United States v. Evans

Opinions of the United

1998 Decisions States Court of Appeals

for the Third Circuit

9-3-1998

United States v. Evans

Precedential or Non-Precedential:

Docket 97-3445

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Filed September 3, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 97-3445

UNITED STATES OF AMERICA,

v.

CURTIS EVANS

Appellant

On Appeal From the United States District Court

For the Western District of Pennsylvania

(D.C. Crim. No. 96-cr-0167-5)

Argued June 12, 1998

Before: BECKER, Chief Judge, WEIS, Circuit Judge,

and DOWD, District Judge.*

(Filed September 3, 1998)

SHELLEY STARK, ESQUIRE

Federal Public Defender

KAREN S. GERLACH, ESQUIRE

(ARGUED)

Assistant Federal Public Defender

415 Convention Tower

960 Penn Avenue

Pittsburgh, Pennsylvania 15222

Attorneys for Appellant, Curtis Evans

_________________________________________________________________

*Honorable David D. Dowd, Jr., United States District Judge for the

Northern District of Ohio, sitting by designation.

LINDA L. KELLY, ESQUIRE

United States Attorney

BONNIE R. SCHLUETER, ESQUIRE

(ARGUED)

Assistant United States Attorney

633 United States Post Office &

Courthouse

Pittsburgh, Pennsylvania 15219

Attorneys for Appellee United States

OPINION OF THE COURT

BECKER, Chief Judge.

Curtis Evans appeals from his conviction on various

fraud-related charges. The primary question presented,

which arises out of Evans' judgment of sentence, is whether

the district court erred in conditioning his supervised

release on reimbursement of the cost of court-appointed

counsel. See 18 U.S.C. S 3583(d). We conclude that it did,

and therefore vacate that portion of the judgment. We also

remand for further sentencing proceedings because of the

inadequacy of the district court's findings supporting its

determination of the amount of loss from fraudulent

conduct. See U.S.S.G. S 2F1.1(b)(1) (1997).1

I.

A federal grand jury returned a forty-six count indictment

against Evans and eleven other individuals. Evans was

_________________________________________________________________

1. Additionally, Evans submits that plain error was committed by the

seating of a juror who purportedly expressed an inability to be fair, and

the wasting of a peremptory challenge on another juror who also

purportedly expressed an inability to be fair. These contentions are

unfounded. Alternatively, Evans contends that trial counsel's failure to

move to strike either of these jurors constituted ineffective assistance

of

counsel. We will not address this claim on direct appeal. See United

States v. Cocivera, 104 F.3d 566, 570 (3d Cir. 1996) (recognizing that

claims of ineffective assistance of counsel are"ordinarily more

appropriate for collateral attack").

2

convicted by a jury of nineteen counts of mail fraud in

violation of 18 U.S.C. S 1341; two counts of use of a

fictitious name to commit mail fraud in violation of 18

U.S.C. S 1342; three counts of wire fraud in violation of 18

U.S.C. S 1343; and one count of conspiracy in violation of

18 U.S.C. S 371. The fraud inhered in a scheme of staging

automobile accidents and then submitting insurance claims

for non-existent medical treatment. The scheme, which

operated in New York, Pennsylvania, and New Jersey, was

masterminded by Alexander Grichener, but Evans played

an apparently significant role in its Pittsburgh,

Pennsylvania operations, particularly those involving the

Keystone Medical clinic. Evans was sentenced to forty-two

(42) months imprisonment and three (3) years supervised

release for each count, to run concurrently; a $1250 special

assessment; and payment of $2500 in restitution. The

supervised release was conditioned upon the

reimbursement of the costs of Evans' court-appointed

counsel, in a monthly amount of not less than ten percent

of his gross monthly income.

During the trial it was revealed that Evans' financial

affidavit, submitted as part of his application for court-

appointed counsel, inaccurately represented Evans' and his

wife's annual joint income as $48,000, when their actual

joint income was $104,000. Evans testified that the court

clerk filling out the affidavit had asked about joint take-

home pay ($48,000), not gross pay ($104,000). At the

sentencing hearing the court found that Evans had made

"material misstatements" in his affidavit, and ordered

Evans to repay the cost of his attorney as a condition of

supervised release. Upon further questioning by Evans'

counsel, the court explained that the condition was

imposed because Evans "had enough income that he was

not entitled to a Public Defender," and that the condition

was not punishment for the misrepresentation.

The presentence investigation report stated that the

amount of loss incurred by the insurance companies was

$2,851,872.42, and thus exceeded $2.5 million for

sentencing guideline purposes. A government agent testified

at the sentencing hearing that he had calculated the

amount of loss based on insurance company

3

reimbursement checks deposited to the bank accounts of

the eleven medical clinics and supply companies involved in

the scheme. On cross-examination, the agent indicated that

he did not know whether every deposit was associated with

a staged accident. The district court then found"from the

preponderance of the evidence [at the sentencing hearing]

and the trial . . . that the amount of loss as a result of the

conspiracy for which defendant knowingly took part and

was expected and foreseeable exceed[ed] 2.5 million

dollars." Accordingly, Evans' base offense level of six was

increased thirteen levels pursuant to U.S.S.G. S 2F1.1(b)(1).2

Evans filed this timely appeal.3

II.

Evans contends that the conditioning of his supervised

release on the reimbursement of counsel fees is violative of

the supervised release statute, 18 U.S.C. S 3583. This

contention was not raised in the district court, and thus we

review it under the familiar plain error standard set forth

infra in Part II.D. For the reasons that follow, we find that

the district court committed plain error requiring the

exercise of our discretion to vacate the judgment.

The supervised release statute is not open-textured. An

order may be a condition of supervised release only to the

extent that it:

(1) is reasonably related to the factors set forth in

S 3553(a)(1), (a)(2)(B), (a)(2)(C), and (a)(2)(D);

(2) involves no greater deprivation of liberty than is

reasonably necessary for the purposes set forth in

S 3553(a)(2)(B), (a)(2)(C), and (a)(2)(D); and

(3) is consistent with any pertinent policy statements

issued by the Sentencing Commission pursuant to

28 U.S.C. S 994(a).

_________________________________________________________________

2. Evans' offense level was further increased two levels, pursuant to

U.S.S.G. S 2F1.1(b)(2), to a final level of twenty-one because the scheme

involved multiple victims.

3. The district court had jurisdiction pursuant to 18 U.S.C. S 3231. We

exercise appellate jurisdiction under 28 U.S.C.S 1291.

4

18 U.S.C. S 3583(d). Section 3553(a), referenced in

paragraphs (1) and (2) above, provides for consideration of:

(1) the nature and circumstances of the offense and

the history and characteristics of the defendant;

[and]

(2) the need for the sentence imposed --

. . .

(B) to afford adequate deterrence to criminal

conduct;

(C) to protect the public from further crimes of t he

defendant; and

(D) to provide the defendant with needed education al

or vocational training, medical care, or other

correctional treatment in the most effective manner.

The question before us is whether a reimbursement order

authorized by the Criminal Justice Act ("CJA"), 18 U.S.C.

S 3006A, which permits a court to order repayment of fees

for appointed counsel whenever it finds that funds are

available,4 satisfies the requirements of the supervised

release statute. This is a question of first impression for us.

The only other court of appeals to have addressed this

issue in a published opinion was the Ninth Circuit in

United States v. Eyler, 67 F.3d 1386 (9th Cir. 1995). The

Eyler court concluded that a condition requiring

reimbursement of attorney fees violated the supervised

release statute because it was not related to the defendant's

underlying criminal conduct of unlawful possession of

firearms and "simply bears no relationship" to the pertinent

statutory goals. See 67 F.3d at 1394; see also United States

v. Lorenzini, 71 F.3d 1489, 1492-93 (9th Cir. 1995) (relying

_________________________________________________________________

4. Section 3006A(f) provides in part:

Whenever . . . the court finds that funds are available for payment

from or on behalf of a person furnished representation, it may

authorize or direct that such funds be paid to the appointed

attorney, to the bar association or legal aid agency or community

defender organization which provided the appointed attorney, . . .

or

to the court for deposit in the Treasury as a reimbursement to the

appropriation. . . .

5

on Eyler to conclude without discussion that

reimbursement of counsel fees is not related to offense of

bank fraud). Evans contends that his reimbursement

condition violates the first prong of the supervised release

statute because it is not "reasonably related" to the nature

and circumstances of his insurance fraud or to his history

and characteristics, and does not further the statutory

goals of deterrence, protection, and rehabilitation. See 18

U.S.C. S 3583(d)(1); 18 U.S.C. S 3553(a)(1), (a)(2)(B)-(D).

A.

As to the factors identified in S 3553(a)(1), we considered

a cognate question in United States v. Spiropoulos, 976 F.3d

155, 165 (3d Cir. 1992), where we held that "[r]ecouping

the costs of imprisonment has nothing to do with the

nature or the seriousness of the offense, and hence is not

authorized under S 3553(a)(1)." In the same vein,

reimbursement of counsel fees is not related in any tangible

way to insurance fraud. Furthermore, the reason for

imposing the condition -- Evans' financial ability to obtain

a private attorney -- is not a relevant "nature and

circumstance" of insurance fraud nor, in our view, is it a

"history and characteristic" of Evans himself. Even if Evans

had the finances to afford an attorney because of profits

attained from the fraudulent insurance scheme in which he

was involved, we do not believe that the profitable nature of

an offense alone is sufficient to establish a reasonable

relationship between a reimbursement condition of

supervised release and the offense of the defendant.

Otherwise, any financially profitable crime, such as robbery

or drug dealing, would necessarily be related to the

repayment of counsel fees (or any other financial condition)

merely because of the likely financial gain from the crime

and regardless of the specific "nature and circumstances" of

the offense, resulting in a defendant's "ability to pay"

overriding all other relevant considerations.

The government submits that Evans' material

misstatements on his financial affidavit, which qualified

him for appointment of counsel, are directly related to his

filing of fraudulent insurance claims because they represent

a continuation of the same criminal conduct. It is possible

6

that without the misstatements Evans may not have been

eligible for court-appointed counsel, 18 U.S.C.S 3006A(b),

or would have otherwise been subject to a reimbursement

order, see discussion infra. Furthermore, making

misstatements on an affidavit is similar in nature and

character to making fraudulent insurance claims in that

both acts involve deception and lying. However, as we have

explained, the district court made it quite clear that the

reimbursement condition was not imposed because of

Evans' misstatements, but rather because of hisfinancial

ability.

Moreover, even if the district court had imposed the

reimbursement condition because of Evans' misstatements,

the condition is nonetheless not reasonably related to the

statutory goals of S 3553(a)(2)(B)-(D). As in Spiropoulos,

where we found no "reason to believe" that assessing the

costs of imprisonment acts as a deterrent, protects the

public, or rehabilitates the defendant, see 976 F.2d at 165-

66, the government has presented no evidence (nor made

any argument) that the reimbursement condition would

serve any of these purposes. We conclude that requiring the

repayment of counsel fees incurred in defending a

prosecution would not likely deter crime, protect the public,

or serve any rehabilitative function. See 18 U.S.C.

S 3553(a)(2)(B)-(D); Eyler, 67 F.3d at 1394. But cf. United

States v. Turner, 998 F.2d 534, 536-37 (7th Cir. 1993)

(concluding that assessment of imprisonment costs deters

criminal conduct).

B.

The government also relies on cases under the old

Federal Probation Act, 18 U.S.C. S 3651 (repealed 1984),5 in

which courts upheld the imposition of repayment of

_________________________________________________________________

5. Section 3651 provided in part:

[W]hen satisfied that the ends of justice and the best interest of

the

public as well as the defendant will be served thereby, [the court]

may suspend the imposition or execution of sentence and place the

defendant on probation for such period and upon such terms and

conditions as the court deems best.

7

attorney fees as a condition of probation, for its contention

that the reimbursement condition satisfies the supervised

release statute. The cases are inapposite becauseS 3651 is

materially different from the supervised release statute. The

language of S 3651 was "broad and inclusive" and provided

the sentencing court with an "exceptional degree of

flexibility." United States v. Gurtunca, 836 F.2d 283, 288

(7th Cir. 1987) (quoting United States v. Missouri Valley

Constr. Co., 741 F.2d 1542, 1552 (8th Cir. 1984) (Gibson,

John R., J., concurring and dissenting), and United States

v. Alexander, 743 F.2d 472, 479 (7th Cir. 1984)). See also

United States v. Beros, 833 F.2d 455, 467 (3d Cir. 1987)

(recognizing that S 3651 grants broad discretion to district

courts). The only limitation on this power was the court-

developed "reasonable relationship to the treatment of the

accused and the protection of the public." United States v.

Santarpio, 560 F.2d 448, 455 (1st Cir. 1977) (quoting

United States v. Alarik, 439 F.2d 1349, 1351 (8th Cir.

1971)).

In contrast, the supervised release statute is limited by

the statutory requirements of S 3553(a)(1) and (a)(2)(B)-(D),

see 18 U.S.C. S 3583(d), and thus the imposition of

conditions on supervised release must satisfy a more

exacting standard. To the extent that the broad language of

S 3651 may have been constrained by the same factors

identified in S 3553(a)(2)(B)-(D), see Beros, 833 F.2d at 467

(interpreting S 3651 as granting discretion to impose

conditions reasonably related to rehabilitation of defendant

and protection of public), the supervised release statute is

nonetheless further restricted by S 3553(a)(1). See supra

Part II.A. Consistent with these observations, we note

support for our position in the Guide to Judiciary Policies

and Procedures, promulgated by the Administrative Office of

the United States Courts, which states:

Subsection (f) of [the CJA] does not authorize a judicial

officer to require reimbursement as a condition of

probation, and the Judicial Conference believes that

reimbursement of the cost of representation under the

Act should not be made a condition of probation under

any other authority.

8

VII Guide to Judiciary Polices and Procedures: Appointment

and Payment of Counsel P 2.22E (1997). In the context of

the judiciary guidelines, we believe there is no difference

between probation and supervised release because

conditions of probation are now statutorily restricted in the

same manner as conditions of supervised release. Compare

18 U.S.C. S 3563(b) (probation statute) with 18 U.S.C.

S 3583(d) (supervised release statute).6

C.

For the foregoing reasons, the district court clearly

violated the first requirement of the supervised release

statute when it imposed a condition that had no reasonable

relationship to the factors identified in #8E8E # 3553(a)(1) and

(a)(2)(B)-(D). This, of course, is not to suggest that the

district court lacks power to order the reimbursement of the

cost of counsel fees, because the CJA provides for such an

order. District courts frequently impose such orders at the

time counsel is appointed, and can in fact do so at any

time. Furthermore, if a defendant fails to satisfy such an

order, the district court can seek enforcement by instituting

contempt proceedings, or by entering a judgment against

the defendant which will act as a lien against his property.

See Lorenzini, 71 F.3d at 1493. All we hold is that

reimbursement of counsel fees could not be effected in this

case by making it a condition of supervised release. 7

_________________________________________________________________

6. Although not at issue in this case, the imposition of conditions under

the current probation statute likely also necessitates a more restrictive

analysis than was required under the old statute. See 18 U.S.C.

S 3563(b) (requiring discretionary conditions to be reasonably related to

factors set forth in S 3553(a)(1), (2)); Lorenzini, 71 F.3d at 1493-94

(considering S 3553(a)(1) and (2) factors in rejecting reimbursement of

counsel fees as condition of probation).

7. Evans has also relied on United States v. Cottman, 142 F.3d 160 (3d

Cir. 1998), where we addressed the question whether the repayment of

"buy-money" to the FBI as a condition of supervised release was

authorized by the supervised release statute. We determined that the

condition was "restitution," and as such was governed by S 3563(b)(2)

permitting "restitution to the victim," but concluded that the definition

of

"victim" under S 3563(b) was parallel to the definition under the Victim

9

D.

We must still decide whether the district court's mistake

amounts to a plain error that warrants the exercise of our

discretion to correct. We believe that it does. As noted

above, we review for plain error. See Fed. R. Crim. P. 52( b);

United States v. Olano, 507 U.S. 725, 731-32 (1993). "There

must be an `error' that is `plain' and that`affect[s]

substantial rights.' " Olano, 507 U.S. at 732 (quoting United

States v. Young, 470 U.S. 1, 15 (1985) (in turn quoting

United States v. Atkinson, 297 U.S. 157, 160 (1936))). The

deviation from a legal rule is "error," and an error is "plain"

if it is "clear" or "obvious." Id . at 732-34. In most cases, an

error affects substantial rights if it is prejudicial, i.e.,

"affected the outcome of the district court proceedings." Id.

at 734. When such an error exists, "the Court of Appeals

has authority to order correction, but is not required to do

so." Id. at 735. We will exercise our discretion and vacate

the sentence if the plain error affecting substantial rights

also "seriously affect[s] the fairness, integrity, or public

reputation of judicial proceedings." United States v. Retos,

25 F.3d 1220, 1229 (3d Cir. 1994) (alteration in original)

(quoting Olano, 507 U.S. at 732).

First, the district court clearly violated the supervised

release statute, and thus committed error. See Olano, 507

U.S. at 732-34. The government argues that any purported

error was not plain because we had not yet addressed the

propriety of a reimbursement order as a condition of

supervised release, and because in United States v.

Chorney, 63 F.3d 78, 83 (1st Cir. 1995), the First Circuit

_________________________________________________________________

Witness Protection Act, which precluded the government as "victims." Id.

Accordingly, we held that the repayment condition was unlawful. Id.

Evans seeks aid from Cottman by arguing that since there is no

authorization for the reimbursement condition underS 3553, the only

possible authorization would be from S 3563(b), but that the only

possibly applicable S 3563(b) provision is paragraph (b)(2) permitting

"restitution to the victim," which Cottman held did not apply to the

government. The government responds that Cottman is inapplicable to

the case at bar because it involved restitution, whereas this case

involves

reimbursement. We agree with the government, and accordingly do not

rest our judgment on Cottman.

10

reviewed a similar reimbursement order for compliance with

the CJA, but did not address the restrictions of the

supervised release statute. These contentions are without

merit. Neither the absence of circuit precedent nor the lack

of consideration of the issue by another court prevents the

clearly erroneous application of statutory law from being

plain error.

This error affects substantial rights because, if Evans

fails to reimburse the cost of his attorney, he would be

subject to possible incarceration for all or part of the term

of supervised release. See 18 U.S.C. S 3583(e)(3); United

States v. Dozier, 119 F.3d 239, 244 (3d Cir. 1997) (error

affects substantial right to liberty when it extends period of

restriction on liberty and of governmental supervision).

Furthermore, imposing a sentence not authorized by law

seriously affects the fairness, integrity, and reputation of

the proceedings. Dozier, 119 F.3d at 244-45. Because the

plain error standard is met, we will exercise our discretion

and direct that the district court vacate the portion of the

sentence conditioning Evans' supervised release on the

repayment of counsel fees.8

_________________________________________________________________

8. The district court may, as we mentioned above, impose a

reimbursement order independent of supervised release if it "finds that

the person is financially able to obtain counsel or to make partial

payment for the representation" or "finds that funds are available for

payment from or on behalf of a person furnished representation." 18

U.S.C. S 3006A(c), (f). The focus is on the defendant's present ability to

pay for his representation. See 18 U.S.C.S 3006A(c) (referring to person

that "is" financially able to obtain counsel); 18 U.S.C. S 3006A(f)

(referring to funds that "are" available); United States v. Jimenez, 600

F.2d 1172, 1174 (5th Cir. 1979) (recognizing that statute is written in

present tense).

The burden is on the defendant to prove by a preponderance of the

evidence that he is financially unable to reimburse the cost of

representation. United States v. Lefkowitz, 125 F.3d 608, 621 (8th Cir.

1997), cert. denied, 118 S.Ct. 1527 (1998); United States v. Harris, 707

F.2d 653, 660 (2d Cir. 1983). Cf. United States v. Gravatt, 868 F.2d 585,

588 (3d Cir. 1989) (defendant has burden of establishing financial

eligibility for appointed counsel). However, this does not relieve the

district court of its responsibility to inquire into the defendant's

current

financial status, see United States v. Fraza , 106 F.3d 1050, 1056 (1st

11

III.

Evans also contends that the district court erred in

determining that the amount of loss from fraudulent

conduct, for purposes of S 2F1.1 of the sentencing

guidelines, exceeded $2.5 million. Evans presented this

objection in the district court. Therefore our review of the

district court's interpretation of "loss" under S 2F1.1 is

plenary, and our review of the district court's application of

the guidelines is governed by the clearly erroneous

standard. See United States v. Collado, 975 F.2d 985, 990

(3d Cir. 1992). Pursuant to S 2F1.1(b), the specific offense

characteristics provision for fraud-related crimes, a

defendant's base offense level is increased by thirteen levels

when the amount of loss resulting from the fraudulent

conduct exceeds $2.5 million. The "loss" is the "value of the

money, property, or services unlawfully taken." U.S.S.G.

S 2F1.1, application note 7. Although "the loss need not be

determined with precision," the court must make a

"reasonable estimate of the loss, given the available

information." U.S.S.G. S 2F1.1, application note 8.

A.

Evans first submits that the court improperly considered

funds obtained from legitimate insurance claims submitted

_________________________________________________________________

Cir. 1997) (remanding for hearing or findings as to defendant's financial

ability despite government's evidence of defendant's misrepresentations

on CJA application), taking into account the defendant's personal and

family needs and the liquidity of his finances, Museitef v. United States,

131 F.3d 714, 716 (8th Cir. 1997); United States v. Bracewell, 569 F.2d

1194, 1199 (2d Cir. 1978). See generally VII Guide to Judiciary Policies

and Procedures P 2.04.

The district court ordered the reimbursement of Evans' counsel fees

because it found that Evans had been ineligible for court-appointed

counsel at the time of his CJA application. Thisfinding focused on

Evans' prior ability to afford counsel, and therefore was inadequate to

support a reimbursement order. We do not condone Evans' deception,

intentional or otherwise, and his misstatements clearly raise doubts as

to his purported inability to afford counsel. Thus, if the district court

on

remand wishes to consider imposing a reimbursement order

(independent of the supervised release sentence), it should conduct an

appropriate inquiry into Evans' current financial ability to pay for all

or

part of his representation.

12

on behalf of legitimate accident victims. We addressed a

similar issue in United States v. Maurello, 76 F.3d 1304 (3d

Cir. 1996), where the defendant was convicted of mail fraud

in connection with the unauthorized practice of law. We

considered the question whether money paid for

satisfactory legal services performed by an unlicensed

attorney should be considered "loss" for purposes of

S 2F1.1. Id. at 1308. We opined that a proper measurement

of actual loss must take into account the "nature and

degree of the harm caused by the offense," and that the

degree of harm, in turn, depends on the quality of services

rendered. Id. at 1311-12 (quoting 28 U.S.C.S 994(c)(3)).

Accordingly, we wrote:

[t]o the extent that the unauthorized services provided

by [the] defendant have not harmed their recipients,

but to the contrary have benefitted them, we conclude

that [the] defendant's base offense level should not be

enhanced.

Id. at 1312.

Thus, the actual loss determination must be predicated

upon the harm caused by Evans' offenses. Evans was

convicted of fraud and conspiracy in connection with the

unauthorized and fraudulent submission of insurance

claims. To the extent that this activity harmed the

insurance companies, Evans' sentence should be

augmented. However, to the extent that any claims were

legitimate and insurance companies were properly obligated

to pay them, there was no harm and Evans' sentence

should not be augmented.

The government contends that Evans presented no

evidence of legitimate patients at the time of his

involvement in the scheme, and that to the extent there

were any legitimate accidents, the claims were inflated. The

burden, however, is on the government to prove by a

preponderance of the evidence the facts in support of a

sentence enhancement; the defendant does not have to

"prove the negative" to avoid the enhanced sentence. United

States v. McDowell, 888 F.2d 285, 291 (3d Cir. 1989).

Although the burden of production shifts to the defendant

once the government has made out a prima facie case, the

13

ultimate burden of persuasion rests with the government.

Fed. R. Crim. P. 32(c); United States v. Raven , 39 F.3d 428,

434-35 (3d Cir. 1994). Accordingly, the burden was on the

government to prove that bank deposits sufficient to

establish the basis for the loss calculation were for

illegitimate or inflated claims. Only when the government

had made such a prima facie showing was Evans required

to come forward with evidence tending to cast doubt on the

government's evidence. See Raven, 39 F.3d at 434-35.

The evidence of fraudulent claims was considerable, and

it may be that the government made a sufficient showing

that there were no legitimate claims, or that the fraudulent

claims alone exceeded $2.5 million.9 However, despite the

extensive record, the district court did not make any

findings on the record as to the basis for its conclusion that

the loss exceeded $2.5 million. The district court only made

a conclusory one sentence statement regarding its loss

determination. Although the district court's determination

need not be exact and can be based on the trial record as

well as the sentencing record, see Fed. R. Crim. P. 32(c), we

should not be asked to rummage through the entire record

without guidance from the district court as to the legal and

factual basis for its determination. In light of our remand

on the supervised release issue, we direct the district court

to make findings on the record as to the actual loss

incurred from fraudulent claims.10

B.

Evans also claims that since his activity was limited to a

single clinic, the losses from the other ten clinics were not

foreseeable and should not be attributed to him. The

district court, in making adjustments based on specific

_________________________________________________________________

9. The government contends that the $2,851,872.42 amount is a gross

underestimation of the actual amount of loss, and thus even if there

were legitimate claims included, the loss still exceeded $2.5 million.

10. We note that if the district court finds that the properly calculated

loss "does not fully capture the harmfulness and seriousness of the

conduct," the court may depart upwards from the normal sentencing

range. U.S.S.G. S 2F1.1, application note 10; United States v. Kopp, 951

F.2d 521, 536 (3d Cir. 1991).

14

offense characteristics, must take into account all conduct

relevant to the offense. See U.S.S.G. S 1B1.3(a). This

includes "all reasonably foreseeable acts and omissions of

others in furtherance of [a] jointly undertaken criminal

activity." U.S.S.G. S 1B1.3(a)(1)(B). In making the

accomplice attribution assessment, the court must consider

whether the loss resulting from the actions of co-

conspirators was (1) "in furtherance of the jointly

undertaken criminal activity," (2) within "the scope of the

criminal activity the . . . defendant agreed to jointly

undertake," and (3) "reasonably foreseeable in connection

with that criminal activity." U.S.S.G. S 1B1.3, application

note 2. In explaining the operation of S 1B1.3 in Collado, we

stated that "it is not enough to merely determine that the

defendant's criminal activity was substantial." 975 F.2d at

995. The sentencing court must conduct "a searching and

individualized inquiry into the circumstances surrounding

each defendant's involvement in the conspiracy" in order to

"ensure that the defendant's sentence accurately reflects

his or her role" and agreement. Id.

The district court concluded, without making any

references on the record to specific evidence, that the losses

caused by the eleven clinics were "a result of the conspiracy

. . . and foreseeable" to Evans. This finding is inadequate to

support the sentence because it appears to focus on the

scope of the conspiracy as a whole, rather than on the

scope of Evans' undertaking and involvement as required.

See id. at 991. The conspiracy, which involved eleven

medical clinics and supply companies owned and operated

by Alexander Grichener and Vladimir Shats, was quite

extensive. There is evidence that clearly indicates that

Evans was involved with Keystone Medical, and which also

suggests that Evans was involved with other clinics. 11 But,

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11. Evans acted on behalf of Keystone Medical in Pittsburgh by opening

a bank account and being the signatory on the account, leasing office

space, and representing the clinic at a zoning board hearing. Evans was

a participant in a staged accident in Solebury, Pennsylvania in May

1993, and submitted fraudulent claims for the accident to an insurance

company. He also purchased car insurance and recruited participants

for a November 1993 accident in Brooklyn, New York, and posed as a

claimant in a subsequent meeting with an insurance adjuster

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there is no indication that the district court made a

"searching and individualized inquiry" into the extent of

Evans' involvement, or the extent to which the co-

conspirators' conduct was in furtherance of and foreseeable

from Evans' undertaking. Consequently, on remand, the

district court should conduct further individualized fact

finding as to the accomplice conduct attributable to Evans.

IV.

For the foregoing reasons, we will vacate the judgment

and remand for further sentencing proceedings consistent

with this opinion.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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investigating the accident. Evans also received various payments during

the course of the conspiracy from clinics other than Keystone Medical,

and he met with Grichener on various occasions at a New York clinic.

However, while the indictment cited twenty staged accidents, there does

not appear to be evidence of Evans' involvement in more than two.

16