and was involved in numerous questionable

investments, in addition to the embezzlement and

fraud later discovered. After hearing Binet’s

testimony, the district court noted the

difficulty in quantifying an amount for Binet’s

services to CU1 in the absence of any records

because Binet had so many "projects" going on, it

was difficult to separate the time spent on

legitimate CU1 investment business.

Binet was not a certified or licensed

investment broker or manager nor was he

registered with the SEC. The board was never

given the opportunity to determine what they

might wish to pay him or someone else. The court

was concerned that Binet was not licensed as an

investment manager and that he involved CU1 funds

in higher risk investments, both factors which

lowered the value of the services rendered.

The district court’s determination of loss under

sec. 2F1.1 (b)(1) of the Guidelines is a finding

of fact reviewable for clear error only. United

States v. Strozier, 981 F.2d 281, 283 (7th Cir.

1992). The district court noted that testimony

indicated most credit unions do not have salaried

investment managers, as was the case with CU1.

The court then determined the offset to be one-

fifth of the $399,500 (the amount Binet had

chosen to "pay" himself); that is, $79,900 for

the four-year period. Because there are no

precise figures, as in Schneider, where the

difference between the contract price and the

contractor’s costs was used as the measure of

damages rather than the full contract price, 930

F.2d at 558, the district court, after hearing

methods of calculations from both parties,

determined the amount based on a percentage of

Binet’s self-remuneration.

We agree that Binet’s services should not be

calculated on a par with a licensed professional

who does not commit embezzlement or fraud with a

client’s money. Given the annualized investment

fees of $27,833.60 for 1988 and $17,858.01 for

1989, the district court’s fee of $19,975 per

year is a "reasonable estimate," Haddon, 927 F.2d

at 952, and is not "outside the realm of

permissible computations." Hassan, 211 F.3d at

383 (citation omitted).

F. Failure to Reduce Loss by Value of Cars

Lopez makes the same argument here he used in

opposing Binet’s gain as a measure of loss, again

referring us to "Application Note 8(b) to

U.S.S.G. sec. 2F1.1" which is not found in the

1989 Guidelines. We repeat, that note is not

applicable to the instant case.

The court stated that the loss amount for

sentencing was determined by the original capital

outlay for the two cars because the defendants

had no right to purchase the vehicles with CU1

funds. There is no dispute that the original

expenditures for the two cars were $20,767 and

$19,877. Lopez argues that the trade-in and/or

resale value of each car should be deducted from

the loss amount. The district court did deduct

the trade-in/resale values from the restitution

amount, but stated that "the loss was determined

by the amount of [CU1] money that was expended to

purchase these items or lease them . . . ." The

district court did not clearly err in using the

purchase price of the cars for sentencing

purposes.

G. Employee Bonuses

Binet testified that in February 1990 a payment

of $13,852 was made to Charles Wiseman, an

employee of CU1. Both Binet and Lopez testified

that Wiseman and several other employees assisted

in the cover-up of irregularities at CU1 prior to

obtaining private insurance. Lopez testified that

these bonuses were approved by the board.

Although Lopez stated that most or all employees

received annual bonuses, the bonuses for these

particular employees (and only these employees)

were issued on February 28, 1990. The insurance

conversion became effective on February 11, 1990.

The government maintains the timing of the

bonuses to these particular employees indicates

the payments were payoffs for assisting with the

fraud.

Minutes of the board meetings from December

1986, December 1987, and December 1989 state that

employee year-end bonuses were authorized at

those times. The district court found that the

people involved and the timing indicated the

payments were directly related to the change in

insurance. We cannot say the district court

committed clear error in making this

determination.

H. Restitution Ex Post Facto Claim

Lopez argues that ordering restitution under the

MVRA, 18 U.S.C. sec. 3663A,/13 which requires

restitution be ordered "without consideration of

the economic circumstances of the defendant," 18

U.S.C. sec. 3664(f)(1)(A), violates the Ex Post

Facto Clause of the Constitution, Art. I, sec. 9,

cl. 3. He asks us to overrule our holding in

United States v. Newman, 145 F.3d 531, 537 (7th

Cir. 1998) (finding that the MVRA applies to

cases in which a defendant is convicted on or

after April 24, 1996, the date of the enactment

of the MVRA, even though the criminal conduct may

have occurred prior to April 24, 1996).

Congress amended the Victim and Witness

Protection Act ("VWPA") in 1996 in an effort to

guarantee restitution to the victims of criminal

conduct. See Newman, 145 F.3d at 537. The Ex Post

Facto Clause prohibits the enactment of a "law

that changes the punishment, and inflicts a

greater punishment, than the law annexed to the

crime, when committed." Calder v. Bull, 3 U.S.

386, 390 (1798). In Newman, we held that

restitution does not qualify as criminal

punishment. 145 F.3d at 538; see also United

States v. Black, 125 F.3d 454, 467 (7th Cir.

1997). We observed in Newman that other courts

disagree with this finding and the Eighth

Circuit, in particular, does not agree with our

characterization of restitution under the VWPA.

Id. at 539.

Lopez notes the split in the circuits on this

issue and asks us to adopt the argument of the

Tenth Circuit in United States v. Nichols, 169

F.3d 1255 (10th Cir. 1999). His argument is

misplaced, as Nichols states, "[W]e accept the

view of the Seventh Circuit [in Newman] that the

Ex Post Facto Clause does not bar application of

the MVRA to a defendant whose criminal conduct

occurred before the effective date of the statute

and reject the views of the Second, Third,

Eighth, Ninth, Eleventh and D.C. circuits to the

contrary." 169 F.3d at 1280 n.9.

We decline to reconsider the holding in Newman.

III. CONCLUSION

Based on the above-stated reasons, we affirm

the findings of the district court.

/1 Although several checks were issued in 1986, the

marketing contract was signed on May 16, 1987 and

terminated in December 1987. According to Lopez’s

testimony, Binet instructed Lopez to use the name

Hana Advertising on the 1986 checks for Binet’s

"work performed," even though Binet had not yet

created the contract using Hana Advertising’s

name. However, Lopez testified that the checks

had actually been written to Binet, but the IRS

1099 forms were issued in the name of Hana

Advertising.

/2 Lopez’s W2 form for 1989 listed $182,727 as his

annual salary.

/3 According to Barron’s Business Guide Dictionary of Banking

Terms 127-28 (Thomas P. Fitch et al. eds., 1990),

a CMO is a:

mortgage-backed bond secured by the cash flow of

a pool of mortgages. In a CMO, the regular

principal and interest payments made by borrowers

are separated into different payment streams,

creating several bonds that repay invested

capital at different rates. . . . A CMO pays the

bondholder on a schedule that differs from the

mortgage pool as a whole, and includes fast pay,

medium pay, and slow pay bonds to suit the needs

of different investors. The common arrangements

include: a fast-pay bond with a maturity much

shorter than the total pool; a bond paying

interest only for a period that may be fixed or

contingent on how prior CMOs perform, before

payment of principal begins; and a bond paying

variable interest based on an index . . . . Fast

paying bonds appeal mostly to savings and loans

seeking short-term liquidity investments, whereas

longer-term CMOs appeal to the investment needs

of pension funds and institutional investors. .

. .

/4 Barron’s Business Guide Dictionary of Banking Terms 524,

states that a CMO residual is:

cash flow resulting from the difference between

the income stream generated by a pool of

mortgages and the cash flow necessary to fund a

series of collateralized mortgage obligation

bonds. Also known as equity.

/5 The record states that the 1989 edition of the

Guidelines has been used to compute sentencing

for the crimes, which were committed from July

1984 through February 1990.

/6 The figure was derived from: profit from contract

buyout-$37,000; CMOR-$600,000; overpayment to

Binet through CUSI-$17,000; overpayment to Binet

through Hana Advertising-$230,799; direct

payments to Binet-$78,000 and $45,500; bonuses

paid to CU1 employees-$36,000; and purchase of

cars for Binet-$40,644, totaling $1,130,943, less

an offset for the value of Binet’s services

rendered to CU1 as determined by the district

court to be $79,900, resulting in a final total

of $1,051,043.

/7 This amount was derived from the $1,051,043

total, less an offset of $21,176 for the trade-in

and resale value of the two cars purchased for

Binet.

/8 A real estate mortgage investment conduit

("REMIC") is a "mortgage securities vehicle

authorized by the Tax Reform Act of 1986 that

holds commercial and residential mortgages in

trust, and issues securities representing an

undivided interest in these mortgages. . . .

similar to a collateralized mortgage obligation

(CMO) . . . ." Barron’s Business Guide Dictionary of Banking

Terms 497. Most of the parties involved in the

case did not understand the exact nature of each

of the investments involved and tended to use

CMO, CMOR, and REMIC interchangeably.

/9 U.S.S.G. sec. 3C1.1 (1989) states, "If the

defendant willfully impeded or obstructed, or

attempted to impede or obstruct the

administration of justice during the

investigation or prosecution of the instant

offense, increase the offense level by 2 levels."

/10 This language appears in sec. 2F1.1 comment.

n.8(b), of the most current Guidelines (1998).

/11 Neither party was able to obtain complete records

from the banks involved, in part due to the lapse

of time between the transaction dates in 1987-88

and the filing of the indictment in March 1997.

Also, according to Binet, most of the CU1

documents on this particular CMOR transaction

were diverted to him and were later destroyed. In

addition, information about this transaction did

not come to light until after Binet’s arrest in

1997.

/12 We note that Schneider limits this "offset"

calculation of loss to fraud cases "where the

fraud is discovered or otherwise interrupted

before the victim has been fleeced." 930 F.2d at

558. The fraud in the instant case was not

interrupted or discovered prior to completion of

the criminal activity. However, the government

does not argue that Binet should not receive an

offset for his services; there is no challenge to

the offset itself, only to the amount.

/13 Lopez mistakenly refers to the MVRA as 18 U.S.C.

sec. 4663A et seq.