United States v. Helbling

Opinions of the United

2000 Decisions States Court of Appeals

for the Third Circuit

3-14-2000

United States v Helbling

Precedential or Non-Precedential:

Docket 99-5051

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Filed March 14, 2000

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-5051

UNITED STATES OF AMERICA

v.

WILLIAM F. HELBLING,

Appellant

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Criminal No. 96-cr-00740)

District Judge: Honorable William G. Bassler

Argued September 9, 1999

Before: BECKER, Chief Judge, ROTH, and RENDELL,

Circuit Judges

(Filed: March 14, 2000)

Tonianne J. Bongiovanni, Esq.

(ARGUED)

Office of Federal Public Defender

972 Broad Street

Newark, NJ 07102

Counsel for Appellant

George S. Leone, Esq.

Elizabeth S. Ferguson, Esq.

(ARGUED)

Office of United States Attorney

970 Broad Street, Room 700

Newark, NJ 07102

Counsel for Appellee

OPINION OF THE COURT

RENDELL, Circuit Judge.

William F. Helbling appeals from his conviction and

sentence. A jury found that Helbling embezzled funds from

a profit sharing plan covered by the Employee Retirement

Income Security Act ("ERISA") to pay the operating

expenses of three failing companies he owned, and engaged

two lawyers to help him by creating false documents

indicating that the withdrawals had been part of a lawful

Employee Stock Ownership Plan ("ESOP") conversion.

Helbling's appeal raises numerous issues relating to the

timeliness of his indictment, the sufficiency of the evidence

presented at trial, and the calculation of his sentence.1 We

will affirm his conviction and sentence in all aspects. An

understanding of the facts of the case is a necessary

foundation for a discussion of the issues he raises.

I.

On December 18, 1996, a federal grand jury returned a

thirty-five count indictment against Helbling. The

indictment included: (1) one count of conspiracy to

embezzle employee pension plan funds and falsify ERISA

documents (18 U.S.C. S 371); (2) four counts of

_________________________________________________________________

1. We have jurisdiction over Helbling's appeal over his conviction under

28 U.S.C. S 1291 and his sentence under 18 U.S.C. S 3742. We gave

Helbling leave to file a supplemental pro se brief and a reply brief and

leave to the government to respond. We have considered both his

counseled and pro se submissions. We have denied Helbling's motions to

file further supplemental briefs and appendices.

2

embezzlement of employee pension plan funds from an

ERISA covered plan (18 U.S.C. S 664); (3) eighteen counts of

falsifying documents required by ERISA (18 U.S.C.S 1027);

(4) six counts of wire fraud (18 U.S.C. S 1343); and (5) six

counts of mail fraud (18 U.S.C. S 1341). The mail fraud

counts were dismissed during trial.2 The jury convicted

Helbling of twenty-seven of the remaining twenty-nine

counts.

Before trial, Helbling filed a motion to dismiss the

indictment on the basis that the indictment was not timely.

On July 22, 1996, Helbling had signed an agreement

waiving his statute of limitations defense. However, Helbling

argued to the District Court that the waiver was invalid

because he had been coerced into signing it by fraud and

misconduct. Helbling also argued that the government had

failed to investigate allegations he had made about third

parties to a degree Helbling says he believed the waiver

agreement required. The waiver agreement specifically

allowed Helbling "to present for investigation" his

allegations which included claims that a number of

individuals purposely injured his companies. After an

evidentiary hearing, the District Court denied the motion in

part by finding that the government had fulfilled its part of

the bargain. The Court found that on October 15, 1996,

government agents met with Helbling and accepted from

him documents he believed supported his claims. Before

ceasing their investigative activities, the agents reviewed the

documents and spoke with another agent who had

previously investigated related complaints.

Trial commenced on May 13, 1998. At trial, the

government offered proof that Helbling illegally withdrew

money from the profit sharing plan covered by ERISA, used

the funds to pay the operating costs of three companies he

owned, and had two lawyers help him withdraw the money

and legitimize the withdrawals by creating backdated

documents to reflect that the plan had been lawfully

converted into an ESOP. Helbling did not contest many of

_________________________________________________________________

2. The District Court granted Helbling's motion to exclude the documents

charged in the indictment. The United States filed a superseding

indictment on May 20, 1998.

3

the background facts presented at trial including his

control of the three companies, his administration of the

plan, or the financial transactions themselves. Helbling

instead argued that the government failed to establish that

he had acted with the requisite criminal intent, and that

the government witnesses were lying. In his pro se brief,

Helbling explains that he acted on the advice of counsel

who told him that he could withdraw funds from the plan

and document the ESOP conversion later as long as he had

secured the consent of the company's board of directors.

To prove its case, the United States presented numerous

documents and several witnesses. The witnesses included

Helbling's alleged co-conspirators, the two lawyers, Gerald

S. Susman and Stephen Sokolic, who testified to the false

ESOP conversion, Laura Scurko, who testified about the

financial transactions and explained that ERISA covered

the plan, Barry Penn, Susan Kramer and Donald Mayle,

who testified to the forgery of two important documents,

and John Grikis and Barry Katz who managed the plan

investments at NatWest Bank and Oppenheimer & Co.

Several of the plan participants also testified.

The witnesses explained that Helbling was the president,

chief executive officer, and sole shareholder of three

companies, Micro-Technology Co. (and its subsidiary Micro-

Products Engineering Co.), Scranton Electronics, Inc., and

Yardley Group, Inc., which Helbling ran as one company,

and the administrator of Micro-Products Engineering

Company Profit Sharing Retirement Plan. The plan was

funded exclusively by Micro-Products. Ed Wisniewski, a

plan participant and long-time employee, testified that the

plan was established by a previous owner in 1965 to

provide retirement income as an incentive to salaried

employees to remain with the company. Laura Scurko, an

attorney who was appointed trustee of the plan in a civil

suit brought by the plan participants, testified as a lay

witness and explained that the plan was covered by ERISA.

She pointed out that the plan documents stated that the

plan was amended and restated in 1976 to comply with the

Employee Retirement Income Security Act of 1974. As of

March 1991, the plan had assets of approximately

$625,000 and covered ten salaried employees. The plan's

4

assets were held by NatWest Bank which also acted as

trustee to the plan.

Helbling's companies were manufacturing companies that

relied heavily upon military contracts. In May 1990, at

Helbling's direction, the companies filed for Chapter 11

reorganization. In February 1992, the Bankruptcy court

converted the Chapter 11 bankruptcy proceedings into a

Chapter 7 liquidation because the companies failed to

provide the Court with the required monthly filings. The

companies subsequently ceased business. While in

bankruptcy, the companies continued to struggle because

they lacked sufficient cash flow and were unable to procure

new military contracts.

In February 1991, Helbling directed John Grikis, then a

trust officer at NatWest, to transfer the plan's assets to

Oppenheimer & Co. Helbling's companies had been

contacted by Barry Katz, an Oppenheimer fund manager, in

late 1990. The funds were transferred on March 13, 1991

after Grikis received a letter sent by Katz indicating that

Oppenheimer would assume responsibility for the funds.

The day after the transfer to Oppenheimer, Helbling moved

$125,000 to an account at Farmers & Mechanics Bank and

used it to pay operating expenses. In July, after

conversations with Katz during which Helbling explained

that he wanted to remove more money, Helbling converted

the account to a margin account and borrowed $350,000

against the plan's assets. Katz approved the conversion

after receiving a fax supposedly signed by Barry Penn, a

lawyer, indicating that Micro-Product's plan permitted the

company to borrow against the plan's assets. The money

was again used to pay operating expenses. At trial, Penn

and his secretary, testified that the letter was a forgery.

They explained that Helbling, who had been Penn's client,

twice asked Penn to write the opinion letter, first in person

and later by fax, but that Penn refused because he was not

familiar with pension law or the profit sharing plan.

Subsequently, Helbling instructed Katz to close the account

and sent Katz a letter, dated August 29, 1991, which

confirmed that the plan had been converted into an ESOP.

Helbling subsequently withdrew money from the account in

the form of a check for $55,300 on September 6, 1991, and

5

a wire transfer for $29,700 on September 16, 1991.

Helbling withdrew a final amount of $3,500 on January 3,

1992.

Attorneys Gerald Susman and Stephen Sokolic were the

government's two key witnesses. Both testified pursuant to

plea agreements. Susman testified first. He explained that

he first spoke with Helbling in the early part of 1990 after

Helbling had been referred to him by Arnold Kaminer, who

provided health insurance for Helbling's companies, to help

Helbling establish a trust to hold his life insurance. During

the summer of 1990, Susman completed some estate

planning work for Helbling. Kaminer confirmed that he

referred Helbling to Susman for estate planning, and also

testified that he mentioned the possibility of an ESOP in a

conversation with Helbling in February of 1991.

Susman testified that Helbling called him again in March,

and July, of 1991. During the conversation in March,

Helbling asked Susman if he knew of any sources of

financing because his companies were having financial

trouble. During the conversation in July, Helbling asked

Susman about withdrawing money from a profit sharing

plan. Sometime around August, 20, Helbling called Susman

again. This time, according to Susman, Helbling told him

that he had made the large March and July withdrawals

from the Micro-Products plan.

Susman testified that he "was flabbergasted" when

Helbling told him in August of the large withdrawals.

Susman had thought that Helbling had been asking about

removing money from his own personal stake in a plan

when he answered Helbling's questions in July. Susman

immediately told Helbling that he could not remove funds

from the plan unless he had an ESOP and explained that

to have an ESOP, Helbling needed a valid resolution of the

board of directors that predated the distribution, and an

appraisal of the stock. Susman testified further that he

explained that since the companies were in bankruptcy, the

stock was worthless. When Helbling asked if Susman would

prepare the required resolution, Susman refused. When

Helbling asked if they could still go ahead with the ESOP,

Susman said that he would look into the matter and get

back to him. Helbling and Susman met the next day, and

6

Helbling provided Susman with several documents

including a copy of the plan.

Susman subsequently sought advice from Stephen

Sokolic, an attorney with more experience with ERISA, to

find out whether they could document what had been done

as an ESOP. Susman testified that after talking with

Sokolic, he felt that the documentation could legitimately

be completed. Subsequently, Susman reviewed Helbling's

August 29, 1991 letter to Katz that said that the ESOP had

been converted into an ESOP under Susman's direction.

The letter also authorized the liquidation of the account.

Both Susman and Sokolic testified that they reviewed the

documents Helbling gave them and met with Helbling on

September 11, 1991. During that meeting, Susman and

Sokolic explained to Helbling that the withdrawals were

prohibited transactions under ERISA. However, after the

meeting, Susman and Sokolic prepared a retainer

agreement which Helbling later signed. The retainer

agreement stated explicitly that the loan Helbling took from

the plan was prohibited by ERISA, and that there could be

a subsequent Department of Labor investigation and

possibly fines because the transactions might violate

Department of Labor regulations. However, on cross-

examination both Susman and Sokolic testified that while

they told Helbling the withdrawals had been prohibited

transactions under ERISA, they did not tell Helbling that

the withdrawals or the creation of the backdated ESOP

could be the basis for criminal prosecution.

Susman and Sokolic testified that on October 14, 1991

they met again with Helbling who was accompanied by

Donald Mayle, an employee of Helbling's companies. In

preparation for this meeting, Susman and Sokolic drafted

most of the documents needed to achieve the ESOP

conversion. At the meeting, Helbling signed the employee

stock ownership plan and the ESOP trust agreement. Both

documents were backdated to July 25, 1991. He also

signed the stock purchase agreement, which purported to

transfer 12.5% of the stock to the plan for $500,000, which

was backdated to March 1, 1991.3 Mayle witnessed

_________________________________________________________________

3. The ESOP conversion was limited to $500,000 to avoid the need for

filing with the SEC.

7

Helbling's signatures. A promissory note for $85,000,

representing the additional funds withdrawn from the

Oppenheimer account in September, was signed by

Helbling in November, and backdated to September 8,

1991. The conversion was made dependent upon a later

appraisal of the companies validating the stock price.

Both Susman and Sokolic testified that they were

originally unwilling to backdate the ESOP plan document

and the trust agreement, but gave in to Helbling's demand

during the meeting. Sokolic, however, testified that he

backdated the stock purchase agreement and the stock

certificates to coincide with Helbling's withdrawals before

the meeting. In response to questions from Helbling's

bankruptcy attorneys in December of 1991, Susman and

Sokolic drafted an opinion letter with Helbling's input that

Susman and Sokolic testified was misleading and false.

Ronald Santora, Helbling's bankruptcy attorney,

subsequently presented the letter to the Bankruptcy Court.

When asked why he agreed to create the documents,

Susman testified that "he wanted the fee." On cross-

examination, Susman testified that he did not intend to

steal from the plan participants and did not conspire with

Helbling to steal money. Susman testified that after he first

met with Sokolic he thought the ESOP conversion could be

completed legally, and that he first understood that he had

committed a crime in November of 1991. He did, however,

admit that earlier, in August, he had committed a crime

because he had participated in Helbling's illegal activities

by reviewing a draft of Helbling's August 29 letter to Katz

which confirmed that the plan had been converted into an

ESOP and authorized the liquidation of the Oppenheimer

account.

Sokolic corroborated much of Susman's testimony,

particularly the meetings with Helbling, the retainer

agreement, and the backdating of documents. Sokolic

testified that he realized that he had committed a crime in

"hindsight," explaining that he originally believed that he

was serving his client to the best of his ability by

documenting the ESOP, and that it was not until November

and December of 1991 that he first began to reconsider the

legality of his acts. Sokolic, however, also conceded

8

repeatedly that his actions were illegal because he created

false or misleading documents that were required by

ERISA. Sokolic explained his initial view by saying that he

had understood that Helbling intended to create the ESOP

in March of 1991, as indicated by the board of directors'

consent dated March 8, 1991, and that he had felt he was

simply documenting that transaction.

Sokolic said that he first saw the consent sometime

between the September and October meetings with

Helbling. At trial, Donald Mayle, who along with Helbling

supposedly signed the consent, testified that his signature

was forged. Susman testified that Helbling brought the

consent to the October 14 meeting. Susman also testified

that Helbling had asked him to create a board of directors'

consent during the first August conversation.

The government also presented witnesses who testified

that Helbling gave them specific directions on how to refer

to the infusions of cash in reports to the Bankruptcy Court

and in certain letters. Donald Mayle testified that Helbling

directed him to record the money as receipts and inventory

in reports filed with the Bankruptcy Court. Thomas Taylor,

former sales manager and later vice-president of sales at

Scranton Electronics, testified that Helbling directed him to

sign two letters intended to help Helbling's companies

obtain a Certificate of Competence from the Small Business

Association stating that Helbling had personally injected

$350,000 into the companies. Obtaining a certificate would

have made it easier for Helbling's companies to procure

military contracts.

Throughout the period, the plan participants requested

information from Helbling about the plan. After the money

was moved from NatWest, NatWest stopped providing the

plan participants with monthly statements. Helblingfirst

told the participants about the conversion in October. After

two meetings during which plan participants protested the

conversion, they filed a lawsuit. The record from the

sentencing hearing reflects that Helbling had sent the

participants letters blaming them for the companies'

difficulties and threatening them with unemployment,

sought to file retaliatory and harassing civil suits against

them, falsely informed the state of New Jersey that they

9

were responsible for approximately $240,000 in back taxes

due to the ESOP conversion, and refused to comply with

the order entered at the end of the civil proceedings. As a

consequence of the civil lawsuit, Lauren Scurko was

appointed trustee. In her role as trustee, Scurko recovered

less than $24,000 of the original amount.

At the end of the government's case, Helbling offered no

witnesses on his behalf. Helbling moved to dismiss the

conspiracy count arguing that the government failed to

establish that either Susman or Sokolic entered into an

agreement with Helbling. The District Court denied the

motion. After closing arguments were heard, Helbling

moved for a new trial based upon alleged misconduct of the

prosecutor for making impermissible statements in the

opening and closing arguments, and for reconsideration of

his statute of limitations argument. The District Court also

denied both motions.

Helbling was sentenced on January 25, 1999. The

District Court increased Helbling's offense level under

S 3B1.1 of the Sentencing Guidelines for Helbling's role in

the offense and under S 3C1.1 for obstruction of justice

based on Helbling's efforts to pressure Susman, Sokolic

and Mayle to lie during the investigation. The District Court

also departed upwards under S 5K2.3 for extreme

psychological damage to the victims of Helbling's

embezzlement.

Helbling now appeals the District Court's sentencing

decisions. He also seeks a new trial based on statements

made in the prosecutor's opening and closing statements,

the insufficiency of the evidence presented at trial,

allegations of prosecutorial misconduct, and the District

Court's decision on the validity of the statute of limitations

waiver. We will address all of these issues beginning with

the statute of limitations waiver.

II.

Helbling argues that the District Court erred by

upholding the validity of his waiver of the statute of

limitations. His primary contention is that the waiver must

be invalidated because the government failed to fulfill its

10

part of the bargain, which required the government to allow

Helbling "to present for investigation" charges he had

leveled against individuals he felt sabotaged his companies.4

He urges that the government was obligated to complete a

full and thorough investigation of his allegations. He alleges

that the District Court erred in rejecting this contention

because it failed to inquire into what Helbling reasonably

understood the waiver to mean. We will affirm the District

Court's decision because, even if Helbling is correct to

assert that we must compare the government's actions to

what Helbling "reasonably understood" it had promised to

do,5 we cannot conclude, on the basis of the language of the

waiver or the record in front of us, that Helbling reasonably

understood the waiver to require an investigation any

broader than he actually received.

_________________________________________________________________

4. The relevant portion of the agreement, with the added rider, stated:

In order to allow ample time for me to confer with representatives

of

the U.S. Attorney's Office,* I hereby knowingly, voluntarily and

expressly waive the right of defense provided by any statute of

limitations with regard to the above criminal statutes of the

United

States Code based upon the failure of the U.S. Attorney's Office to

obtain an indictment for violations of those during the period from

July 22, 1996 through December 31, 1996.

* and to present for investigation by the FBI and the Department of

Labor those allegations which I have set forth in my letter to the

U.S. Attorneys Office dated July 13, 1996, specifically paragraph

#3.

5. The parties do not direct us to any controlling authority where we

have actually considered whether the government had breached a

statute of limitations waiver in a criminal case. Helbling argues that we

should use the same standard here as we use to determine whether a

plea agreement has been complied with. See, e.g., United States v. Nolan-

Cooper, 155 F.3d 221, 236 (3d Cir. 1998) (considering "whether the

government's conduct is inconsistent with what was reasonably

understood by the defendant when entering the plea of guilty."); see also

United States v. Levine, 658 F.2d 113, 124, 124 n.17 (3d Cir. 1981)

(noting that waivers of statutes of limitations have been viewed as being

similar to guilty pleas). We decide neither that this standard is

necessarily applicable to waivers, nor that defendants who sign waiver

agreements should always receive the same protections as those who

sign plea agreements. Rather, even assuming the standard does apply,

Helbling cannot succeed.

11

The District Court addressed this specific contention,

along with others, in a written opinion, after holding an

evidentiary hearing into the circumstances surrounding the

signing of the waiver agreement. Finding the government's

witnesses credible, the District Court addressed each of

Helbling's allegations as to why the waiver was fraudulently

coerced and rejected each of them.6 Importantly for this

discussion, the District Court found that Helbling knew and

understood the implications of waiving the statute of

limitations, was not unduly pressured into signing the

waiver since he engaged in extensive negotiations regarding

the waiver provision, and was repeatedly advised to retain,

or request, counsel.

Addressing whether the government fulfilled its bargain,

the District Court noted that the provision itself did not

clearly describe the extent of investigation required, and

stated that Helbling had not introduced any evidence

showing that a particular meaning had been agreed upon.

The District Court proceeded on the basis that the

agreement imposed a duty on the government to investigate

and found that the government had done enough to satisfy

_________________________________________________________________

6. Considering Helbling's allegations that he was coerced into signing the

waiver by threats and by misrepresentations, and that he was not

represented during the negotiations, the District Court determined that

the government was ready to indict Helbling when the waiver was signed

so it did not coerce him into signing the waiver by falsely threatening

immediate indictment, and that Helbling realized, or should have

realized, that the waiver would provide the government more time to

investigate, as well as provide him more time to prepare, and, therefore,

the government did not misrepresent the effect of the waiver.

In his pro se brief, Helbling alleges that the prosecutor conspired with

Susman's lawyer to coerce Helbling to sign the waiver, and states that

Department of Labor investigator Daphne Rich testified that Susman and

Sokolic had agreed to cooperate with the government before Helbling

signed his statute of limitations waiver. However, Susman's lawyer's

testified at the hearing, and the District Court rejected Helbling's

argument that he was coerced by him. The District Court also found that

Susman's plea agreement came months after Helbling signed the waiver.

The Court's factual findings are not clearly erroneous, and we agree with

its legal conclusions. Therefore, to the extent that Helbling asserts

these

arguments as separate grounds to invalidate the waiver, we reject them.

We find no evidence in the record to support Helbling's other allegations.

12

its obligation and, therefore, the waiver was valid. We apply

the clearly erroneous standard of review to the District

Court's finding of facts and review the District Court's legal

conclusion that the government fulfilled the terms of the

agreement under the plenary standard of review. See United

States v. Moscahlaidis, 868 F.2d 1357, 1360 (3d Cir. 1989)

(reviewing a district court's determination that the

government did not breach a plea agreement).

The difficulty with Helbling's argument on appeal is that

his assertion -- that the government promised to engage in

a full scale investigation -- cannot be squared with the

record evidence, or the language of the waiver itself.

Helbling argues in effect that he reasonably understood

that the government would complete a full scale

investigation because he would not have agreed to the

waiver without such a promise. However, even if we were to

step beyond the language of the provision which only

requires the government to allow him to "present for

investigation" -- a promise the government clearly fulfilled

-- we cannot find support for his assertion because at the

pre-trial hearing a government agent testified that she told

Helbling that the government would not agree to more than

a promise to evaluate Helbling's evidence.

Helbling signed the waiver agreement on July 22, 1996.

According to testimony presented at the hearing, and which

the District Court found credible, SA Donald Wadsworth

had spoken to Helbling on July 19, and Helbling advised

him that he wanted Wadsworth to perform an expansive

investigation and include Helbling's allegations against

others in his review. When Helbling, thereafter, told

Department of Labor investigator Daphne Rich that

Wadsworth had promised him that if he signed the waiver,

the government would investigate his charges, Rich said

that the government would only evaluate the evidence he

gave to Wadsworth and Rich. Thereafter, that day, Helbling

signed the waiver in the presence of two other FBI agents.

Therefore, we conclude that Helbling's belief that the waiver

required the government to fully investigate his claims was

unreasonable.

Furthermore, we note that the government did indeed do

more than permit Helbling to "present" his allegations.

13

Reviewing the evidence, the District Court found that,

before the government ceased its investigation into

Helbling's allegations, government agents met with Helbling

and discussed his allegations, reviewed the documents

Helbling gave them, and culled out those which the

government already had, those that were new and those

that were related to a prior investigation. The agents also

spoke to Robert Connolly, the Chief of the Antitrust

Division of the Department of Justice in Philadelphia, who

had already investigated allegations related to many of

Helbling's complaints of sabotage in a protracted

investigation from 1989-1992, and reviewed the documents

with him.

Accordingly, we find the waiver to have been valid.

III.

Next, Helbling challenges the sufficiency of the evidence

supporting all the counts of his conviction. Helbling argues

that the government failed: (1) to establish an agreement

necessary for a conspiracy; (2) to establish a scheme to

defraud required by the wire fraud convictions; or (3) to

establish that ERISA covered the Micro-Products plan, as

required by the embezzlement and false documents

convictions.7 Our standard of review is highly deferential.

"We determine whether there is substantial evidence that,

when viewed in the light most favorable to the government,

would allow a rational trier of fact to convict." Government

of the Virgin Islands v. Charles, 72 F.3d 401, 410 (3d Cir.

_________________________________________________________________

7. We note at the outset of this discussion that Helbling also alleges in

his pro se brief that the government withheld exculpatory evidence and

suborned false testimony in return for plea agreements. Since these

arguments were not raised to the District Court, we review for plain

error. To the extent that Helbling's argument rests on United States v.

Singleton, 144 F.3d 1343 (10th Cir. 1998), rev'd en banc, 165 F.3d 1297

(10th Cir.), cert. denied, 119 S. Ct. 2371 (1999), we note that this Court

has now rejected the holding of the first Singleton decision in United

States v. Hunte, 193 F.3d 173, 174 (3d Cir. 1999), decided after briefing.

Furthermore, Helbling had the opportunity to cross-examine the

witnesses at trial, and we find no factual support for his other

allegations.

14

1995). We find that substantial evidence did support the

verdicts and we will affirm all the convictions on all counts.

Helbling first argues that the government failed to

establish that he conspired with either Susman or Sokolic.8

To establish a conspiracy, the government must show: (1)

a unity of purpose between two or more persons; (2) an

intent to achieve a common goal; and (3) an agreement to

work together. See United States v. Carr, 25 F.3d 1194,

1201 (3d Cir. 1994). Circumstantial evidence may be used

to establish a conspiracy although if the government relies

entirely on circumstantial evidence "the inferences drawn

must have a logical and convincing connection to the facts

established." Id. (quoting United States v. Casper, 956 F.2d

416, 422 (3d Cir. 1992)) (internal quotations omitted). The

indictment charges Helbling with conspiracy (1) to defraud

the plan and participants, or (2) to put false information in

documents required by ERISA. We must affirm the jury

verdict if the government adduced sufficient evidence of

either object of the conspiracy. See id. at 1201-02 (citing

Griffin v. United States, 502 U.S. 46 (1991)).

Helbling argues that the government failed to show that

he entered into an agreement with either Susman or

Sokolic because both testified that they did not intend to

commit unlawful acts and that they came to understand

the illegality of their actions only by hindsight. However,

their testimony was replete with statements from which the

jury could reasonably have inferred that Sokolic and

Susman had the necessary intent and knowledge regardless

of their statements to the contrary. For example, both

testified that they acted illegally, and that they agreed to

complete work for Helbling after explaining to him that the

withdrawals were prohibited transactions.

Contesting his wire fraud convictions, Helbling argues

that the government failed to establish that Helbling

participated in a scheme with the specific intent to defraud.

See 18 U.S.C. S 1343; United States v. Veksler, 62 F.3d

544, 551-52 (3d Cir. 1995). Helbling argues that the

government failed to prove this element of the crime

_________________________________________________________________

8. Helbling raised this issue at trial as a Rule 29 motion to dismiss. The

District Court denied the motion.

15

because he relied upon the expertise of Susman and

Sokolic, and because both testified that they did not intend

to defraud the participants.

Clearly, sufficient evidence existed to establish that

Susman and Sokolic had the requisite intent. However,

even if Helbling's contention about Susman's and Sokolic's

intent had merit, their intent is irrelevant to Helbling's

conviction since a wire fraud conviction is not dependent

upon the existence of an agreement. See United States v.

Nelson, 54 F.3d 1540, 1546 (10th Cir. 1995). Susman and

Sokolic testified that Helbling directed them to construct

the ESOP and backdate the documents. Testimony also

supports the conclusion that Helbling forged Barry Penn's

letter to Oppenheimer before engaging the services of

Susman or Sokolic, and that he alone forged the consent of

the directors sometime after engaging their help. These acts

are clearly probative of Helbling's intent.

Finally, Helbling contends that the government failed to

establish that the plan was subject to ERISA. Counts 2

through 5 of the indictment charged Helbling with

embezzlement of plan assets in an "employee benefit plan

subject to any provision of title 1 of [ERISA]" in violation of

18 U.S.C. S 664 and counts 6 through 23 charged Helbling

with violating documents required by title I of ERISA to be

published, kept as records or certified to the administrator

of the plan. See United States v. Furst, 886 F.2d 558, 565

(3d Cir. 1989) (explaining that a conviction underS 664

requires a showing that the plan is covered by ERISA); see

also United States v. Coyle, 63 F.3d 1239, 1245 (3d Cir.

1995) (explaining that a conviction under 18 U.S.C.S 1027

requires a showing that (1) the defendant made a false

statement; (2) knowing it to be false; (3) in a document

required by ERISA). A plan is subject to ERISA if itfits

under 29 U.S.C. S 1003(a), and is not exempted by the 29

U.S.C. S 1003(b). Relevant definitions are provided in 29

U.S.C. S 1002.

Helbling contends that the government failed to introduce

sufficient evidence from which the jury could conclude that

the plan was covered by ERISA, and argues that the plan

was not covered by ERISA as a matter of law.9 Generally,

_________________________________________________________________

9. Helbling's counseled brief argues that the government failed to submit

sufficient evidence. Helbling raised and developed his second theory in

16

whether a plan is covered by ERISA is an issue of fact to be

decided by the jury, which we review under the substantial

evidence standard, see Furst, 886 F.2d at 565, though we

exercise plenary review when our review requires the

interpretation and application of legal precepts. See United

States v. Martorano, 767 F.2d 63, 65 (3d Cir. 1985).

At trial, the District Court precluded the testimony of two

experts offered by the government who would have testified

about the nature of the plan because the government failed

to comply fully with discovery requirements.10 The

government therefore relied upon the lay testimony of

Laura Scurko, the court appointed plan trustee, Susman

and Sokolic. Scurko testified that the plan was covered by

ERISA, that the plan was restructured to be an ERISA plan,

and that the plan itself suggested that it was covered by

ERISA. Susman and Sokolic predicated their testimony, as

well as their guilty pleas, on the basis that the plan was

covered by ERISA. The government also introduced

testimony of the plan participants indicating that the plan

had the characteristics of an ERISA covered plan, including

testimony that the plan was established to provide

retirement income to workers who did not receive piece rate

incentives, after they left the company.

Reviewing the factual evidence adduced at trial and the

legal arguments raised in response by the government, we

_________________________________________________________________

his subsequent pro se brief. The government points out that he did not

raise his second argument in front of the District Court. However, we

have explained that since the alleged error directly relates to his

criminal

responsibility, such error would be plain error. See United States v.

Cusumano, 943 F.2d 305, 309 (3d Cir. 1991) (considering whether a

plan was covered by ERISA for the first time on appeal).

10. The government intended to have Debra Golding and Kevin Long

testify, and presented a letter to Helbling outlining the general areas

about which they would testify. Helbling moved to preclude their

testimony, asserting that the government's letter failed to comply with

Federal Rule of Criminal Procedure 16(a)(1)(e) which requires the

government to "describe the witnesses' opinions, the bases and the

reasons for those opinions, and the witnesses' qualifications." Rejecting

the government's contention that Golding and Long were lay witnesses

not covered by 16(a)(1)(e), the District Court granted Helbling's motion.

17

conclude that sufficient factual evidence and legal support

existed for the conclusion that the plan was covered by

ERISA. The government convinces us as an initial matter,

with reference to the facts discussed above, that the plan

fell within the general ERISA definitions, particularly 29

U.S.C. S 1002(2)(A). See In re New Valley Corp. v. New

Valley Corp., 89 F.3d 143, 148-49 (3d Cir. 1996) (explaining

that a court must begin first look to see whether the plan

fits under the general provisions of ERISA and then

consider the exceptions). Section 1002(2)(A) extends ERISA

to cover plans established or maintained by an employer to

the extent that it provides retirement income regardless of

the method use to determine contributions, or calculate

and distribute benefits. See 29 U.S.C.S 1002(2)(A). The

government also explains that the plan fits within the

definition of a defined contribution plan, see 29 U.S.C.

S 1002(34), and correctly rebuts Helbling's arguments as to

why the plan was exempt from ERISA coverage in whole or

in part. Finally, the government points out that even if the

plan was exempt from certain provisions of ERISA, for

example, by having the characteristics of a "top hat" plan,

18 U.S.C. S 1027 and 18 U.S.C. S 664 would still apply

because they do not require that the plan in question be

subject to all of ERISA's various provisions. Rather, these

criminal provisions require that the plan be a plan"subject

to any provision of title 1," 18 U.S.C. S 664, or that the

fraudulent statement be contained in a document required

by title 1. See 18 U.S.C. S 1027.

IV.

Helbling next argues that the prosecutor, Assistant

United States Attorney Jayne K. Blumberg, made

prejudicial comments in her opening and closing

statements that require the grant of a new trial. Helbling

argues that her opening statement included impermissible

characterizations and impermissible vouching, and that in

her closing and rebuttal arguments, the prosecutor again

acted impermissibly by characterizing Helbling and his

actions, implying that Helbling committed improprieties in

the past, and by describing the evidence that the letter

supposedly signed by Barry Penn was forged as

18

"uncontroverted." Without parsing the prosecutor's

comments, which we have paraphrased in the margin, 11 we

note that, although the government disputes many of

Helbling's contentions of misconduct, the United States

acknowledged in its brief that the prosecutor's opening

statement "overstepped the parameters of an opening

statement" in the manner in which it characterized

Helbling. See Appellee's Br. at 38. We quite agree that Ms.

_________________________________________________________________

11. Early in opening arguments, the prosecutor told the jury that the

defendant had "[u]gly values: Dishonesty, disloyalty, deceit, and above

all, greed. To be sure, ladies and gentlemen, the Defendant, William

Helbling is a thief. He lied to these men, he stole their retirement

moneys

boldly and brazenly." The prosecutor also called Helbling a looter while

pointing a finger in his face, and said, while discussing the companies'

financial problems, that "the one source [of money] was what he called

his `secret fund,' his slush find, his private kitty. And he stole the

money, he stole the retirement money." The prosecutor also called

Susman and Sokolic "unscrupulous," and explained that they assisted

Helbling in "covering up his fraud, his looting of moneys." After a

defense

counsel objection, the prosecutor completed her opening by stating that:

"We believe that you will find the Defendant guilty as charged." The

District Court directed the jury to disregard the comment. During the

prosecutor's opening, the Court sustained a number of defense counsel

objections and brought counsel to side bar where the judge admonished

the prosecutor. At the close of the prosecutor's opening, the judge

reminded the jury, as he had already explained during his preliminary

instructions, that the opening statement was not to be considered as

evidence.

Before closing arguments began, the District Court again reminded the

jurors, as part of the jury instructions, that they must not consider the

opening and closing arguments as evidence. In the early portion of her

closing argument, the prosecutor referred to "a greedy person's plan," the

"Defendant's plunder and thievery," and the Defendant's "track record of

lying, cheating and deceit." The prosecutor also called evidence that the

letter from Barry Penn to Oppenheimer was forged"uncontroverted." In

rebuttal, the prosecutor again referred to the same evidence as

"uncontroverted," and further characterized the defendant as "arrogant"

and "despicable" which the court instructed the jury to disregard. Upon

defense counsel objection to the second reference to uncontroverted

evidence, the District Court told the prosecutor to avoid such references.

Later at side bar, the Court asked defense counsel what counsel wanted

the court to do to neutralize the statement. Counsel asked the Court to

"leave it, please."

19

Blumberg's remarks were over the line, and arguably even

out of line. The government will not be sanctioned in this

instance, however, because our case law punishes the

government by granting a new trial in such a situation only

if the defendant was prejudiced by the remarks in question.

Here, we conclude that a new trial is not warranted

because Helbling was not in fact prejudiced. We reach this

conclusion even though we view AUSA Blumberg's remarks

to have been inappropriate, and we urge that the United

States Attorney for New Jersey remind his assistants of the

limits of appropriate advocacy.

"Prosecutorial conduct does not always warrant the

granting of a mistrial." United States v. Zehrbach, 47 F.3d

1252, 1264 (3d Cir. 1995) (en banc). "An appellate court

should not exercise its `supervisory power to reverse a

conviction . . . when the error to which it is addressed is

harmless since, by definition, the conviction would have

been obtained notwithstanding the asserted error.' " Id.

(quoting United States v. Hasting, 461 U.S. 499, 506

(1983)). The harmless error standard requires us to

consider the record as a whole. The standard of review

depends upon whether the error was constitutional or non-

constitutional. If the error is non-constitutional, we will

affirm "when it is highly probable that the error did not

contribute to the judgment." Id. (quoting Government of

Virgin Islands v. Toto, 529 F.2d 278, 284 (3d Cir. 1976)). If

the error is constitutional, we will affirm if wefind that the

error is harmless beyond a reasonable doubt. See United

States v. Molina-Guervara, 96 F.3d 698, 703 (3d Cir. 1996)

(citing Chapman v. California, 386 U.S. 18, 24 (1967)).

Even under the most stringent harmless error analysis,

we cannot conclude that Helbling was prejudiced."In

determining prejudice, we consider the scope of the

objectionable comments and their relationship to the entire

proceeding, the ameliorative effect of any curative

instructions given, and the strength of the evidence

supporting the defendant's conviction." Zehrbach, 47 F.3d

at 1265. First, the evidence presented by the United States

was overwhelming. See id. at 1267 (finding the evidence at

trial substantial). As discussed above, the government

adduced substantial direct evidence of Helbling's activities,

20

and substantial circumstantial evidence of his motivation

and intent. Second, the District Court did give curative

instructions. It repeatedly instructed the jury not to

consider counsel's arguments as evidence, doing so before

the prosecutor's opening, after the prosecutor's opening,

and before her closing argument, and appeared to do so in

a way that conveyed the Court's displeasure with counsel's

tactics. See id. at 1267 (finding characterizations

neutralized in part by instructions not to consider the

opening evidence); United States v. Somers, 496 F.2d 723,

738 (3d Cir. 1974). Furthermore, the Court told the jury to

disregard the vouching in the prosecutor's opening

statement and to disregard the references to "arrogant" and

"despicable" in rebuttal. Lastly, we note that defense

counsel asked the Court not to give a curative instruction

to neutralize reference to "uncontroverted" testimony in a

side bar conference.

Helbling seeks to distinguish this case by arguing that he

was prejudiced because the government's comments

poisoned the jury's mind regarding his intent, a crucial

element in each count of his indictment. Helbling places

considerable reliance on United States v. Mastrangelo, 172

F.3d 288 (3d Cir. 1998), in which we found the defendant

to be prejudiced by the comments of a prosecutor in closing

and rebuttal arguments which inflated a limited stipulation

that the defendant "had the chemical background to know

the ingredients and equipment necessary to make

methamphetamine" into one stating that the defendant

knew how to make methamphetamine. See Mastrangelo,

172 F.3d at 295. We find Mastrangelo to be easily

distinguishable from our case. First, and most importantly,

in Mastrangelo, the prosecutor misstated a stipulation to

make it encompass a fact central to the government's

charges and not otherwise supported by any evidence the

government presented. See id. at 298. Here, the government

introduced overwhelming circumstantial evidence of

Helbling's intent. Second, in Mastrangelo, we explained that

the district court's curative instruction may have served to

exacerbate the problem because the court reaffirmed the

prosecutor's incorrect view of the stipulation. See id. at

296. Here, we view the curative instructions as having

neutralized the possible prejudice.

21

We note that Helbling's argument is also weakened by

United States v. Retos, 25 F.3d 1220 (3d Cir. 1994), where

we found that a prosecutor's reference in opening argument

to the defendant's "crooked law practice" was not

misconduct requiring a new trial since the comment was

clearly related to the charges the government had to prove

and was supported by the evidence presented at trial. See

Retos, 25 F.3d at 1226. But see Somers, 496 F.2d at 737-

38 ("Whether or not proofs were ultimately adduced

warranting such characterizations is irrelevant. Such

characterizations add nothing to the legitimate education of

the jury which is not afforded by the proper presentation of

the facts to be proved."). Here, although the prosecutor's

comments may have been a pointed assertion of Helbling's

guilt, the characterizations were related to the charges

contained in the indictment which the evidence presented

later did in fact establish. Accordingly, we find prejudice to

be lacking.

V.

Helbling also appeals the District Court's determination

of his sentence. Helbling contends that the District Court

erred by increasing his offense level four-levels under

U.S.S.G. S 3B1.1(a), "Aggravating Role," by increasing his

offense level two-levels for obstruction of justice, U.S.S.G.

S 3C1.1, and by departing upwards two-levels for

psychological harm. See U.S.S.G. S 5K2.3.

A. S 3B1.1(a), Aggravating Role

Helbling argues that the District Court erred in applying

a four-level enhancement to his offense level pursuant to

S 3B1.1(a) of the Sentencing Guidelines for"Aggravating

Role." Section 3B1.1(a) states in full: "If the defendant was

an organizer or leader of a criminal activity that involved

five or more participants or was otherwise extensive,

increase by 4 levels." U.S.S.G. S 3B1.1(a). Helbling finds

fault with the District Court's view regarding both aspects

of this Guideline, namely that he was an organizer or

leader, and that the activity was "otherwise extensive." Both

Helbling and the government agree that Helbling's criminal

activity did not involve five "participants" as defined by the

commentary to the Guideline.

22

We review a District Court's factual determinations

underlying the application of the sentencing guidelines for

clear error. See United States v. Ortiz, 878 F.2d 125, 126-27

(3d Cir. 1989). Although we give due deference to the

District Court's application of the sentencing guidelines to

those facts, as required by 18 U.S.C. S 3742(e), we exercise

plenary review over legal questions involving the proper

interpretation and application of the sentencing guidelines.

See United States v. Katora, 981 F.2d 1398, 1402 (3d Cir.

1992). We will address the two aspects of the relevant

Guideline section in turn.

1. Leader or Organizer

Section 3B1.1(a) applies only if a sentencing courtfinds

that "the defendant was an organizer or leader of a criminal

activity." Application Note 4 explains that a court should

consider a number of factors when determining if the

defendant was an organizer or leader, rather than a

manager or supervisor.

In distinguishing a leadership and organizational role

from one of mere management or supervision, titles

such as "kingpin" or "boss" are not controlling. Factors

the court should consider include the exercise of

decision making authority, the nature of participation

in the commission of the offense, the recruitment of

accomplices, the claimed right to a larger share of the

fruits of the crime, the degree of participation in

planning or organizing the offense, the nature and

scope of the illegal activity, and the degree of control

and authority exercised over others.

U.S.S.G. S 3B1.1, Application Note 3; United States v. Ortiz,

878 F.2d 125, 127 (3d Cir. 1989). We have explained that

to be considered an organizer or leader, "the defendant

must have exercised some degree of control over others

involved in the commission of the offense." United States v.

Phillips, 959 F.2d 1187, 1191 (3d Cir. 1992) (quoting United

States v. Fuller, 897 F.2d 1217, 1220 (1st Cir. 1990)).

The District Court made specific factual findings, which

are not clearly erroneous, in determining that Helbling

acted as an organizer or leader. The Court found that:

23

Helbling recruited all of the participants mentioned

above and his attorneys, Sokolic and Susman, to help

him in his criminal activity. He alone made the

decision to conceive and implement his conversion

scheme. The benefits from his scheme went either to

his personal use or into shoring up companies which

he was the sole owner. Helbling played the key role in

structuring the operation to defraud the retirement

plan and convert its assets. There is no evidence that

anyone else exercised control over the criminal scheme,

nor exercised any decision-making authority.

On appeal, Helbling raises two arguments. Helbling

argues first that the evidence failed to show that Helbling

recruited Susman and Sokolic with a criminal purpose or

controlled their activities. Helbling also argues, citing

United States v. Katora, 981 F.2d 1398 (3d Cir. 1992), that

he cannot be a leader or organizer because the other

participants -- Susman and Sokolic -- were equally

responsible for the criminal activity.

Given the guideline provision and the record evidence, we

find the District Court's factual findings to be proper and

its legal conclusion that Helbling was an organizer and

leader unassailable. In so doing, we necessarily reject

Helbling's arguments which are essentially fact based.

Contrary to his urging, the District Court could properly

find that he had a criminal purpose in recruiting Susman,

that he controlled their activities in orchestrating the

scheme through them thereafter, and that he was more

culpable than they were.12 On these facts, Katora does not

dictate a different result.13 Finally, we note that evidence

_________________________________________________________________

12. Helbling's reliance on the terms of Susman's and Sokolic's plea

agreements as proof of their equal culpability is misplaced. The

Guideline clearly contemplates that a defendant may be the leader or

organizer of another criminally responsible individual; the amount of loss

stipulated to in a plea agreement is surely not the only factor that bears

on the relationship between those individuals.

13. Katora is simply not applicable to this case. In Katora, we explained

that a defendant cannot be assessed an offense level enhancement under

S 3B1.1 where the district court determined that the two participants

were equally culpable and did not organize, lead, manage or supervise a

third participant. See Katora, 981 F.2d at 1405. In this case, however,

the District Court determined that Helbling alone organized and led the

criminal activity which involved two other participants.

24

that certain individuals provided expertise or planning does

not necessarily counter evidence that their actions were

controlled by another.

2. "Otherwise Extensive"

The second part of S 3B1.1(a)'s analysis requires the

sentencing court to determine whether the "criminal activity

. . . involved five or more participants or was otherwise

extensive." U.S.S.G. S 3B1.1(a). Since the government

acknowledges that Helbling, Susman and Sokolic are the

only "participants," this case requires us to determine when

a criminal activity is "otherwise extensive." See United

States v. Colletti, 984 F.2d 1339, 1346 (3d Cir. 1992)

(holding that the leader or organizer may be included when

determining the number of participants); see also U.S.S.G.

S 3B1.1, Application Note 1 (defining "participant"). This

seemingly simple phrase, which also appears in S 3B1.1(b),

has spawned much discussion, and some disagreement, in

the opinions of several courts of appeals. The courts that

have considered the question agree that the "otherwise

extensive" language makes S 3B1.1(a) applicable when

criminal activity involves the equivalent of five participants,

but disagree as to whether, if fewer than five participants

are involved, the determination of equivalence must focus

upon a headcount of the individuals involved, or may also

rely upon other indices of extensiveness such as the

magnitude of the harm, the complexity of the planning, or

the number of victims. Compare United States v.

Carrozzella, 105 F.3d 796, 802-03 (2d Cir. 1997) (focusing

analysis on the number of individuals involved), with United

States v. Dietz, 950 F.2d 50, 53-54 (1st Cir. 1991)

(permitting consideration of a broad range of indices).

In Carrozzella, the Court of Appeals for the Second

Circuit explained that the analysis of "otherwise extensive"

must focus initially upon the number of participants, and

the knowing or unknowing persons, involved in the

criminal activity, and then a subsequent determination

must be made as to whether the roles and involvement of

all those persons constitute the functional equivalent of five

"participants" as defined by the Application Notes. See

Carrozzella, 105 F.3d at 802-04. This contrasts with the

25

rulings of several other courts of appeals that permit a

broader inquiry that examines other characteristics of the

criminal activity as well. See United States v. Brockman,

183 F.3d 891, 900 (8th Cir. 1999), cert. denied , 120 S.Ct.

800 (2000) (permitting consideration of the number of

persons involved and the amount of loss); United States v.

Yarnell, 129 F.3d 1127, 1139 (10th Cir. 1997) (following

Dietz); United States v. Tai, 41 F.3d 1170, 1175 (7th Cir.

1994) (permitting courts to "to examine factors in addition

to a headcount to justify a finding that a given criminal

activity is extensive"). For example, the Court of Appeals for

the First Circuit, in United States v. Dietz, explained that

"the extensiveness of a criminal activity is not necessarily a

function of the precise number of persons, criminally

culpable, or otherwise, engaged in the activity" and upheld

a four-level increase based upon a general conception of

extensiveness which included a finding that the activity

spanned twelve years, crossed seven states and victimized

a number of governmental agencies without an exact

determination of the number of individuals involved. See

Dietz, 950 F.2d at 53-54. In United States v. Rose, 20 F.3d

367, 374 (9th Cir. 1994), the Court of Appeals for the Ninth

Circuit explained that "[w]hether criminal activity is

`otherwise extensive' depends on such factors as (i) the

number of knowing participants and unwitting outsiders;

(ii) the number of victims; and (iii) the amount of money

fraudulently obtained or laundered." Id. at 374 (internal

citations omitted).

In United States v. Bennett, 161 F.3d 171 (3d Cir. 1998),

the only opinion in which we have previously considered

the "otherwise extensive" prong of S 3B1.1(a), we affirmed

the application of S 3B1.1(a) to enhance the offense level of

a defendant convicted of running a large and complex

"Ponzi" scheme which the district court found involved two

participants and at least thirteen non-participants who

assisted Bennett. See id. at 194. Many of these individuals

served Bennett by withholding information from investors

and legitimizing his activities by preparing reports based

upon false information he had provided. See id. Because

the evidence of extensiveness was so clear, due to the

involvement of at least thirteen others, we did not discuss

whether other indices of "extensiveness" could be

26

appropriately considered under S 3B1.1.14 We take the

opportunity to decide this issue here.

We will subscribe to the analysis of the Court of Appeals

for the Second Circuit as described in Carrozzella. We

believe that the focus upon the number and roles of the

individuals knowingly, and unknowingly, involved best

comports with the text of S 3B1.1, its application notes and

commentary, as well as the overall structure of the

Sentencing Guidelines. We note that while the Guideline

itself provides no clear guidance as to the meaning of

"otherwise extensive," the application notes and the

commentary strongly indicate that the focus should be

upon the number of persons involved. Although we disagree

with the District Court's decision to count one"non-

participant," we agree with the District Court, which

essentially applied the Carrozzella test, that the

combination of Helbling, Susman and Sokolic -- the

participants -- together with the countable non-

participants, made Helbling's criminal activity"otherwise

extensive" for the purposes of S 3B1.1.

Application Note 3 specifically includes an example of

"otherwise extensive" that is instructive."In assessing

whether an organization is `otherwise extensive,' all persons

involved during the course of the entire offense are to be

considered. Thus, a fraud that involved only three

participants but used the unknowing services of many

outsiders could be considered extensive." U.S.S.G. S 3B1.1,

Application Note 3 (emphasis added). The background

commentary is consistent with a numerical focus:

This section provides a range of adjustments to

increase the offense level based upon the size of the

criminal organization (i.e., the number of participants in

the offense) and the degree to which the defendant was

_________________________________________________________________

14. Since we did not engage in a broader analysis, we place no

significance upon citations in Bennett to United States v. D'Andrea, 107

F.3d 949, 957 (1st Cir. 1997), and United States v. Dietz, 950 F.2d at 53,

decisions that permit the district court to consider the "width, breadth,

scope, complexity, and duration of the scheme." See Bennett, 161 F.3d

at 194 n.14. These citations were placed in a footnote attached to the

last part of the analysis and are no more than dicta.

27

responsible for committing the offense . . . . The

Commission's intent is that this adjustment should

increase with both the size of the organization and the

degree of the defendant's responsibility.

U.S.S.G. S 3B1.1, Background (emphasis added).

The background commentary also explains why the size

of the criminal activity is important to the purpose of the

provision. It notes that the Sentencing Commission drafted

the Guideline's separate provisions to respond to criminal

organizations whose size and structure increases the

significance of the defendant's role. Compare U.S.S.G.

S 3B1.1(a)-(b), with S 3B1.1(c)."In relatively small criminal

enterprises that are not otherwise to be considered as

extensive in scope or in planning or preparation, the

distinction between organization and leadership, and that

of management or supervision, is of less significance than

in larger enterprises that tend to have clearly delineated

divisions of responsibility." U.S.S.G. S 3B1.1, Background

(emphasis added).

If the Commission intended the courts to utilize a

broader analysis to determine if a criminal activity was

"extensive" it could easily have said so. Instead, the notes

clearly indicate the Commission meant the courts to

consider the role of the defendant and the size of the

criminal organization as its way of determining the relative

responsibility of the defendant, so as to mete a greater

sentence to those who likely received a greater division of

the illegal profit, posed a greater danger to the public, and

are more likely to commit more crimes in the future. See

U.S.S.G. S 3B1.1, Background ("This adjustment is

included primarily because of concerns about relative

responsibility. However, it is also likely that persons who

exercise a supervisory or managerial role in the commission

of an offense tend to profit more from it and present a

greater danger to the public and/or are more likely to

recidivate.").

Furthermore, limiting our construction of "extensiveness"

to a head counting analysis reduces the potential for double

counting certain aspects of criminal activity that are

considered elsewhere in the scheme of the guidelines, thus

28

helping to maintain the distinct character of various

guideline sections. See Carrozzella, 105 F.3d at 802-03. For

example, as the court in Carrozzella explained, in a fraud

conviction the base offense level can be increased based on

the amount of loss, the extent of planning, and the number

of victims. See U.S.S.G. S 2F1.1; Carrozzella, 105 F.3d at

802. Further adjustments may be made to account for the

vulnerability of the victims, see U.S.S.G.S 3A1.1, the

defendant's role, see U.S.S.G. S 3B1.2, and abuse of a

position of trust.15 See U.S.S.G. S 3A1.3. If we were to adopt

a broad reading of the phrase "otherwise extensive," so that

some of these possible adjustments could be considered in

that inquiry as well, a defendant would possibly receive two

sentence enhancements for the same attributes of the

crime. We avoid this result by focusing upon the number of

individuals involved.

We disagree with the government that our opinion in

United States v. Wong, 3 F.3d 667, 668 (3d. Cir. 1993),

undercuts this rationale. In Wong, we held that where the

guidelines happen to direct the sentencing court to increase

the defendant's sentence under two separate sections--

which respond to different evils -- based on different

aspects of the same conduct, the district court does not err

by "double counting" those aspects in determining the

sentence. See Wong, 3 F.3d at 668; see also United States

v. Johnstone, 107 F.3d 200, 211-13 (3d Cir. 1997) (rejecting

a double counting argument in accordance with Wong);

United States v. Maurello, 76 F.3d 1304, 1315-16 (3d Cir.

1996) (same). Thus in Wong, we found no error in the

district court's decision to increase the defendant's offense

_________________________________________________________________

15. Similarly, following a broad reading of "otherwise extensive" would

permit a court to consider the amount of drugs sold in both the base

offense level and as an element leading to the determination that the

activity was extensive. See United States v. Rodriquez, 981 F.2d 1199,

1200, 1200 n.3 (11th Cir. 1993) (per curiam) (finding no problem with

considering drug quantities as evidence of extensiveness).

Not surprisingly, courts following a broad test for extensiveness

repeatedly encounter, though they have rejected them, arguments

complaining of double counting relating to the finding of extensiveness in

fraud cases. See, e.g., Brockman , 183 F.3d at 900 n.8 (rejecting

argument based upon double counting by way of S 2F1.1 and S 3B1.1.).

29

level for both more than minimal planning, see U.S.S.G.

S 2B1.1(b)(5), and aggravating role under U.S.S.G.

S 3B1.1(c) -- the degree of planning and defendant's role

were different attributes of the same conduct. See Wong, 3

F.3d at 668, 669 n.4. Here, the guideline focuses on the

attribute or aspect of the numerosity of the group that the

defendant led or organized. The language of two or more

sections may well require consideration of different

attributes of the same conduct. This is not an untoward

result, but, rather an intended one.16

Having adopted the test that requires us to focus upon

the number and participation of the individuals involved in

the criminal activity, we must address how the district

courts are to apply it to the situations facing them.

Although Application Note 3 supports our mode of analysis,

the guidelines are silent as to how the sentencing court

actually is to decide which non-participants should be

considered, and what combination of participants and

_________________________________________________________________

16. Application Note 4, of S 1B1.1, was amended effective November 1,

1993, to state that "[a]bsent an instruction to the contrary, the

adjustments from different guideline sections are applied cumulatively

(added together). For example, the adjustments fromS 2F1.1(b)(2) (more

than minimal planning) and S 3B1.1 (Aggravating Role) are applied

cumulatively." U.S.S.G. S 1B1.1, Application Note 4 (amended November

1, 1993, Amendment 497). We believe that this amendment, which

followed a few months after our decision in Wong , reinforces the decision

in Wong and our reasoning here. We read the Application Note to explain

that a defendant cannot attack a sentence by arguing that the district

court impermissibly considered evidence of more than minimal planning

when both adjusting under S 2F1.1(b)(2) and when engaged in finding

the defendant to be a leader, organizer, manager or supervisor as

specifically directed by S 3B1.1, Application Note 4. Indeed, prior to the

amendment, the Sixth Circuit Court of Appeals, in United States v.

Romano, 970 F.2d 164 (6th Cir. 1992), found that because it viewed

consideration of more than minimal planning as being required by

S 3B1.1's application notes an enhancement under both provisions was

not permitted. See Romano, 970 F.2d at 167. In United States v.

Cobleigh, 75 F.3d 242 (6th Cir. 1996), the court recognized that Romano

had been effectively overruled by the amendment. See Cobleigh, 75 F.3d

at 251. Nothing about the amendment leads us to believe that it meant

to implicate the breadth of analysis required or permitted under the

second part of S 3B1.1(a) -- the determination of the size of the criminal

activity.

30

countable non-participants is the "equivalent" of five

participants. We agree with the court in Carrozzella that

not every individual tangentially involved in the criminal

activity can fairly be considered in the analysis. See

Carrozzella, 105 F.3d at 803. The purpose of the provision

would rarely be achieved by counting the unknowing

services of some actors in a criminal scenario, a taxicab

driver or bank teller, for instance.

The court in Carrozzella developed a three step inquiry to

help determine which individuals should be counted. 17 See

id. at 803-04. This test distinguishes non-participants who

should be considered from those who should not be

considered on the basis of the defendant's intent in

involving them in the criminal activity and the nature of

their role in the offense.18 Under this test, a sentencing

_________________________________________________________________

17. The Second Circuit wrote in full:

[W]e believe that the following must be determined by the

sentencing

court:

(i) the number of knowing participants;

(ii) the number of unknowing participants whose ac tivities were

organized or led by the defendant with specific criminal intent;

(iii) the extent to which the services of the unkn owing

participants

were peculiar and necessary to the criminal scheme.

Carrozzella, 105 F.3d at 803-04.

18. We note that the Introductory Commentary to Part B, which contains

S 3B1.1, was amended effective November 1, 1990 to state that: "The

determination of a defendant's role in the offense is to be made on the

basis of all conduct within the scope of S 1B1.3(a)(1-4), and not solely

on

the basis of elements and acts cited in the count of conviction." Prior to

the amendment, we held that S 1B1.3 did not apply to the analysis

under 3B1.1. See United States v. Murillo, 933 F.2d 195, 199 (3d Cir.

1991); see also United States v. Pollen, 978 F.2d 78, 89-90(3d Cir. 1992).

In these cases, we focused upon the language of the provision -- the

offense -- to conclude that consideration of who could be considered a

participant must be limited to those involved in the offense charged and

all conduct in furtherance of the offence of conviction. See Murillo, 933

F.2d at 199. In both cases, we noted that our decisions did not address

the effect of the amendment on our analysis. See id. at 198 n.1; see also

Pollen, 978 F.2d at 89 n.24. We do not decide today whether the scope

of S 1B1.3 might affect our analysis.

31

court must first separate out the "participants" as defined

by Application Note 1 from other individuals, non-

participants, who were involved in the criminal activity. "A

`participant' is a person who is criminally responsible for

the commission of the offense, but need not have been

convicted." U.S.S.G. S 3B1.1, Application Note 1. The

defendant may be considered as one of the participants.

See Colletti, 984 F.2d at 1346. The court must next

determine whether the defendant used each non-

participants' services with specific criminal intent. See

Carrozzella, 105 F.3d at 804. Third, the court must

determine the extent to which the services of each

individual, non-participant, were peculiar and necessary to

the criminal scheme. See id. at 804. Utilizing this test, the

Court of Appeals for the Second Circuit has upheld the

consideration of individuals used by the defendant to

legitimize, facilitate or hide the criminal activity. See United

States v. Napoli, 179 F.3d 1, 15 (2d Cir. 1999) (applying

Carrozzella and upholding the finding that the criminal

activity was otherwise extensive on the basis of casino

personnel who unwittingly helped the defendant launder

money); United States v. Nolan, 136 F.3d 265, 273 (2d Cir.

1998) (approving the consideration of accountants, bank

officers, and lawyers used to perpetuate embezzlement from

an ERISA covered pension plan including the filing of

incomplete documents). We view this test as helpful in

defining which non-participants should be counted, and

subscribe to it.

After deciding which individuals may be counted, the

court must then consider whether the sum of the

participants and countable non-participants is the

"functional equivalent" of five participants. We note that, at

a minimum, a criminal scheme must involve more than one

participant in order to be found otherwise extensive; there

can be no less than the defendant and one participant the

defendant led or organized. See U.S.S.G.S 3B1.1,

Application Note 2 ("To qualify for an adjustment under this

section, the defendant must have been the organizer,

leader, manager, or supervisor of one or more other

participants."). However, a court's determination as to the

functional equivalence does not lend itself to a mere

numerical analysis, but will necessarily be guided by the

32

sentencing court's discretion. In deciding whether the total

is the equivalent to five participants, the sentencing court

may consider other factors, including the nature of the

criminal scheme, to evaluate the relative value of the

various countable non-participants.

We will apply the test we have crafted to the case at

hand. We note that Helbling urged us to adopt the Second

Circuit's test and does not contest the District Court's

determination that Helbling, Susman and Sokolic should be

counted as participants. Therefore, the analysis rests upon

the validity of the court's decision to count six non-

participants -- John Grikis, Arnold Kaminer, Bruce Katz,

Donald Mayle, Ronald Santora and Thomas Taylor -- and

the conclusion that the combination of these three

participants and these six non-participant individuals is the

equivalent of five participants. Helbling disputes the

consideration of each individual. He argues that Katz and

Grikis should not be considered because both merely

transferred funds at Helbling's instruction. Helbling argues

that Mayle, Santora and Taylor should not be considered

because they all acted as part of a bankruptcy fraud which

was not peculiar and necessary to the criminal activities

that supported Helbling's conviction, and, finally, Helbling

argues that Kaminer should not be considered because the

letter Kaminer wrote at Helbling's behest, falsely saying

that they had a conversation about an ESOP conversion,

was never sent. We agree with the District Court's

conclusion in all but Kaminer's case, and find that the

District Court properly concluded that the combination of

participants and countable non-participants makes

Helbling's scheme "otherwise extensive."

In arguing that Katz and Grikis should not be considered,

Helbling unduly narrows the scope of our inquiry. While

our test, which considers both the intent with which the

defendant directed the individual's involvement and the

extent to which the services of the individual were peculiar

and necessary to the criminal scheme, instructs the

sentencing court to disregard individuals who are

essentially functionaries, the activities of Katz and Grikis

are distinguishable from those of other banking employees

who, for example, might have simply moved the money for

33

Helbling. See generally Napoli, 179 F.3d at 15 (applying

Carrozzella and upholding the finding that the criminal

activity was otherwise extensive on the basis of casino

personnel who unwittingly helped the defendant launder

money). Helbling used the services of Grikis and Katz to

convert an account held by NatWest as a trustee owing

fiduciary duties, into an account that from which he could

withdraw funds, borrow against and which he could

eventually liquidate.

We also believe that the District Court was correct to

count the activities of Mayle, Santora and Thomas. Each

individual helped Helbling hide his criminal activities. See

Bennett, 161 F.3d at 194 (counting non-participants who

helped hide and legitimize the criminal activity). At the

direction of Helbling, Mayle attested to Helbling's signatures

on the ESOP conversion documents and hid the influx of

$350,000 from the Bankruptcy Court. Similarly, Thomas,

at Helbling's direction, submitted false documents to the

Small Business Association describing the $350,000 as a

personal cash infusion from Helbling. Lastly, at Helbling's

direction, Santora, Helbling's bankruptcy lawyer, submitted

false documents given to him by Helbling to the bankruptcy

court.

We reject Helbling's argument that Mayle, Santora, and

Thomas ought not be considered because their activities

were related to crimes for which Helbling was not indicted,

and, therefore, their activities were not peculiar and

necessary to Helbling's criminal behavior.19 These activities

aided Helbling's embezzlement activities by concealing

Helbling's withdrawals from the Bankruptcy Court, from

the Small Business Administration, and from the plan

participants.

_________________________________________________________________

19. In the proceedings in front of the District Court and again on appeal,

Helbling considers Mayle, Santora and Thomas together because they

provided services relating to bankruptcy fraud. See Appellant's Br. at 46.

Our review of the trial testimony indicates that thefilings signed by

Taylor were not part of the bankruptcy case. Instead, they were

submitted to the United States Small Business Administration. However,

we consider the three individuals together because Helbling's arguments

why each person should not be considered are identical.

34

We agree, however, that the District Court erred in

counting Kaminer. The District Court found that Helbling

directed Kaminer to write a letter in December 1991 stating

falsely that he had a conversation with Helbling about an

ESOP conversion in February 1991. While we disagree with

the Court's factual conclusion, that is not the focal point of

our inquiry.20 As far as can be determined from the record,

Helbling never used the letter, or even placed it in a

situation where it might be used, and, therefore, we cannot

say that Kaminer's conduct, innocuous in itself, was

peculiar and necessary to Helbling's criminal activities.

We will therefore affirm the District Court's decision to

enhance Helbling's sentence under S 3B1.1 on the basis

that he was the organizer or leader of a criminal activity

that was otherwise extensive. Helbling's criminal activity

involved three criminally responsible participants and five

other non-participant individuals whose involvement

Helbling directed and whose actions were peculiar and

necessary to the furtherance of Helbling's efforts. Given the

nature of Helbling's criminal conduct, the combination of

these participants and non-participants was properly held

by the District Court to be the functional equivalent of five

participants.

B. Obstruction of Justice

Helbling contends that the District Court did notfind

that Helbling had the requisite willful intent to obstruct

justice as is required in order to increase Helbling's offense

level under S 3C1.1 of the Guidelines.21 See U.S.S.G.

_________________________________________________________________

20. The District Court found that the letter was false because the

conversation never took place. We find this finding clearly erroneous

because Kaminer testified at trial that the February 1991 conversation

did occur and that the letter merely confirmed that fact. As we find that

Kaminer should not be counted because the letter was never used in

furtherance of Helbling's activities, we need not determine whether

submitting a truthful letter in an effort to support a false conclusion is

the type of involvement that should be counted underS 3B1.1.

21. Section 3C1.1 of the guidelines states:

If (A) the defendant willfully obstructed or impeded, or attempted

to

obstruct or impede, the administration of justice during the course

35

S 3C1.1; United States v. Belletiere, 971 F.2d 961, 965 (3d

Cir. 1992) ("[T]he government bears the burden of proving

by a preponderance of the evidence that the defendant

willfully obstructed or impeded, or willfully attempted to

instruct or impede, the administration of justice."). We

disagree.

The District Court applied the two-level enhancement on

the basis of two acts by Helbling which it found were "clear-

cut attempts to influence" testimony and which it

concluded were covered under Application Note 4.

Application Note 4 lists as one type of applicable behavior,

"(a) threatening, intimidating, or otherwise unlawfully

influencing a co-defendant, witness, or juror, directly or

indirectly, or attempting to do so." U.S.S.G.S 3C1.1,

Application Note 4(a). The first act relied upon by the

District Court was a letter written by Helbling to his two

attorneys, Susman and Sokolic, in May of 1994. In the

letter Helbling threatened to file malpractice actions against

the lawyers and file complaints with the bar association if

they refused to stand behind the documents they created.

Helbling, however, contends that the letter evidences his

frustration rather than an attempt to intimidate. The

second act was a conversation between Helbling and

Donald Mayle in July of 1996 during which Helbling

pressured Mayle to say his signature on the board of

directors' consent was genuine.22 Helbling argues that the

_________________________________________________________________

of the investigation, prosecution, or sentencing of the instant

offense

of conviction, and (B) the obstructive conduct related to (i) the

defendant's offense of conviction and any relevant conduct; or (ii)

closely related offense, increase the offense level by 2 levels.

U.S.S.G. S 3C1.1.

22. Two conversations between Helbling and Mayle are reproduced in the

record. The first conversation took place on July 19, 1996. The second

conversation took place on July 20, 1996. The District Court's opinion

does not make it clear whether it is relying upon both conversations or

just one. The opinion quotes from the July 19, 1996 conversation.

Helbling suggests that part of the District Court's error was failing to

consider both conversations. We believe, however, that both

conversations indicate the same desire to influence Mayle. The issue is

therefore moot.

36

discussion of Mayle's signature was innocuous and that the

District Court failed to put it in context. We disagree on

both scores. We review the District Court's factualfindings

under the clearly erroneous standard. See United States v.

Boggi, 74 F.3d 470, 478 (3d Cir. 1996) (citing United States

v. Cusumano, 943 F.2d 305, 315 (3d Cir. 1991)).

While we recognize that the Helbling's letter varies in tone

and could be subject to differing interpretations, the letter

demanded that the lawyers stand behind documents found

by the jury to be false, and threatened adverse

consequences if they did not do so. With respect to the

conversations with Mayle, the inference drawn from the

conversations is that Helbling desired Mayle to say that he

signed the board of directors' consent and was urging

Mayle to lie. We conclude that the District Court'sfinding

that these acts represented attempts to influence testimony

was not clearly erroneous.

C. Extreme Psychological Injury to the Victims

Helbling also contends that the District Court abused its

discretion when it departed upward two-levels from the

applicable guideline level on the basis of extreme

psychological damage to the victims because there was

insufficient evidence of psychological harm to justify the

departure. See U.S.S.G. S 5K2.3 (Extreme Psychological

Injury to the Victims) (Policy Statement); Unites States v.

Neadle, 72 F.3d 1104, 1111-12 (3d Cir. 1995); United

States v. Astorri, 923 F.2d 1052, 1058 (3d Cir. 1991).

Section 5K2.3 permits a sentencing court to sentence above

the guideline sentence level "[i]f a victim or victims suffered

psychological injury much more serious than that normally

resulting from commission of the offense . . ." The section

continues to explain that:

Normally, psychological injury would be sufficiently

severe to warrant application of this adjustment only

when there is a substantial impairment of the

intellectual, psychological, emotional, or behavioral

functioning of a victim, when the impairment is likely

to be of an extended or continuous duration, and when

the impairment manifests itself by physical or

psychological symptoms or by changes in behavior

37

patterns. The court should consider the extent to

which such harm was likely, given the nature of the

defendant's conduct.

U.S.S.G. S 5K2.3. In Astorri, we upheld a departure for

extreme psychological harm when the District Court found,

both through testimony and its own observation, that the

victims' health suffered after they lost their life savings. See

Astorri, 923 F.2d at 1059.

We review a district court's decision to depart from the

guidelines under an abuse of discretion standard. See

United States v. Jacobs, 167 F.3d 792, 798 (3d Cir. 1999)

(citing United States v. Baird, 109 F.3d 856, 862 (3d Cir.

1997)). We have noted that "[i]f there is any place in

sentencing guidelines analysis where a fact-finder is to be

given considerable deference, it is here where the district

court is to be called upon to assess the psychological

impact upon victims." See Astorri, 923 F.2d at 1058.

However, in Jacobs, a case addressing the psychological

effects of an aggravated assault, we explained that a finding

that the victim's psychological injury was "much more

serious than that normally resulting from the commission

of the crime . . . is a prerequisite for a departure under

S 5K2.3." Jacobs, 167 F.3d at 799.

Relying principally on Astorri, a fraud case, the District

Court found that a two level departure was warranted

under S 5K2.3 because of the effects of Helbling's criminal

activities and harassment. Helbling argues that the District

Court's factual findings were insufficient for the departure.

The District Court found:

[T]he age of Helbling's victims did not facilitate the

commission of his crimes, it did heighten their impact

. . . . The Government has convincingly detailed the

emotional and psychological costs of surviving

Helbling's crimes and resisting his harassment. These

costs include the humiliation of being forced to seek

work at an advanced age and rely on help from family

members, the trauma that comes from family

members, the trauma that comes with losing one's

savings, and the psychological damage resulting from

resisting slurs, threats, frivolous lawsuits, and

38

pressure from the tax authorities. The evidence fully

justifies this two level upward departure.

We believe that the District Court's findings are clearly

supported by the record and that the record itself supports

the determination that Helbling caused psychological injury

"much more serious" than would normally result from his

type of fraudulent activity. In fact, as the District Court

recognized, the record, in the form of the Presentence

Report and the testimony of some of the victims at trial,

contains the same type of evidence of individual loss and

resulting medical complications we found sufficient in

Astorri. Accordingly, we find that the District Court did not

abuse its discretion in departing upward under S 5K2.3.

VI.

For the reasons above, we will affirm the judgment of

conviction and sentence.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

39