United States v. Tupone

Opinions of the United

2006 Decisions States Court of Appeals

for the Third Circuit

3-28-2006

USA v. Tupone

Precedential or Non-Precedential: Precedential

Docket No. 04-2832

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Case No: 04-2832

UNITED STATES OF AMERICA

v.

ALBERT TUPONE,

Appellant

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

District Court No. 03-CR-00169

District Judge: The Honorable Jan E. DuBois

Argued December 12, 2005

Before: SLOVITER, SMITH, and STAPLETON, Circuit

Judges

(Filed: March 28, 2006)

Counsel: Ellen C. Brotman (Argued)

Carroll & Brotman

601 Walnut Street

Suite 1150 West

Philadelphia, PA 19106

Norris E. Gelman

Suite 940

6th & Chestnut Streets

Public Ledger Building

Philadelphia, PA 19106

Counsel for Appellant

Sarah L. Grieb (Argued)

Suite 1250

Office of United States Attorney

615 Chestnut Street

Philadelphia, PA 19106

Counsel for Appellee

OPINION OF THE COURT

SMITH, Circuit Judge

Albert Tupone appeals his felony conviction for making

false representations in connection with the receipt of federal

2

workers’ compensation benefits, a violation of 18 U.S.C. §

1920. Although Tupone and the Government agree that this

case should be remanded for resentencing under the Supreme

Court’s decision in United States v. Booker, 543 U.S. 220

(2005), a conclusion with which we agree, we must decide two

remaining issues. The first is whether the District Court erred

in instructing the jury on the threshold dollar amount for a

felony conviction under § 1920, and in holding that the jury’s

verdict constituted felony, rather than misdemeanor convictions.

The second is whether the District Court erred in finding that the

total amount of benefits Tupone received as a result of false

applications for workers’ compensation benefits constituted the

“loss amount” under § 2B1.1 of the United States Sentencing

Guidelines (the “Guidelines”). Because we conclude that the

District Court’s interpretation of § 1920 was sound, we will

affirm Tupone’s conviction. Because we also conclude,

however, that the “loss amount” fixed by the Court was

incorrect under the Guidelines, we will vacate the sentence, and

we will remand the case for resentencing in light of Booker and

based on a properly calculated loss amount.

I.

On June 20, 1974, Albert Tupone was an employee of the

United States Postal Service. On that day, Tupone suffered

disabling injuries to his back and eardrum when his mail truck

was involved in an accident. As a result of his injuries, Tupone

was found to be totally disabled and began to receive disability

3

payments from the United States Office of Workers’

Compensation Program (“OWCP”).

Each year that Tupone received disability payments, the

Department of Labor monitored his status by, inter alia, sending

him a questionnaire to complete – Form 1032. In particular,

Tupone was required to answer truthfully the following

questions: (1) “Did you work for any employer during the period

covered by the form?”; and (2) “Were you self-employed or

involved in any business enterprise during the period covered by

the form?” During the years 1998 through 2000, Tupone

received Form 1032, and each year he answered the above

employment questions “No.” As a result of his answers, Tupone

received tax-free benefits in the amount of $17,894 for 1998,

$16,592 in 1999, $19,946 in 2000, for a total of $54,432.

In late 1997, however, Tupone began to buy, repair, and

resell used cars. Over the three years in question, Tupone

bought and sold approximately twenty-five cars for some

disputed amount of profit.1 Tupone neither reported the income

1

The Government asserts that Tupone’s profits totaled

$8982.68; Tupone says they were only $3300.81. For the

sentencing hearing, Tupone produced an extensive exhibit,

“Exhibit A,” based in large part on Tupone’s testimony at trial,

detailing the profits made from each car sale. Both profit

figures are based on that exhibit. Tupone’s figure is lower

because the Government’s calculation, tracking that of an

4

to the Department of Labor nor advised the Department of his

self-employment activity when filling out the 1032 forms for

1998 through 2000. The Department of Labor discovered the

omissions, and a criminal investigation ensued.

On March 13, 2003, a grand jury returned an indictment

against Tupone charging him with three counts of violating 18

U.S.C. § 1920.2 The indictment alleged that Tupone had

OWCP employee called to testify at sentencing, “did not use any

items that showed a net loss.” In any event, the parties

stipulated, for sentencing purposes, on the amount that Tupone’s

benefits would have been reduced had he reported his car sale

income. See infra, this section.

2

Section 1920 states:

Whoever knowingly and willfully falsifies,

conceals, or covers up a material fact, or makes a

false, fictitious, or fraudulent statement or

representation, or makes or uses a false statement

or report knowing the same to contain any false,

fictitious, or fraudulent statement or entry in

connection with the application for or receipt of

compensation or other benefit or payment under

subchapter I or III of chapter 81 of title 5, shall be

guilty of perjury, and on conviction thereof shall

be punished by a fine under this title, or by

imprisonment for not more than 5 years, or both;

but if the amount of the benefits falsely obtained

5

violated the statute by certifying “on three 1032 forms that he

had . . . no self-employment and no earned income from any

employment for the previous fifteen month period.” Count One

was based on the form filed on July 1, 1998, which covered the

“previous 12 months”; Count Two was based on the form filed

on May 4, 1999, which covered the “previous 11 months”; and

Count Three was based on the form filed on May 30, 2000,

which covered the “previous 13 months.” Paragraph 6 of the

indictment indicated that Form 1032 “was used to determine

whether the claimant qualified for continued benefits and to

determine whether an adjustment for continued benefits was

warranted.” Paragraph 15 of the indictment alleged that Tupone

“knowingly and willfully . . . concealed . . . material facts, and

made false . . . representations, in connection with the receipt of

compensation and other benefits and payments exceeding

$1000, under Subchapters I and III of Chapter 81 of Title 5 of

the United States Code, the federal workers’ compensation law.”

At trial, the OWCP employee assigned to Tupone’s case

testified as to the total amount of benefits Tupone had received

during the period covered by the indictment. A second OWCP

employee, Agent Gallagher, testified that had Tupone been

does not exceed $1,000, such person shall be

punished by a fine under this title, or by

imprisonment for not more than 1 year, or both.

18 U.S.C. § 1920.

6

truthful on his 1032 forms, the Department of Labor would have

reduced his benefits according to profits made, required

additional medical examinations, and initiated the process

designed to determine if Tupone was still disabled and whether

his benefits should be further reduced or terminated.

At the close of evidence, the Court instructed the jury on

the elements of the offense:

Counts 1, 2, and 3 of the indictment charge

defendant with violating Federal law requiring

recipients of Federal disability benefits to report

any employment or self-employment and any

income earned through that employment.

18 United States Code Section 1920

provides in part that whoever knowingly and

willfully falsifies, conceals or covers up a

material fact or makes a false, fictitious or

fraudulent statement or representation or makes or

uses a false statement or report, knowing the same

to contain any false, fictitious or fraudulent

statement or entry in connection with the

application for or receipt of compensation or other

benefit or payment in excess of $1,000, under

Subchapter 1 or 3 of Chapter 81 of Title 5, shall

be guilty of an offense against the United States.

That’s the statute.

The defendant can be found guilty of the

7

offense of making false statements in order to

receive Federal disability benefits only if all of the

following facts are proved beyond a reasonable

doubt. These are what we refer to as the essential

elements of the crime charged.

First, that defendant knowingly and

willfully made a false statement or report to the

Department of Labor, Office of Workers’

Compensation Program as charged in Counts 1, 2

and 3 of the indictment.

Second, that the false statement or report

was made in connection with an application for or

receipt of Federal workers [sic] compensation

benefits in excess of $1,000.

And, third, that the false statement or

report related to a material fact.

The jury found Tupone guilty of each count of making false

statements.

At the sentencing hearing, Tupone argued that § 1920

defined both a felony and a misdemeanor, and that the felony

required proof that Tupone had received more than $1,000 in

“falsely obtained benefits,” an element of the crime which the

jury had not been instructed to find. The Court rejected the

argument that “falsely obtained” meant something different than

receiving a benefit “in connection with” a false statement. The

8

District Court entered felony convictions based on the jury

verdict.

On the issue of the “loss” calculation under the

Guidelines, Agent Gallagher of the OWCP testified regarding

his calculation of the immediate reduction in Tupone’s benefits

that would have resulted had he reported his earnings on his

1032 forms: $1,955.25 in 1998; $3,718 in 1999; and $1,647.25

in 2000, for a total reduction of $7,320.50. Gallagher also

indicated, as he had at trial, that reported income or employment

by Tupone would have triggered a re-evaluation process

regarding Tupone’s status that could have led to a further

reduction or even elimination of his benefits and may have

resulted in Tupone’s return to some form of work.

Based in large part on Agent Gallagher’s testimony, the

District Court found that the “loss” for Guidelines purposes

associated with Tupone’s offenses was not merely the $7,320.50

in foregone earnings-based benefit reductions, but the entire

amount of benefits that Tupone had received during the

indictment period – $54,432. Using that finding, the Court

determined that Tupone’s total offense level was 12 (rather than

6), and, applying the pre-Booker mandatory Guidelines regime,

sentenced Tupone to five months incarceration and three years

supervised release, including five months of home detention.

Tupone appealed.

9

II.

The District Court exercised subject matter jurisdiction

over this criminal case under 18 U.S.C. § 3231. We exercise

appellate jurisdiction over the District Court’s final order

pursuant to 28 U.S.C. § 1291.

Because Tupone’s challenge to the jury instructions turns

on a matter of statutory interpretation, our review is plenary as

to that issue. United States v. Cooper, 396 F.3d 308, 310 (3d

Cir. 2005). We review the District Court’s application of the

Guidelines to facts for abuse of discretion. Buford v. United

States, 532 U.S. 59, 63-66 (2001). Factual findings will be

reversed only if clearly erroneous. United States v. Moorer, 383

F.3d 164, 167 (3d Cir. 2004); United States v. Napier, 273 F.3d

276, 278 (3d Cir. 2001).

III.

Whether the District Court adequately instructed the jury

turns on a specific question of statutory interpretation. The

parties agree that “[w]here the language of the statute is clear .

. . the text of the statute is the end of the matter.” Steele v.

Blackman, 236 F.3d 130, 133 (3d Cir. 2001). The key issue in

this case is the meaning of the phrase “benefits falsely

obtained.” Both parties look to the “plain text” of the statute,

and both believe that the text cuts their way. We conclude that

the Government’s reading of the statute best comports with the

10

text and structure of § 1920.

Tupone argues before us, as he did at sentencing, that the

phrase “falsely obtained” requires that an additional element be

proved in order for a § 1920 violation to constitute a felony. He

asserts that the use of “falsely obtained” means that, for a jury

verdict to constitute a felony conviction under § 1920, a jury

must find a $1000 difference between what a given defendant

was entitled to receive had he been truthful and what he actually

received owing to his false statement. Because the indictment

and jury instructions did not include the phrase “falsely

obtained,” Tupone argues that he was charged with, and the jury

convicted him of, a misdemeanor.3

The District Court rejected that argument and stated:

[A]nother way to read the statute is that it

makes it a crime to falsely apply for or receive

compensation or other benefits. And if the

3

Thus, Tupone asserts, his sentence was improper under the

Supreme Court’s decision in Apprendi v. New Jersey, 530 U.S.

466 (2000), which requires that any fact that would raise a

defendant’s sentence beyond the prescribed statutory maximum

must be charged in the indictment and proved beyond a

reasonable doubt to a jury. Id. at 490. Tupone argues that the

additional element required to increase his sentence from the

misdemeanor range to the felony range was not found by the

jury.

11

benefits falsely obtained, which is all of the

benefits does not exceed $1,000, we have a

misdemeanor and not a felony.

....

I think the statute criminalizes making of

[sic] a false statement in connection with the

application for or receipt of compensation, and it

makes it a misdemeanor only if the amount of

benefits at issue – I think they could have said “at

issue,” but they said “falsely obtained,” in the

statute, does not exceed $1,000. That’s a

misdemeanor.

According to Tupone, the District Court’s reading of §

1920 renders the phrase “falsely obtained” meaningless. In

other words, he submits that the District Court ignored the

“distinction Congress drew between the misdemeanor offense

of filing a false application . . . which is complete at the time of

filing and requires no loss, and the felony which only occurs

when and if the applicant is paid $1,001 more than he is entitled

to receive.”

The Government argues that the structure and design of

§ 1920 show that the statute “clearly sets forth the prohibited

conduct up front, and makes the violation of the statute a

felony.” In other words, “benefits falsely obtained” refers back

to the criminal conduct proscribed by the statute, i.e., obtaining

12

any benefits as a result of false statements. Under this reading,

“benefits falsely obtained” is not rendered meaningless; it is

synonymous with and refers to benefits received “in connection

with” a false statement.

Although our cases offer no precedent dealing directly

with the meaning of § 1920, two other circuits have weighed in

on the proper reading of the statute. The Tenth Circuit, in

United States v. Henry, 164 F.3d 1304, 1310 (10th Cir. 1999),

concluded that the “plain terms” of § 1920 pertain, at least for

loss calculation purposes, to the benefits obtained in connection

with a false application, “not the amount of benefits obtained

minus the amount that would have been obtained if no false

statement had been made.” Id. In United States v. Hurn, 368

F.3d 1359, 1362 (11th Cir. 2004), the Eleventh Circuit Court of

Appeals indicated that § 1920 requires a jury to find “a causal

link” between a defendant’s false statement and his receipt of

$1,000 in benefits.4 Id. The Court in Hurn also stated, however,

that “[a] reasonable juror would be likely to conclude that a

benefit is obtained ‘falsely’ if it is obtained as a result of a

fraudulent or misleading statement or omission.” Id. In other

words, the Eleventh Circuit concluded that “benefits falsely

4

We note that the Hurn case is not precisely analogous to the

instant appeal inasmuch as the jury instruction in Hurn did

include the phrase “falsely obtained.” Nonetheless, the Court’s

comments regarding the proper interpretation of § 1920 are

instructive.

13

obtained” is synonymous with benefits received as a result of a

false application. No court has addressed § 1920 and interpreted

the statute in the manner urged by Tupone.

In matters of statutory interpretation, the “plain meaning”

of statutory language is often illuminated by considering not

only “the particular statutory language” at issue, but also the

structure of the section in which the key language is found, “the

design of the statute as a whole and its object . . . .” United

States v. Schneider, 14 F.3d 876, 879 (3d Cir. 1994). The

Supreme Court has stated consistently that the text of a statute

must be considered in the larger context or structure of the

statute in which it is found. See, e.g., City of Rancho Palos

Verdes v. Abrams, 125 S. Ct. 1453, 1462 (2005) (“context, not

just literal text, will often lead a court to Congress’ intent in

respect to a particular statute”); Alexander v. Sandoval, 532 U.S.

275, 288 (2001) (“interpretive inquiry begins with the text and

structure of the statute”).

Many of our own cases reflect this methodology as well.

See, e.g., Zheng v. Gonzalez, 422 F.3d 98, 116 (3d Cir. 2005)

(expressly looking to the text and structure of a statute to discern

Congressional intent); Booth v. Churner, 206 F.3d 289, 295 (3d

Cir. 2000) (“We do not quarrel with petitioner’s claim that the

most natural reading of [the relevant phrase], when viewed in

isolation, would [suggest one result]. However, statutory

language must always be read in its proper context. . . . [W]hen

the relevant section is read in its entirety, it suggests [the

14

opposite result]”) (internal citations omitted). It would therefore

be a mistake to “squint[] myopically” at the phrase “falsely

obtained” and interpret it in isolation, rather than in the context

of the “text and structure” of § 1920 as a whole. M.A. ex rel.

E.S. v. State-Operated Sch. Dist. of the City of Newark, 344 F.3d

335, 348 (3d Cir. 2003).

We conclude that, when read in its entirety, § 1920's

phrase “benefits falsely obtained” refers back to – and is

synonymous with – any benefits received “in connection with”

the making of a false representation. The overall “design” and

“object” of § 1920 is to criminalize the making of false

statements in the application for and receipt of government

benefits. Schneider, 14 F.3d at 879. The language of the

primary clause – the import of the section as a whole – is

concerned with communicating that any knowing or willful false

statement made in connection with the application of or receipt

of benefits will be considered a felony. The misdemeanor

exception for benefits less than $1000 rated no separate section,

no subsection, nor even a separate paragraph. Nowhere does §

1920 offer a separate definition for “benefits falsely obtained.”

The statute is devoid of any language that would require the

calculation (i.e., amount of benefits received minus amount

rightly owed in the absence of the false statement) that Tupone

argues is required by its “plain text” for felony conviction. All

of the above militates in favor of the District Court’s reading of

the statute.

15

In contrast, Tupone’s reading turns the import of § 1920

on its head even as he claims to be taking its overall structure

into consideration. Tupone argues that deference is required to

the “distinction Congress drew between the misdemeanor

offense of filing a false application . . . which is complete at the

time of filing and requires no loss, and the felony which only

occurs when and if the applicant is paid $1,001 more than he is

entitled to receive.” Such a reading suggests that the main thrust

of the entire statute is to create a misdemeanor, with the latter

clause carving out a narrow category of felony liability. An

examination of the Federal Criminal Code reveals such a

structure to be highly atypical among criminal statutes –

especially those dealing with fraud, theft, or false statements –

that provide for both felony and misdemeanor offenses. In fact,

numerous sections of the criminal code mirror the precise

linguistic pattern found in § 1920. See, e.g., 18 U.S.C. §§ 655,

656, 1003, 1025. The above code sections and those like them

all include the same structural elements: a lengthy primary

clause describing certain illegal conduct and providing for

felony punishment thereof; a semicolon; and, finally, a second

clause – beginning with the word “but” – which refers back to

the illegal conduct described in the main clause and provides for

misdemeanor punishment in cases where the dollar value

associated with the aforementioned illegal conduct does not

exceed $1000. See, e.g., id. In other words, the above statutes

are felony criminal statutes that include a narrow misdemeanor

exception in the event that the illegal conduct results in de

minimus gain.

16

We reject the argument that, unlike all other identically

structured provisions in the Federal Criminal Code, § 1920

alone primarily establishes a misdemeanor and creates a narrow

“felony exception” that turns on an undefined, two-word phrase,

and that requires a calculation nowhere mentioned or implied in

the text. The much more natural and obvious reading of § 1920

is that the main “effect” of the text is to create the felony of

making false statements related to government benefits, and to

carve out a narrow misdemeanor exception for those defendants

whose false statements relate to applications for or receipt of de

minimus benefits and dollar amounts.5

Applying this interpretation of the statute, we conclude

that both the indictment and jury instructions set out the

necessary elements for felony liability under § 1920. Paragraph

15 of the indictment alleged that Tupone “knowingly and

5

Accordingly, we note that Tupone’s “rule of lenity”

argument is unavailing. Under Supreme Court and Third Circuit

precedent, the rule of lenity “applies only where a statute is

found to be ambiguous upon review of the text, structure,

legislative history and policies of the statute, not at the

beginning of the process of construction, as an overriding

consideration of being lenient to wrongdoers.” E.g., United

States v. Johnson, 155 F.3d 682, 685 (3d Cir. 1998) (internal

quotations and citations omitted). As discussed above, any

ambiguity that may exist as to the text of the latter clause of §

1920 is resolved upon review of the structure of the section as

a whole.

17

willfully . . . concealed . . . material facts, and made false . . .

representations, in connection with the receipt of compensation

and other benefits and payments exceeding $1000 . . . .” The

jury instruction stated, inter alia, that the jury must find that

Tupone “knowingly and willfully made a false statement or

report to the Department of Labor . . . in connection with an

application for or receipt of Federal workers [sic] compensation

benefits in excess of $1,000.” Although neither the indictment

nor the instruction contained the phrase “falsely obtained,” both

tracked other language from § 1920 that expresses all the

elements necessary for a felony violation of the statute.

The phrase “benefits falsely obtained” does not create an

additional element to felony liability under § 1920. The District

Court therefore properly treated the jury verdict against Tupone

as three felony convictions. The conviction will be affirmed.6

IV.

We must next decide whether the District Court erred in

finding that the loss resulting from Tupone’s false statements

equaled the entire amount of benefits Tupone received from

1998 to 2000 ($54,432), rather than fixing the loss at the amount

6

Because we conclude that the District Court committed no

error as to the jury instructions, we need not reach the issue –

briefed by the parties – whether the standard for evaluating such

an error would be “plain error” or “harmless error.”

18

that Tupone’s benefits would have been reduced immediately

had Tupone filed truthful 1032 forms ($7,320.50). We conclude

that the Court erred in its application of the Guidelines to this

case.

A.

Tupone argues that the correct measure of “loss” under

the Guidelines as applied to § 1920 is “the difference between

what Tupone actually received, and what he would have

received, if his forms had been accurate.” The Government

implicitly argues that the loss under § 1920 is necessarily equal

to the entire amount of benefits received as a result of Tupone’s

false statements. We are persuaded that, in general, the

Guidelines support a “difference” method of loss calculation.

The Commentary to U.S.S.G. § 2B1.1 states that, as a

general rule, “loss” under § 2B1.1 is the greater of “actual” or

“intended” loss. U.S.S.G. § 2B1.1 app. note 3(A). That same

Commentary, however, indicates clearly that cases involving

government benefits call for the use of a more particularized

standard in evaluating loss:

(F) Special Rules. – Notwithstanding subdivision

(A), [which states the above general rule,] the

following special rules shall be used to assist in

determining loss in the cases indicated

19

....

(ii) Government Benefits. – In a case

involving government benefits (e.g.,

grants, loans, entitlement program

payments), loss shall be considered to be

not less than the value of the benefits

obtained by unintended recipients or

diverted to unintended uses, as the case

may be. For example, if the defendant was

the intended recipient of food stamps

having a value of $100 but fraudulently

received food stamps having a value of

$150, loss is $50.

U.S.S.G. § 2B1.1 app. note 3(F)(ii). This subdivision explains

that “loss” in government benefits cases is, at a minimum, equal

to the amount of benefits obtained that were not “intended” by

the government to be obtained by a given recipient. In those

cases in which a defendant was intended by the government to

receive some amount of benefits, the loss is the delta between

the amount of benefits “intended” by the government to be

received by that defendant and any greater amount of benefits

actually received.7

7

We note that both the parties and the District Court seem to

have proceeded under the assumption that U.S.S.G. § 2B1.1 app.

note 3(A) provided the relevant definition of “loss” under the

Guidelines in this case. As we have indicated, U.S.S.G. § 2B1.1

20

Our cases indirectly support the idea of a “difference”

method of calculating loss under the Guidelines in government

benefits cases. No precedent binding on this Court has dealt

directly with the standard for “loss” under § 1920. 8 That said,

there are decisions of our Court which, though they involve

specific offenses and Guidelines provisions distinguishable from

the case at bar, support the general concept of a “difference”

standard of loss. See United States v. Kopp, 951 F.2d 521 (3d

Cir. 1991) (loss amount in case involving false statements on

loan applications is the amount of money the victim lost as of

sentencing – i.e., the amount of the loan not repaid – not the full

amount of the original loan); United States v. Evans, 155 F.3d

245 (3d Cir. 1998) (in case involving fraudulent submission of

insurance claims, loss amount does not include legitimate

insurance claims submitted on behalf of legitimate victims).

app. note 3(F) supersedes subdivision (A) of Note 3 in

government benefits cases and provides the relevant definition

of “loss” in such cases.

8

The only two courts of appeal to have addressed the issue

squarely came to differing conclusions. As mentioned above, in

Henry, the Tenth Circuit stated explicitly that “the plain terms

of § 1920 pertain to ‘the amount of the benefits obtained,’ not

the amount of benefits obtained minus the amount that would

have been obtained if no false statement had been made.”

Henry, 164 F.3d at 1310. The Fourth Circuit, however, in

United States v. Dawkins, 202 F.3d 711, 715 (4th Cir. 2004),

held that the “difference” standard was correct.

21

Furthermore, as an analytical matter, we note the

necessary distinction between the task of evaluating the text of

§ 1920 proper and that of measuring the “loss” amount under the

Guidelines resulting from a violation of that text. The former

task involves assessing the breadth and level of culpability – and

liability – prescribed by the language of § 1920. As discussed

above, Congress, in passing § 1920, ascribed felony liability to

the making of false statements in connection with the

application for or receipt of benefits in excess of $1000. For the

qualitative purpose of measuring criminal liability, then, all the

benefits which a defendant applies for or receives must

necessarily be “counted.”

Loss calculations under the Guidelines, however,

generally involve a different analytical goal. Rather than

measuring the more qualitative categories of criminal culpability

and liability as such, the court attempts to reach an appropriate

sentence by quantifying the amount of “harm” wrought against

the victim – here the government – by a particular criminal act.

Applying that principle to § 1920 and other government benefits

cases, the Guidelines Commentary defines the aforementioned

“harm” as the value of benefits obtained by an individual in the

absence of a government intention that he obtain them.

Accordingly, we hold that the proper “loss” calculation under

the Guidelines for a violation of 18 U.S.C. § 1920 is the

difference between the amount of benefits actually obtained by

a given defendant and the amount the government intended him

to receive during the relevant period.

22

B.

Applying the above standard, we conclude that the

District Court erred in finding that the “difference” in this case

was the entire amount of benefits Tupone received from 1998

through 2000.

In this case, the key guidance on government “loss” is

found in OWCP Agent Gallagher’s testimony at the sentencing

hearing. Based on our review of that testimony, the rest of the

sentencing record, and the District Court’s remarks regarding

the evidence, we conclude that the only “loss” that can be

definitively shown on this record is the amount by which

Tupone’s benefits would have been immediately reduced had he

reported his car sale profits.

Gallagher’s testimony contained two essential

components for loss calculation purposes. The first component

involved the immediately ascertainable and retroactive loss that

OWCP suffered because Tupone failed to report his income.

Gallagher testified that Tupone’s activities during the relevant

years did not constitute “sufficient information to establish a

pattern,” and that OWCP “would therefore base any

adjustments for these periods of times [sic] strictly on the

figures that [Tupone] earned.” Gallagher also stated that any

overall change in Tupone’s disability status resulting from his

reported income would affect his prospective benefits and would

not be applied retroactively.

23

The second key component of Gallagher’s testimony

relates to further possible loss based on a re-evaluation of

Tupone’s eligibility for benefits. Gallagher indicated that had

Tupone reported his income on his 1032 form in 1998, the

OWCP would have considered that income to be prima facie

evidence of “partial disability” rather than total disability and

would have initiated a re-evaluation of Tupone that could have

led to further reductions in his benefits. Gallagher testified –

when questioned by the Court – that his “earnings only”

assessment of benefits reduction was a retroactive estimate

based on the information provided by the defense as to Tupone’s

car sale profits. Gallagher said he was hindered in his estimate

because, in a trial context, it was given “so late after the fact,”

[W]hereas, in actual practice, as soon as we’re

notified of these type [sic] of earnings, we’re

going to start the ball rolling with the medical

examination . . . we’re going to determine . . .

disability . . . we’re going to go back to the

employing agency and request a job offer to get

[the beneficiary] back to their original employer.

Tupone’s attorney responded by asking whether, on the mere

basis of “Tupone’s sale of six cars in 1999 . . . [OWCP] would

start to do a work- [up?]”; Gallagher responded, “Oh yes”;

Attorney: “– an earning capacity [?]”; Gallagher: “Yes,

absolutely.”

Additionally, Agent Gallagher testified that despite the

24

required regular medical reports given by all beneficiaries, a

report of earnings or employment by a beneficiary would call

into question whatever medical information OWCP had on file.

Accordingly, the agency would likely seek an additional and

“[m]ore definitive” medical report in light of the new

information.

Other evidence illustrates the two-tiered import of Agent

Gallagher’s testimony. For example, Exhibit B to Tupone’s

Sentencing Memorandum was a letter sent by Agent Gallagher

to the defense after the defense provided Gallagher with

profit/loss figures from Tupone’s car sales. In that letter,

Gallagher states that his best estimate of actual retroactive

benefits reductions based on Tupone’s profits would have been

$7,320.50. Gallagher adds, however, that he “would also point

out that had this office been aware of Mr. Tupone’s activities,

re-evaluation of his medical condition would have been

indicated, with potential further reduction or termination of his

compensation entitlement.”

Taken together, these two aspects of Agent Gallagher’s

testimony support two distinct propositions. The first is that

Tupone’s omission of his earnings caused the OWCP to pay

Tupone at least $7,320.50 more than OWCP would have

“intended” to pay him during the relevant period had he reported

his income. U.S.S.G. § 2B1.1 app. note 3(F)(ii). The second is

that Tupone’s omissions precluded the OWCP from (1)

reclassifying Tupone as “partially” rather than totally disabled,

25

and (2) re-evaluating Tupone and, possibly, further reducing or

terminating his prospective eligibility for benefits. Even if

Tupone had reported his income on the first relevant 1032 form

(in 1998), and that disclosure had led to a re-evaluation by

OWCP and a prospective termination of his benefits, Tupone

could only have been subject to a partial reduction of his

benefits – based on profits earned in the previous year – for the

first year of the indictment period. Thus, nothing in the record

supports a finding that, had Tupone reported his income on any

or all of the relevant 1032 forms, the OWCP would have

completely terminated his benefits retrospectively, such that he

would have been entitled to no benefits at all for the entire

indictment period.

Under the Guidelines, the Government has the burden of

showing the amount of loss resulting from criminal conduct.

The sentencing court, though it need not reach a precise figure

as to loss, must make a “reasonable estimate” of loss that must

be based on the “available information” in the record. U.S.S.G.

§ 2B1.1 app. note 3(C). Under the particular facts of this case,

the Government failed to show that full retroactive termination

of Tupone’s benefits – such that the loss resulting from

Tupone’s omissions would be equal to the entire amount of

benefits he received – was among the possible results of any re-

evaluation by OWCP. As such, a loss amount set at the entire

amount of benefits Tupone received during the indictment

period was not within the range of “reasonable estimate[s]” of

loss based on the evidence. Id.

26

On this record, a loss calculation set at $54,432, the entire

amount of benefits received by Tupone during the indictment

period, is precluded by the evidence and constitutes an incorrect

application of the Guidelines. We conclude that the “available

information” in this case shows with adequate certainty that

Tupone’s false representations caused him to become an

“unintended recipient” of $7,320.50 in workers’ compensation

benefits. U.S.S.G. § 2B1.1 app. note 3(C), 3(F)(ii). We will

vacate the sentence imposed by the District Court, and we

instruct the Court on remand to recalculate Tupone’s total

offense level under the Guidelines based on a “loss amount” of

$7,320.50.

V.

Finally, as noted above, the parties jointly assert that

Tupone’s case should be remanded for resentencing pursuant to

the Supreme Court’s decision in United States v. Booker. As

discussed in section IV.B., supra, we conclude that the case

should be remanded for resentencing in light of the incorrect

loss calculation. We further conclude that the Supreme Court’s

decision in Booker constitutes an independent ground for

remand of this case, and that the post-Booker, advisory

Guidelines regime – with the properly calculated offense level

– should be applied at resentencing.

In United States v. Davis, 407 F.3d 162, 165 (3d Cir.

2005), we announced our intention to remand for resentencing

27

those cases in which sentence was imposed under the pre-

Booker mandatory Guidelines regime, was enhanced pursuant

to judge-found facts (other than the existence of prior

convictions), and was challenged on direct appeal:

Furthermore, as noted by the Court of Appeals for

the Sixth Circuit, “[w]e would be usurping the

discretionary power granted to the district courts

by Booker if we were to assume that the district

court would have given [defendant] the same

sentence post-Booker.” Failure to remand for

resentencing, therefore, could adversely affect the

fairness and integrity of the proceedings.

Accordingly, defendants sentenced under the

previously mandatory regime whose sentences are

being challenged on direct appeal may be able to

demonstrate plain error and prejudice. We will

remand such cases for resentencing.Id. at 165. As

the above language from Davis suggests, in order

to qualify for resentencing under Booker, a

defendant must object to his sentence at

sentencing and reassert his argument on direct

appeal. See U.S. v. Ordaz, 398 F.3d 236, 239 (3d

Cir. 2005).

Tupone obviously preserved the sentencing issue at his

sentencing hearing and now raises it on appeal before us. The

Government agrees that remand is appropriate under Booker.

The District Court imposed Tupone’s sentence under the pre-

28

Booker mandatory Guidelines regime, and the Court enhanced

Tupone’s offense level based on facts found by the Court, rather

than by the jury. The case is thus subject to Booker scrutiny and

appropriate for remand on that ground.

VI.

For the foregoing reasons, the District Court’s conviction

will be affirmed. We will vacate the sentence imposed by the

District Court, and we will remand the case for resentencing.

29

STAPLETON, Circuit Judge, dissenting:

I agree with my colleagues that the Sentencing

Commission intended the degree of punishment in situations of

this kind to turn on what the defendant received that he was not

entitled to receive rather than on the size of the transaction itself.

Ironically, however, the Court’s opinion, while giving effect to

this judgment of the Commission, refuses to acknowledge an

identical judgment of Congress reflected in a literal reading of

the text of § 1920. For this reason, I respectfully dissent.

Section 1920 provides as follows:

Whoever knowingly and willfully falsifies,

conceals, or covers up a material fact, or makes a

false, fictitious, or fraudulent statement or

representation, or makes or uses a false statement

or report knowing the same to contain any false,

fictitious, or fraudulent statement or entry in

connection with the application for or receipt of

compensation or other benefit or payment under

subchapter I or III of chapter 81 of title 5, shall be

guilty of perjury, and on conviction thereof shall

be punished by a fine under this title, or by

imprisonment for not more than 5 years, or both;

30

but if the amount of the benefits falsely obtained

does not exceed $1,000, such person shall be

punished by a fine under this title, or by

imprisonment for not more than 1 year, or both.

18 U.S.C. § 1920.

Insofar as here relevant, the District Court read § 1920 to

provide that “whoever knowingly and willfully . . . makes a false

statement . . . in connection with the application for or receipt of

compensation or other benefit or payment shall be guilty of

perjury and . . . shall be punished by a fine . . . or imprisonment

for not more than 5 years, or both, . . . but if the amount of the

benefits . . . obtained does not exceed $1,000, such person shall

be punished by a fine . . . or imprisonment for not more than one

year, or both.”

Congress could have enacted a coherent statute so

providing, but it did not. Section 1920, as enacted by Congress,

criminalizes precisely the conduct the District Court read it to

criminalize, but when it came to punishment Congress did not

make the degree of punishment turn on “the amount of the

benefits obtained.” Congress rather provided that the degree of

punishment would turn on the quantum of wrongful conduct

rather than the extent of the defendant’s dependence on the

31

government, i.e., on “the amount of the benefits falsely

obtained.” 18 U.S.C. § 1920 (emphasis supplied).9

The District Court interpretation reads out of the statute

entirely the word “falsely,” thereby violating the rule of

construction that no statutory text should be ignored as

surplusage unless there is no other reasonable alternative. See

Bailey v. United States, 516 U.S. 137, 146 (1995) (employing

the canon to reject an interpretation of a criminal statute because

“[n]othing here indicates that Congress, when it provided these

two [different] terms, intended that they be understood to be

redundant. We assume that Congress used two terms because it

intended each term to have a particular, nonsuperfluous

meaning.”); United States v. Cooper, 396 F.3d 308 (3d Cir.

2005) (quoting TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001),

9

It is, of course, true that the “overall ‘design’ and ‘object’

of § 1920 is to criminalize the making of false statements in the

application and receipt of government benefits” and the judge’s

instructions to the jury would have been entirely appropriate

prior to the age of Apprendi. Op. at 12. I fail to perceive,

however, how this “militates in favor of the District Court’s

reading of the statute.” Id. The statute was enacted prior to

Apprendi, and in that context, the relevant text clearly related

only to the Court’s sentencing decision. If that text had referred

to “benefits obtained,” the statute could fairly be read to limit

the judge’s punishment discretion by a reference back to

“compensation, or other benefit or payment.” Congress chose,

however, to limit punishment in accordance with the amount of

“benefits falsely obtained.”

32

for the proposition that “a statute ought, upon the whole, to be

so construed that, if it can be prevented, no clause, sentence, or

word shall be superfluous, void, or insignificant”). Here, the

literal reading of the entire statute as written produces an

eminently reasonable result. Indeed, I regard it as far more

likely that Congress intended the punishment to turn on how

much the defendant received that he was not entitled to rather

than the size of the transaction itself. As I have indicated, this

is precisely the same judgment reached by the Sentencing

Commission as a result of its deliberations. See U.S.S.G. §

2B1.1, Application Notes § 3.(F)(ii) (For example, “if the

defendant was the intended recipient of food stamps having a

value of $100 but fraudulently received food stamps having a

value of $150, loss is $50” for enhancement purposes.). In

short, I would hold that § 1920 means what it literally says.

Even if it could be said that § 1920 was ambiguous,

however, I would consider myself bound by the rule of lenity to

construe the statute in a manner that would produce the lighter

sentence in those cases where the two readings would produce

different results. United States v. $734,578.82 in U.S. Currency,

286 F.3d 641, 657 (3d Cir. 2002) (“[W]here a statute is punitive

in nature, the rule of lenity requires that any ambiguity in the

statute be resolved in favor of the claimant.”); United States v.

Fenton, 309 F.3d 825, 828 n.3 (3d Cir 2002) ([W]here . . . the

[Sentencing] Guidelines do not clearly call for enhancement, the

rule of lenity should prevent the application of a significantly

increased sentence.”).

33

Because there was no determination by the jury as to

whether “the amount of the benefits falsely obtained” by Tupone

exceeded $1,000 and because there was testimony from Tupone

on the basis of which a juror might have a reasonable doubt

about whether that was the case, I would remand with

instructions that Tupone should be resentenced to no more than

a fine or imprisonment of one year, or both.