Petition for Writ of Certiorari — Lopez v. United States

Supreme Cout, US.

FILED

001086 JAN - 4 2001

No.

MOE Kee ee Tete ot eae

In The

Supreme Court of the United States

*

ANGEL C. LOPEZ,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

S

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Seventh Circuit

¢

PETITION FOR WRIT OF CERTIORARI

¢

J. Steven BECKETT

Counsel of Record

Becxett & Wesser, P.C.

508 South Broadway Avenue

Post Office Box 17160

Urbana, IL 61803-7160

(217) 328-0263

Attorney for Petitioner

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Whether a sentencing court, pursuant to the Federal

Sentencing Guidelines, may properly calculate a vic-

tim’s loss, by holding the Defendant responsible for

an estimated Co-Defendant’s gain?

Whether it is a violation of the Ex Post Facto Clause

of the United States Constitution, Article I, Section 9,

Clause 3, to apply the Mandatory Victim Restitution

Act to the Defendant’s conduct, which occurred six or

more years prior to the effective date of the Act?

li

TABLE OF CONTENTS

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Appendix

Opinion of the Seventh Circuit Court of

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Judgment of the Seventh Circuit Court of

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Sentencing Remarks of the United States Dis-

trict Court for the Central District of Illinois,

Honorable Michael Mimm, United States Dis-

trict Judge PresiGing. « «s.0.00icaskscenssaeuces App. 28

Judgment and Sentencing Order of the United

States District Court for the Central District of

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18 U.S. § SOGOK..« cckce cca App. 51

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TABLE OF AUTHORITIES

Page

CASES

U.S. v. Anderson, 45 F.3d 217 (7th Cir. 1995).......... 7

U.S. v. Edwards, 162 F.3d 87 (3rd Cir. 1998)........... y

U.S. v. Galbraith, 20 F.3d 1054 (10th Cir. 1994), cert.

Se ee Gt GY ND ks bt cn es cidcdceded vaveces 7

U.S. v. Marcus, 82 F.3d 606 (4th Cir. 1996)............ 7

U.S. v. Newman, 144 F.3d 531 (7th Cir. 1998) ........ 5

U.S. v. Richards, 204 F.3d 177 (5th Cir. 2000), cert.

denied as Braugh v. United States, __ U.S. __,

ee ce debavasveeahe 8

U.S. v. Rutgard, 116 F.3d 1270 (9th Cir. 1997)......... 8

U.S. v. Siegel, 153 F.3d 1256 (11th Cir. 1998).......... 4

U.S. v. Viteck Supply Corp., 144 F.3d 476 (7th Cir.

1998), cert. denied, 525 U.S. 1138 (1999)............. 8

STATUTES AND CONSTITUTIONAL PROVISIONS

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PETITION FOR WRIT OF CERTIORARI

Petitioner respectfully prays that a Writ of Certiorari

issue to review the judgment and opinion of the United

States Court of Appeals for the Seventh Circuit entered

on August 17, 2000.

OPINION BELOW

The opinion of the United States Court of Appeals for

the Seventh Circuit is reported at __ F.3d ___ (7th Cir.

2000). A copy of the opinion is included in the Appendix.

¢

JURISDICTION

Jurisdiction in this cause is premised upon 28 U.S.C.

§1254(1) for review by certiorari of the judgment and

opinion of the United States Court of Appeals for the

Seventh Circuit. Petitioner in the District Court and in the

Court of Appeals asserted Federal claims based on the

United States Constitution and interpretations of the

United States Federal Sentencing Guidelines. A written

opinion was issued by that Court on August 17, 2000.

Petitioner sought rehearing, which the Court denied on

October 6, 2000.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Relevant portions of 18 U.S.C. §3663A and the Ex

Post Facto Clause to Article I, Section 9 of the United

States Constitution are set forth in the Appendix.

*

STATEMENT OF THE CASE

Petitioner was the president of a credit union, Credit

Union 1 (hereinafter referred to as “CU1”) based in Ran-

toul, Illinois. Along with the Chairman of the Board of

Directors of CU1, Richard Binet (hereinafter referred to as

“Binet”), Petitioner was charged and plead guilty to a

Federal conspiracy offense in an indictment in the Central

District of Illinois, in violation of 18 U.S.C. §371. The two

executives were simultaneously employed at CUl1

throughout the 1980’s. As members of the Board, each

was enjoined to eschew personal profit from service on

the Board, to the credit union, except for Petitioner's

salary as President. The men were indicted in 1997 for

fraudulent conduct that occurred between 1983 and 1992.

CU1 was governed by a Board of Directors that over

time was handpicked by the Petitioner and Binet and

which provided no real oversight to their operations.

Nevertheless, the credit union was quite successful, and

with its growth and success, both Petitioner and Binet

enjoyed personal financial opportunities. Binet, relying

upon Petitioner’s assistance, created several companies

that did ancillary work for the credit union membership,

3

including travel (CU Travel), insurance (CUSI) and adver-

tising (Hana Advertising). In each instance, Binet person-

ally profited by consultant payments that were approved

by the Board or by Petitioner, without direct Board

approval. In the end, Binet received benefits amounting

to personal compensation of approximately $400,000. He

was also provided one new automobiles during his ten-

ure.

Petitioner enjoyed a stable working relationship and

lucrative contractual compensation. Because he wanted

job security and had no retirement benefits, he negotiated

a contract with the Board (headed by Binet) that guaran-

teed a pension of 50% of his highest salary for ten years,

after ten years of service, and prevented the Board from

discharging him, even for negligent fiduciary or regula-

tory violations. When auditors criticized the contract,

Petitioner negotiated a $530,000 lump sum buy-out of the

contract. Petitioner also was assigned the value of a “key

man” life insurance policy on his own life that was

owned by the credit union.

Utilizing the assets of the credit union, Binet recom-

mended and managed an investment portfolio for the

Board that consisted of highly sophisticated collateralized

mortgage obligations (described as “CMO’s” and

“CMOR’s”). Binet made himself indispensable to the

credit union because no one understood the investments

except him. Petitioner supported Binet’s activities and

Binet supported Petitioner. When the deposit insurer for

the credit union (National Credit Union Share Insurance

Fund, “NCUSIF”) demanded that CU1 divest itself of the

CMO’s and CMOR’s, the two men agreed that CU1 would

instead, divest itself of the insurer. They organized pub-

licity informing the membership that private share insur-

ance was better for the credit union, when in fact, the

motivation was to avoid the investment divestiture order.

When the new insurance company (American Share

Insurance, “ASI”) was in place, however, ASI and the

Illinois Department of Financial Institutions still com-

manded divestiture and eventually removed Petitioner,

Binet and the rest of the Board from office in March 1992.

Sometime in 1988, Binet purchased a CMO using

credit union funds ($8.8 million), acting through a com-

pany he had organized, CU Mortgage, Inc. He later sold

the investment, returning the credit union funds, and in

fact returning a profit of approximately $78,000 to the

credit union. He kept as his personal gain an amount of

funds that he later, at Petitioner’s sentencing hearing,

estimated to be at least $800,000 to $1,000,000. He had no

documents to support this amount of his personal gain,

nor any records to support his claim that Petitioner was a

joint venturer in the CMO scheme. Petitioner denied any

role in the scheme, noting to Federal investigators during

his proffer that Binet had mentioned the proposed CMO

scheme to him and that Petitioner had declined any

involvement. It was undisputed that Petitioner received

no proceeds from Binet’s CMO scheme.

Following their convictions, Petitioner and Binet

were the subject of sentencing hearings with Binet being

the chief government witness against Petitioner. Binet

was the beneficiary of a government departure motion

under §5K1.1 of the Federal Sentencing Guidelines based

‘on his testimony and cooperation with the government.

Petitioner had proffered assistance to the government as

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well, but his sentencing entreaties were rejected by prose-

cutors. All credibility questions were resolved in the Dis-

trict Court in favor of Binet and against Petitioner.

Pursuant to §2F1.1 of the Guidelines, the District

Court determined the amount of loss attributable to the

Petitioner to include $600,000 based on the gain to Binet

in the 1988 CMO transaction. Petitioner’s objection that

this enhancement was improper because there was no

loss to the credit union, and in fact a profit, was rejected

by the District Court. Petitioner was sentenced to 38

months imprisonment. Additionally, the District Court

determined a restitution amount of in excess of

$1,000,000, and ordered payment by Petitioner under the

provisions of the Mandatory Victim Restitution Act, 18

U.S.C. §3663A, regardless of Petitioner’s inability to pay

restitution. The MVRA was enacted by Congress to be

effective in 1996. Petitioner’s Constitutional claim that

application of the MVRA to his case violated the Ex Post

Facto Clause of the United States Constitution was like-

wise rejected by the District Court.

Petitioner appealed to the United States Court of

Appeals for the Seventh Circuit and raised both Federal

issues. As to both the loss enhancement and restitution

issues, Petitioner pointed to the split of authority with

other Circuit Courts of Appeal. Nonetheless, a panel of

the Seventh Circuit Court of Appeals rejected Petitioner’s

claims and affirmed the District Court. Petitioner’s timely

filed Petition for Rehearing en banc was also denied.

¢

REASONS FOR GRANTING THE WRIT

There is a significant split in the holdings of the United

States Circuit Courts of Appeals on the issue of “gain

for loss” where no loss is shown, and on the issue of the

ex post facto application of the Mandatory Victim Resti-

tution Act as punishment in a Sentencing Order.

This case presents two important issues for this

Court to address regarding a conflict among the Circuit

Courts of Appeal over two recurring sentencing issues.

1. Sentence Enhancement Based on Gain

First, with respect to “gain for loss”, the United

States Sentencing Commission has determined a meth-

odology of sentence enhancements in cases, like this one,

involving fraudulent conduct where the seriousness of

the crime is enhanced by the amount of loss caused by

the fraud of the defendant (see §2F1.1(b)), or in some

instances, loss caused by a co-defendant (see United

States Sentencing Guidelines, §1B1.3(a)(1)). What of the

circumstance, however, when the victim sustains no loss

from the defendant’s or co-defendant’s fraudulent con-

duct, and, in fact, receives a gain?

The panel opinion of the Seventh Circuit in this case

recognized “gain as substitute for loss”, relying on §2F1.1

Comment N.8 of the 1989 Guidelines that “the offenders’

gross gain from committing the fraud is an alternative

estimate that ordinarily will understate the loss” and that

the Section allows the defendants’ gain to be used as a

basis for calculating an approximate loss, will understate

the loss. The Court reasoned, relying on Seventh Circuit

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authority, that a defendant’s gain could provide an esti-

mate of an appropriate loss when the exact amount of

loss is not available. U.S. v. Anderson, 45 F.3d 217, 221 (7th

Cir. 1995).

The difficulty with the Seventh Circuit opinion and

panel analysis is that it is assumes that a sentencing court

must turn to a gain where a loss is not capable of identi-

fication. Other Circuits have addressed this issue and

determined that where there is no loss, there should be

no sentencing enhancement pursuant to §2F1.1 Loss

Table. Thus, in the U.S. v. Marcus, 82 F.3d 606, 608 (4th

Cir. 1996), the Court noted “gain, measured either by

gross sales or some other gauge, does not support a loss

enhancement under §2F1.1(b) if there was no actual,

probable or intended loss to the victims.” Again, in U.S.

v. Galbraith, 20 F.3d 1054, 1060 (10th Cir. 1994), cert. denied,

513 U.S. 889 (1994) the Court noted that “the defendant’s

gain may be used only as alternate estimate of that loss; it

may not support an enhancement on its own if there is no

actual or intended loss to the victims.”

The Seventh Circuit’s misinterpretation of “gain” as a

substitute for “loss” is further exacerbated by the use of

sentencing conspiracy theory. Under §1B1.3(a)(1) Peti-

tioner could be held responsible for losses occasioned by

Co-Defendant Binet, reasonably foreseeable as part of a

conspiratorial agreement. However, to use a gain

obtained by Binet, where there is no loss to the Credit

Union, and in fact a $78,000 profit, is to exalt form over

substance and to provide for a sentencing enhancement

not proved by the Government, based on loss. Indeed, the

Seventh Circuit holding is not only contrary to the law of

other Circuits, it is also contrary to other case holdings in

the Seventh Circuit. (See U.S. v. Viteck Supply Corp, 144

F.3d 476, 490 (7th Cir. 1998), cert. denied, 525 U.S. 1138

(1999)) Applied to the present case, the contrary Circuit

authority would reduce Petitioner’s sentencing level by 3

points under §2F1.1.

This Court should grant certiorari to review the “gain

as a substitute for loss” issue and resolve the conflict

amongst the Circuit Courts of Appeals.

2. Ex Post Facto Application of Mandatory Victim Res-

titution Act 18 U.S.C. §3663A

The second recurring issue deals with the impact of

the Mandatory Victim Restitution Act. The MVRA [Man-

datory Victim Restitution Act] 18 U.S.C. §3663A et seq.

mandates that the District Court order a defendant to pay

restitution without taking into consideration the defen-

dant’s ability to pay. Although the split in Circuits was

pointed out to the Seventh Circuit, the panel adhered to a

prior stated view of the Seventh Circuit Court of Appeals

that the MVRA posed no ex post facto dilemma because

restitution did not equate to “punishment” as prohibited

by the Ex Post Facto Clause to Article I, Section 9 of the

United States Constitution. (See U.S. v. Newman, 144 F.3d

531, 537 (7th Cir. 1998)) Other Circuits hold in direct

contradiction of the Seventh Circuit’s position in Peti-

tioner’s case. (See U.S. v. Rutgard, 116 F.3d 1270, 1294 (9th

Cir. 1997) “the substantive change in the criminal law

cannot be applied retroactively without violation of Ex

Post Facto Clause of the United States Constitution.”;

U.S. v. Richards, 204 F.3d 177, 213 (5th Cir. 2000), cert.

denied as Braugh v. United States, ___ U.S. __, 121 S.Ct. 73

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(2000), “Iby requiring the court to order restitution in the

full amount of loss, without considering the defendant’s

ability to pay, the MVRA increases the severity of the

punishment a defendant faces as compared to the pre-

amendment [statute]”; U.S. v. Edwards, 162 F.3d 87 (3rd

Cir. 1998) “we find that under the MVRA, restitution is

punishment, and that the retrospective application of the

punishment to Edwards under the facts of this case is a

violation of the Ex Post Facto Clause and plain error”;

U.S. v. Siegel, 153 F.3d 1256, 1260 (11th Cir. 1998) “we hold

that the MVRA cannot be applied to a person whose

criminal conduct occurred prior to April 24, 1996”).

Creating a financial disadvantage for the defendant

at a sentencing hearing, without regard to his financial

circumstances, is certainly “punishment”. The varied

holdings of the listed Circuit Courts of Appeal accepts

this Comstitutional concept and prohibits retroactive

application of MVRA. It is Constitutionally significant

that a defendant’s sentencing order not vary from Circuit

to Circuit. This Court should grant certiorari to address

and resolve the conflict between the Seventh Circuit opin-

ion and other Circuits

CONCLUSION

In its opinion below, the Seventh Circuit Court of

Appeals improperly affirmed the District Court’s sentenc-

ing orders against the Petitioner. The Seventh Circuit's

flawed analysis caused the Court to create a new “gain as

a substitute for loss” category of fraud sentencing. Its

Order also retroactively applied mandatory restitution

10

provisions of the Mandatory Victim Restitution Act to the

Petitioner whose conduct occurred six years prior to the

enactment and in fact effective date of the statute.

Accordingly, this case presents significant issues worthy

of this Court’s consideration. Certiorari should be

granted to review and reverse the holding of the Seventh

Circuit Court of Appeals.

Respectfully submitted,

J. STEVEN BECKETT

Counsel of Record

Beckett & Wesser, P.C.

508 South Broadway

P. O. Box 17160

Urbana, IL 61803-7160

(217) 328-0263

Attorneys for Petitioner

January 2001

App. 1

In the

United States Court of Appeals,

for the Seventh Circuit

No. 99-1724

UNiTED STATES OF AMERICA,

Plaintiff-Appellee,

ANGEL C. Lopez,

Defendant-Appellant.

Appeal from the United States District Court

for the Central District of Illinois

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

ArGuED Octoser 27, 1999 — Decipep Aucust 17, 2000

Before Fiaum, Chief Judge, HARLINGTON Woop, Jr. and

Evans, Circuit Judges.

HARLINGTON Woop, Jr., Circuit Judge. Angel Lopez

(“Lopez”) pleaded guilty to conspiracy to embezzle and

misapply credit union funds and conspiracy to execute a

scheme to defraud. Lopez was sentenced to thirty-eight

months in prison and to pay restitution in the amount of

$1,029,867. Lopez challenges the sentencing determina-

tion and the amount of restitution. We affirm.

App. 2

I. BACKGROUND

It is necessary to try to unravel the convoluted and

complicated transactions involved. Credit Union One

(“CU1”) was a state-regulated credit union incorporated

under the laws of Illinois, but also falling within the

regulatory authority of the National Credit Union

Administration (“NCUA”), which organizes and

approves federal credit unions. CU1 was federally

insured by the National Credit Union Share Insurance

Fund (“NCUSIF”).

Lopez graduated from high school and began work-

ing in the financial field in 1959. He was hired by CU1 in

1976 as assistant general manager. He was promoted to

general manager in 1978. In 1979, his title was changed to

president. Less than a year later, Lopez became a member

of CU1’s board of directors. All board members were

required to sign an oath of fiduciary duty to act in the

best interests of the credit union and to consider the

interests of the credit union before their own personal!

interests. Board members were to receive no compensa-

tion for their services, other than reasonable and neces-

sary reimbursement for expenses incurred while on

official credit union business. The board of directors pro-

vided oversight and direction for the operation of the

credit union, with the primary goal of offering high sav-

ings rates. To offset the higher savings rate, CU1 charged

higher interest rates on loans. Unfortunately, this left a

large pool of tempting cash.

Richard Binet (“Binet”) was CU1’s chairman of the

board throughout Lopez’s employment. Binet managed

an investment portfolio of approximately $82 million on a

App. 3

yearly average from 1986 to early 1990. Lopez testified

that he and Binet did not sit down and form an elaborate

plan on how they would defraud CU1; it was basically an

arrangement where Lopez and others supported Binet’s

actions and were consequentially rewarded by Binet.

Lopez stated that anyone who objected to Binet’s activity

was quickly removed from the board. During his tenure

as president, Lopez authorized at least $400,299 in direct

and indirect consulting fees to Binet, in addition to

authorizing CU1 purchases of two automobiles for Binet

at a total cost of $40,644.

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

corporation formed by Binet, which received payments

totaling approximately $17,000 authorized by Lopez.

According to Binet, the services CUSI was to provide

were illusory and of no value. Lopez was also an officer

of CUSI. After CUSI stopped receiving money for Binet,

he created Credit Union Management, Inc. to receive CU1

money for his benefit.

Binet also had CU1 create a travel agency known as

CU1 Travel. Lopez was listed as the “owner” of CU1

Travel and his wife as manager. Following an audit by

Deloitte & Touche in 1989, travel agency losses of

$141,231 were listed for 1988 and subsidiary losses of

$25,539 for 1989.

Binet, after complaining to the board about the mar-

keting efforts being made on CU1’s behalf, proposed that

Hana Advertising Associates, Inc. be given the marketing

contract for CU1. The board agreed. During interviews

with the FBI, after making a proffer (use immunity)

agreement, Lopez stated that he knew Binet owned

App. 4

numerous companies, but that he (Lopez) was not

involved in any of the companies. Although Lopez stated

that “he had no involvement with a company

called . . . Hanah [sic],” Hana Advertising was incorpo-

rated under the laws of Illinois with Binet listed as presi-

dent and Lopez as a director. Without the board’s

knowledge or approval, Lopez ordered checks totaling

approximately $230,000 to be issued to Hana Advertising

from 1986 to 1987.1 Lopez stated that he signed the con-

tract and approved the checks to Binet because “that

[wa]s the way Binet wanted it,” and that Lopez’s relation-

ship with the board was basically, “You scratch my back,

I'll scratch yours.” Lopez stated that if Binet left, Lopez

knew his lucrative compensation package? would be

“seriously reduced.”

Lopez also stated that he knew Binet owned or con-

trolled a company called Innovo, but did not admit to any

involvement with that company either. However, Lopez

later admitted to owning a substantial amount of stock in

Innovo Group Inc., which was owned by Binet. Innovo

received a contract from CU1 in order to expedite the

1 Although several checks were issued in 1986, the

marketing contract was signed on May 16, 1987 and terminated

in December 1987. According to Lopez’s testimony, Binet

instructed Lopez to use the name Hana Advertising on the 1986

checks for Binet’s “work performed,” even though Binet had not

yet created the contract using Hana Advertising’s name.

However, Lopez testified that the checks had actually been

written to Binet, but the IRS 1099 forms were issued in the name

of Hana Advertising.

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

salary.

App. 5

purchase of plastic bags. Lopez eventually sold his shares

in Innovo, making a net profit of approximately $100,000.

Lopez also facilitated a CU1 loan of approximately

$100,000 to Innovo, which was never paid back.

Having worked without a contract since 1976, and

being concerned about a retirement plan, in 1984 Lopez

had his lawyer prepare an employment contract which

included a provision allowing Lopez to retire after ten

years of employment. If Lopez exercised the retirement

option, the contract required CU1 to hire Lopez for a

period of not less than ten years as a “special consultant”

at an annual salary equal to fifty percent of his highest

annual salary earned while president of CU1. The con-

tract was self-renewing every five years and specified

Lopez could not be terminated for “negligent or inadver-

tent omissions or violations of regulatory rules or laws.”

The board never reviewed or discussed this contract.

Under Binet’s direction, the contract was bought out in

1988 for $580,000, which the government argued was

approximately $300,000 more than its true value.

Lopez also stated that dealing with Binet became a

necessity after Binet decided that CU1 should invest in

collateralized mortgage obligations (“CMQOs”)? and col-

lateralized mortgage obligation residuals (“CMORs”).4

3 According to BaRROon’s Business Guipe DICTIONARY OF

BANKING TERMS 127-28 (Thomas P. Fitch et al. eds., 1990), a CMO

is a:

mortgage-backed bond secured by the cash flow of a

pool of mortgages. In a CMO, the regular principal

and interest payments made by borrowers are

separated into different payment streams, creating

several bonds that repay invested capital at different

App. 6

Both Lopez and Binet stated that Binet was the only

person at CU1 who had any knowledge of CMOs/

CMORs and that they and the board did not want to hire

an outside consultant who might recommend needless

transactions in order to increase commissions. Lopez

authorized payments to Binet as an investment advisor in

the amounts of $78,000 for 1988 and $45,500 for 1989.

Although Lopez continually denied awareness of or

participation in a CMOR transaction with Binet for per-

sonal profit, Binet stated that in February 1988, he and

Lopez used $8.8 million of CU1 money to purchase a

CMOR, with CU1 owning eighty percent of the invest-

ment and Lopez and Binet owning twenty percent. Binet

rates... . A CMO pays the bondholder on a schedule

that differs from the mortgage pool as a whole, and

includes fast pay, medium pay, and slow pay bonds to

suit the needs of different investors. The common

arrangements include: a fast-pay bond with a

maturity much shorter than the total pool; a bond

paying interest only for a period that may be fixed or

contingent on how prior CMOs perform, before

payment of principal begins; and a bond paying

variable interest based on an index. . . . Fast paying

bonds appeal mostly to savings and loans seeking

short-term liquidity investments, whereas longer-

term CMOs appeal to the investment needs of

pension funds and institutional investors. . . .

* Barron's Business Guipe Dicnionary or BANKING Terms 524,

states that a CMO residual is:

cash flow resulting from the difference between the

income stream generated by a pool of mortgages and

the cash flow necessary to fund a series of

collateralized mortgage obligation bonds. Also

known as equity.

ee

App. 7

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

testified that he had destroyed a fax from Lopez on June

6, 1988, which showed a portion of the money being

returned to CU1. Lopez received part of his profits in the

form of a “deferred compensation” payment of $250,000

orchestrated by Binet, and through the transfer of a uni-

versal life program insurance policy for Lopez which

Binet had CU1 purchase in 1986. The policy, known as a

“key man” policy, insured that if Lopez died, CU1 would

own the cash flow from the policy. According to Binet, he

had the ownership of the policy changed from CU1 to

Lopez and Lopez was able to redeem the policy for a cash

value of $265,000.

In February 1989, Lopez received notice that NCUA

was going to conduct a review of CU1 in connection with

CUl1's status as an insured of the NCUSIF. NCUA has

mandatory regulations concerning the buying and selling

of CMOs and CMORs. As one of NCUSIF’s insureds, CU1

had agreed to follow the NCUA regulations. After the

review, NCUA notified Lopez of numerous concerns

regarding the fact that CU1 had nearly fifty percent of its

assets invested in CMOs/CMORs. CU1 agreed to sell fifty

percent of the CMO/CMOR investments by December 31,

1989, and agreed to dispose of the remaining fifty percent

by the following year. However, Binet and Lopez decided

to seek private insurance in order to distance CU1 from

NCUA examinations and federal regulations. Presented

as a money-saving step, the board voted to terminate its

share insurance with NCUA and sought private share

insurance coverage with the National Deposit Insurance

Corporation (now known as “ASI”). On February 11,

1990, the insurance conversion became effective and CU1

App. 8

was relieved of its obligation to comply with NCUA’s

requirements.

During a joint examination of CU1 by ASI and the

Illinois Department of Financial Institutions (“DFI”) in

February 1991, it was noted that CU1 was not acting on

divesting the CMOs/CMORs. As a result, CU1 entered

into a Letter of Understanding and Agreement with the

DFI and ASI promising to engage a portfolio manager to

assist in the pricing and sales of all the CMOs/CMORs

and immediately cease payment of all compensation to

the board of directors. Lopez admitted he provided false

information to the DFI regulators about the CMQOs/

CMORs.

Lopez was removed as president and as a director of

CU1 in 1992 following an investigation by the DFI. On

February 14, 1997, Lopez signed a proffer agreement

which granted him use immunity for any information he

provided which was relevant to the criminal activity

engaged in while at CU1. Lopez was interviewed by

government agents for three days and also assisted the

government in locating and arresting Binet. On December

29, 1997, Lopez signed a plea agreement and on January

5, 1998, reviewed the plea agreement before the district

court and pleaded guilty to conspiracy to embezzle and

misapply funds belonging to CU1 and conspiracy to exe-

cute a scheme to defraud.

The court’s sentencing calculations for fraud began

with a base offense level of 6 under § 2F1.1(a) of the 1989

United States Sentencing Guidelines (“U.S.S.G.” or the

App. 9

“Guidelines”),5 with an 11 level increase incurred for a

loss of $1,051,043. U.S.S.G. § 2F1.1(b)(1)(L). Additional

increases were applied as follows: 2 levels for more than

minimal planning, U.S.S.G. § 2F1.1(b)(2)(A); 2 levels for

abuse of a position of public or private trust and use of

his position which “significantly facilitated the commis-

sion or concealment of the offense”, § 3B1.3; and 2 levels

for obstruction of justice when testifying untruthfully

before the grand jury about the CMOR, § 3C1.1 comment.

n. 1(c). These additions created an adjusted offense level

of 23. A 2 level downward adjustment for acceptance of

responsibility under § 3E1.1 comment. n. 4, was also

made, which resulted in a total offense level of 21. With

no prior criminal history, Lopez’s Guideline range for

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

§ 5A. The district court sentenced Lopez to thirty-eight

months incarceration, and, under the Mandatory Victim

Restitution Act of 1996 (“MVRA”), ordered restitution to

CU1 in the amount of $1,029,867.7

5 The record states that the 1989 edition of the Guidelines

has been used to compute sentencing for the crimes, which were

committed from July 1984 through February 1990.

6 The figure was derived from: profit from contract buyout-

$37,000; CMOR-$600,000; overpayment to Binet through

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

Advertising-$230,799; direct payments to Binet-$78,000 and

$45,500; bonuses paid to CU1 employees-$36,000; and purchase

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

the value of Binet’s services rendered to CU1 as determined by

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

$1,051,043.

7 This amount was derived from the $1,051,043 total, less an

offset of $21,176 for the trade-in and resale value of the two cars

purchased for Binet.

App. 10

Lopez contends that the district court erred on eight

issues: (1) by violating the immunity proffer to enhance

Lopez’s sentence, (2) by enhancing his sentence for

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

substitute for loss where there was no loss to the victim,

(4) by basing the estimated gain on unreliable and contra-

dictory evidence, (5) by determining an arbitrary value

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

Guideline losses by the value of the cars recovered by

CU1, (7) by enhancing the loss figure with bonuses paid

to certain CU1 employees, and (8) by violating the Ex

Post Facto Clause in applying the MVRA.

II. ANALYSIS

A. Violation of Immunity Agreement

Lopez argues that the February 1997 proffer agree-

ment providing use immunity prohibited the district

court from using any information about the personal

CMOR transaction in Lopez’s sentencing. The terms of

the immunity agreement provide:

[N]o statement made or information provided

by [Lopez] pu’ suant to this agreement may be

used directly against your client in any criminal

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

vide complete and truthful information . . . reg-

arding his criminal conduct and everything he

knows or has reason to believe about the crimi-

nal conduct of others. . . . Should [Lopez] know-

ingly make any materially false statement or

omission in providing information under this

agreement, the government will be entitled to

use his statements and evidence he provides

ate dacliicaaiiaiiaaiaall

NE IBM OR 6

App. 11

directly to institute and support a criminal pros-

ecution for any offense as well as a prosecution

for giving false statements and perjury. . . .

[Lopez] must neither conceal or minimize his

own actions or involvement in any offense, nor

conceal, minimize, fabricate, or exaggerate any-

one else’s action or involvement in any offense.

He must be completely truthful about the facts

whatever those may be.

(Emphasis in original.)

After signing the proffer, Lopez testified before gov-

ernment agents and the grand jury that Binet supervised

the CMO/CMOR investments for CU1. He stated that

when Binet approached him to purchase a CMOR with

CU1’s money for their own profit, he refused to partici-

pate in such an action and had no idea if Binet ever did

so. Binet later testified that he and Lopez made such an

investment, that Binet had had records of Lopez’s partici-

pation which he had since destroyed, and that Lopez

personally benefitted from the transaction. In addition,

Lopez failed to mention the fact that he had conspired to

alter the minutes of the board meetings, although the

minutes were discussed with the government and Lopez

knew the government was relying on the minutes in its

investigation.

“As a contract, a proffer agreement must be enforced

according to its terms.” United States v. Cobblah, 118 F.3d

549, 551 (7th Cir.1997) (citation omitted). As in Cobblah,

the proffer “contract” obligated Lopez to give statements

that were entirely truthful. See id. The proffer emphasized

that Lopez should not seek to conceal or minimize his

own actions in the offenses involved and clearly stated

ee

App. 12

that any false statements or omissions could then be used

against him. Given the language of the proffer, the gov-

ernment was within its rights to consider the proffer

agreement had been voided due to Lopez’s omissions

concerning the CMOR and the alteration of the minutes.

See id. We cannot say the district court erred in its deter-

mination that the government had established, by a pre-

ponderance of the evidence, that Lopez did know about

the CMOR used for his and Binet’s personal profit and

that Lopez concealed the fact that he and others changed

the board minutes. See id. Lopez violated the terms of the

proffer, making it unenforceable.

Furthermore, in his plea agreement, signed December

29, 1997, ten months after the proffer, Lopez admitted to

the following:

On April 20, 1988, the defendant and Rich-

ard Binet caused $8.8 million of CU1 funds to be

used to purchase a CMO residual with CU1

owning 80% of the investment and the defen-

dant and Binet owning 20% of said investment.

Said use of CU1 funds was never made known

to the Board of Directors and the defendant

knew that individuals were not entitled to own

REMIC® investments. When said investment

8 A real estate mortgage investment conduit (“REMIC”) is a

“mortgage securities vehicle authorized by the Tax Reform Act

of 1986 that holds commercial and residential mortgages in

trust, and issues securities representing an undivided interest in

these mortgages. . . . similar to a collateralized mortgage

obligation (CMO). . . . ” BARRON’s Business Guipe DicTIONARY OF

BANKING TeRMs 497. Most of the parties involved in the case did

not understand the exact nature of each of the investments

involved and tended to use CMO, CMOR, and REMIC

interchangeably.

App. 13

was sold for a $1 million gain, the defendant

knew that the benefit was not provided to CU1.

The defendant himself did not take any of these

funds directly but benefitted from a $250,000

cash payment under the heading of Deferred

Compensation Plan. Further, the defendant ben-

efitted when a life insurance policy which had

originally been purchased by CU1 as a key-man

policy, beneficiary of which was to be CU1, was

transferred to him personally.

Lopez also admitted in the plea agreement that he con-

spired to alter the minutes of the board meetings. The

plea agreement also stated that the government was

requesting a 2 level enhancement for obstruction of jus-

tice, based on Lopez’s failure to fully disclose the CMOR

transaction and his failure to disclose alteration of the

minutes.

Lopez discussed the terms of the plea agreement

with the district court at the plea hearing. Lopez stated

that the plea agreement represented “every understand-

ing” he had with the government and that he understood

the terms of the plea agreement. Lopez cannot invoke the

proffer after agreeing to the admissions and terms set

forth in the plea agreement.

B. Obstruction of Justice

The Guidelines provide for an increase of 2 levels if

the offender obstructed justice during the investigation or

App. 14

prosecution of his offense. U.S.S.G. § 3C1.1.9 The plea

agreement states that “[p]ursuant to § 3C1.1, the defen-

dant may receive 2 points for obstructing or impeding the

administration of justice during the investigation or pros-

ecution of the instant offense. . . . ” More specifically, the

plea agreement notes that because Lopez admitted his

guilt after being confronted with evidence that he caused

the minutes to be altered, he would fall into a sentencing

category under § 3E1.1 comment. n. 4, which allows for

both an obstruction of justice and an acceptance of

responsibility adjustment to be applied. Lopez also

admitted in the plea agreement to knowledge of the

CMOR transaction Binet engineered and to receiving per-

sonal benefits from the profits of that transaction.

“To establish an obstruction of justice, the sentencing

court must make an independent factual finding that the

defendant engaged in a willfull attempt to provide false

testimony.” United States v. Sinclair, 74 F.3d 753, 762 (7th

Cir. 1996) (citing United States v. Dunnigan, 507 U.S. 87,

93-96 (1993)). This finding may be reversed only if clearly

erroneous. Id. (citation omitted). Based on the evidence of

Lopez and Binet’s intertwined dealings, the substantial

amounts of money funneled to Lopez, and the testimony

of Binet about both the minutes and the CMOR, the court

determined that Lopez had willfully withheld informa-

tion about material facts. The court stated, “I . . . believe

there were things you didn’t tell them that you were

9 U.S.S.G. § 3C1.1 (1989) states, “If the defendant willfully

impeded or obstructed, or attempted to impede or obstruct the

administration of justice during the investigation or prosecution

of the instant offense, increase the offense level by 2 levels.”

App. 15

aware of and should have told them and didn’t until they

were discovered somewhere else. . . . ” Given these

findings, we cannot say the district court’s conclusion

that Lopez’s testimony was intentionally withheld, and

not the result of confusion, mistake, or faulty memory,

was Clearly erroneous. See id. Moreover, because the dis-

trict court recognized this finding was a factual deter-

mination based in large part on an issue of credibility,

such credibility determinations “can virtually never be

clear error.” United States v. Hickok, 77 F.3d 992, 1007 (7th

Cir. 1996) (quoting Anderson v. Bessemer City, 470 U.S. 564,

575 (1985)); see also United States v. Fiore, 178 F.3d 917, 924

(7th Cir. 1999). We also note that the court’s enhancement

for obstruction of justice is not incompatible with a

reduction for acceptance of responsibility. See United

States v. Buckley, 192 F.3d 708, 711 (7th Cir. 1999); United

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

States v. Lallemand, 989 F.2d 936, 938 (7th Cir. 1993).

C. Gain as Substitute for Loss

Lopez argues the district court erred in using the

estimated profit made on the CMOR transaction by his

co-conspirator Binet towards Lopez’s sentence, even

though the court determined that there was no “actual

loss” to CU1 because the $8.8 million “borrowed” from

CU1 was returned, albeit with some (but not all) profit

made on the transaction. Lopez refers us to Application

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

that a loss figure should be reduced “by the amount the

lending institution has recovered or can expect to

App. 16

recover.” There is no such language in the 1989 Guide-

lines. This section first appears in the 1991 Guidelines,

§ 2F1.1 comment. n. 7(b), which deals specifically with

fraudulent loan application and contract procurement

cases, and pertains to a defendant who understates debt

information to obtain a loan.!° There is no language in

§ 2F1.1 of the 1989 Guidelines which requires the district

court to offset the amount of loss, although comment. n.

10 does allow for consideration that a total dollar loss

may overstate the seriousness of a crime when “under-

stating debts to a limited degree in order to obtain a

substantial loan which the defendant genuinely expected

to repay. ... ” However, this language is not applicable to

the instant case, where Binet and Lopez did not manufac-

ture a “fraudulent loan” scheme but simply took and

used CU1’s money outright.

Under § 2F1.1 comment. n. 8 of the 1989 Guidelines,

“The offender’s gross gain from committing the fraud is

an alternative estimate that ordinarily will understate the

loss.” Section 2F1.1 “allow[s] the defendants’ gain to be

used as a basis for calculating an approximate loss when

evidence of the exact amount of loss is not available”

United States v. Andersen, 45 F.3d 217, 221 (7th Cir. 1995).

While the meaning of loss under § 2F1.1 presents a

question of law subject to de novo review, United States v.

Holiusa, 13 F.3d 1043, 1045 (7th Cir. 1994), the district

court’s finding on the amount of loss is reviewed for clear

10 This language appears in § 2F1.1 comment. n. 8(b), of the

most current Guidelines (1998).

App. 17

error only. United States v. Dillard, 43 F.3d 299, 309 (7th

Cir. 1999).

Lopez argues that because the $8.8 million was

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

misapplication of funds for the CMOR occurred. Lopez

also maintains that because Binet supervised and benefit-

ted the most from the transaction, he should not be held

accountable for Binet’s gain. Lopez admitted in his plea

agreement that he conspired with Binet to embezzle, mis-

apply, and defraud funds from CU1. Section 1B1.3 com-

ment. n. 1, states:

In the case of criminal activity undertaken in

concert with others, whether or not charged as a

conspiracy, the conduct for which the defendant

“would be otherwise accountable” also includes

conduct of others in furtherance of the execution

of the jointly-undertaken criminal activity that

was reasonably foreseeable by the defendant.

Binet testified this particular CMOR transaction was

purportedly made on behalf of CU1, but that twenty

percent of the profit was to go to Lopez and to him. He

also testified that Lopez was involved in helping to trans-

fer and receive the monies. The transfer of $8.8 million of

CU1 funds was documented by the government. There-

fore, any estimated profit which Binet made on the

investment was correctly determined to be a loss to CU1.

Binet’s profit from this particular transaction would not

have been realized without his illegal use of CU1’s funds.

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

The profits were “intertwined with and an ingredient of

[defendant]’s overall fraudulent scheme.” See id. Addi-

tional punishment is merited where sufficient evidence

App. 18 |

provides for determination of monetary loss. See United

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

The district court did not clearly err, based on Binet’s

statements that Lopez was involved in this particular

CMOR transaction, and Binet’s testimony, along with

Lopez’s testimony and evidence in the record concerning

benefits received by Lopez, in determining that the esti-

mated profit from the CMOR transaction should be

applied as a factor in Lopez’s sentencing.

D. Estimated Gain Based on Unreliable Evidence

“Generally, the defendant’s gain may provide a rea-

sonable approximation of a victim’s loss, and may be

used when more precise means of measuring loss are

unavailable.” Andersen, 45 F.3d at 221. The amount of loss

sustained by a victim must be established by a prepon-

derance of the evidence. 18 U.S.C. § 3664(d). In determin-

ing a sentence under the Guidelines, the court has an

“obligation to employ fair procedures to determine the

accuracy of information used in sentencing.” United States

v. Franz, 886 F.2d 973, 980 (7th Cir. 1989); see also United

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

“{T]he court properly discharge{s] its obligation under

§ 2F1.1 of the Sentencing Guidelines by reducing the

available information to a ‘reasonable estimate’ of the

loss.” United States v. Haddon, 927 F.2d 942, 952 (7th Cir.

1991); U.S.S.G. § 2F1.1 comment. n. 8. “Every factual

inaccuracy does not amount to a constitutional violation.”

Franz, 886 F.2d at 980 (citations omitted). The burden of

proof on appealing a district court’s loss calculation

requires the defendant to show that the determination

App. 19

“was not only inaccurate but outside the realm of permis-

sible computations.” United States v. Hassan, 211 F.3d 380,

383 (7th Cir. 2000) (quoting United States v. Jackson, 25

F.3d 327, 330 (6th Cir. 1994)).

Based on calculations from incomplete documenta-

tion concerning the CMOR transaction,!! Binet stated that

he believed he, through his company, Credit Union Mort-

gage, had received $1,360,000. He said, “I don’t know the

exact amount, but it was at least a million.” He also stated

that he was certain that he had received $800,000 because

he used that amount to fund Innovo, his company in

Texas. Lopez argues that because Innovo’s annual report

listed a “debt” balance of $413,754 during the relevant

period when Binet was siphoning off his profits from the

CMOR, that is the amount that should be considered

Binet’s profit. Binet also testified that he recalled approxi-

mately $600,000 had been funneled into Innovo by the

time it went public. Although the district court noted that

Binet “had a lot of things going on at that same

time . . . that he was the man in terms of all of this

movement of money from one place to another, and I’m

not sure that it’s totally clear in his mind what he did,”

the court believed Binet had “made an effort to be truth-

ful in his testimony.”

11 Neither party was able to obtain complete records from

the banks involved, in part due to the lapse of time between the

transaction dates in 1987-88 and the filing of the indictment in

March 1997. Also, according to Binet, most of the CU1

documents on this particular CMOR transaction were diverted

to him and were later destroyed. In addition, information about

this transaction did not come to light until after Binet’s arrest in

1997.

App. 20

To the extent that the district court’s findings rest on

credibility determinations, they command even greater

deference than ordinary factual findings. Fed.R.Civ.P.

52(a); see Johnson v. Zerbst, 327 U.S. 106, 111-12 (1946).

This court may not re-judge credibility and may reverse

only if, after reviewing the record, we are left with the

firm belief that the district court made a mistake. Zeige

Distributing Co., Inc. v. All Kitchens, Inc., 63 F.3d 609, 612

(7th Cir. 1995) (citation omitted). “Congress has manda-

ted this deferential standard of review, see 18 U.S.C.

§ 3742(e), and we do not second-guess the sentencing

judge.” United States v. McEntire, 153 F.3d 424, 431 (7th

Cir. 1998) (citations omitted).

The district court calculated the estimated profit at

$600,000. This amount was arrived at after hearing Binet

testify at an alleged co-conspirator’s trial, in addition to

three separate sentencing hearings. The court reviewed

all of the available documentation concerning the CMOR

during the three sentencing hearings and asked questions

of both parties in seeking to reconcile the documentation

with the testimony. The record indicates the district

court’s inquiries were sufficiently searching to ensure the

probable accuracy of the available evidence. See United

States v. Beler, 20 F.3d 1428, 1443 (7th Cir. 1994). The

district court judge stated repeatedly that “Mr. Binet has

been credible in his testimony.” Although the district

court stated there was sufficient evidence to support a

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

amount of loss to $600,000, given the “grossly incom-

plete” records of the CMOR transaction. The court noted

the $413,754 loan amount but, from the documents and

App. 21

testimony, believed the profit on the $8.8 million CMOR

to be more than that.

We are satisfied the district court “correctly applied

the guidelines to findings of fact that do not leave us with

the definite and firm conviction that a mistake has been

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

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

court did not clearly err in determining the estimated

profit loss to CU1 was $600,000 on a CMOR transaction

involving $8.8 million and in applying that amount to

Lopez’s sentence.

E. Arbitrary Determination of Binet’s Services

Binet received $399,500 during the four years he

managed CU1’s investment portfolio. Lopez argues the

entire amount should be deducted from CU1’s losses

because the portfolio earned money during every year in

question and Binet was worth that much in managing a

portfolio of approximately $82 million on average. Of

course, this amount was “paid” to Binet through Lopez’s

manipulations and without the board’s knowledge.

The government proposed an offset based on the

annualized investment fees for 1988 and 1989, $27,833.60

and $17,858.01 respectively, but divided the figures in

half to take into account the amount of time Binet spent

“working” at CU1 for personal gain. The defendants pro-

posed fees based on percentage points of the total of net

investments for each year, resulting in calculations of

approximately $300,000 for 1988, $353,000 for 1989, and

$428,000 for 1990.

App. 22

The district court followed Schneider in determining

that there should be a certain offset where the defendant

provides a service. See 930 F.2d at 558.12 However, as the

government noted, when the NCUA, DFI, and ASI came

in, they all agreed that CU1 was not being managed well

and was involved in numerous questionable investments,

in addition to the embezzlement and fraud later discov-

ered. After hearing Binet’s testimony, the district court

noted the difficulty in quantifying an amount for Binet’s

services to CU1 in the absence of any records because

Binet had so many “projects” going on, it was difficult to

separate the time spent on legitimate CU1 investment

business.

Binet was not a certified or licensed investment

broker or manager nor was he registered with the SEC.

The board was never given the opportunity to determine

what they might wish to pay him or someone else. The

court was concerned that Binet was not licensed as an

investment manager and that he involved CU1 funds in

higher risk investments, both factors which lowered the

value of the services rendered.

The district court’s determination of loss under

§ 2F1.1(b)(1) of the Guidelines is a finding of fact review-

able for clear error only. United States v. Strozier, 981 F.2d

12 We note that Schneider limits this “offset” calculation of

loss to fraud cases “where the fraud is discovered or otherwise

interrupted before the victim has been fleeced.” 930 F.2d at 558.

The fraud in the instant case was not interrupted or discovered

prior to completion of the criminal activity. However, the

government does not argue that Binet should not receive an

offset for his services; there is no challenge to the offset itself,

only to the amount.

App. 23

281, 283 (7th Cir. 1992). The district court noted that

testimony indicated most credit unions do not have

salaried investment managers, as was the case with CU1.

The court then determined the offset to be one-fifth of the

$399,500 (the amount Binet had chosen to “pay” himself);

that is, $79,900 for the four-year period. Because there are

no precise figures, as in Schneider, where the difference

between the contract price and the contractor’s costs was

used as the measure of damages rather than the full

contract price, 930 F.2d at 558, the district court, after

hearing methods of calculations from both parties, deter-

mined the amount based on a percentage of Binet’s self-

remuneration.

We agree that Binet’s services should not be calcu-

lated on a par with a licensed professional who does not

commit embezzlement or fraud with a client’s money.

Given the annualized investment fees of $27,833.60 for

1988 and $17,858.01 for 1989, the district court’s fee of

$19,975 per year is a “reasonable estimate,” Haddon, 927

F.2d at 952, and is not “outside the realm of permissible

computations.” Hassan, 211 F.3d at 383 (citation omitted).

F. Failure to Reduce Loss by Value of Cars

Lopez makes the same argument here he used in

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

ring us to “Application Note 8(b) to U.S.S.G. § 2F1.1”

which is not found in the 1989 Guidelines. We repeat, that

note is not applicable to the instant case.

The court stated that the loss amount for sentencing

was determined by the original capital outlay for the two

cars because the defendants had no right to purchase the

App. 24

vehicles with CU1 funds. There is no dispute that the

original expenditures for the two cars were $20,767 and

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

value of each car should be deducted from the loss

amount. The district court did deduct the trade-in/resale

values from the restitution amount, but stated that “the

loss was determined by the amount of [CU1] money

that was expended to purchase these items or lease

them. ...” The district court did not clearly err in using

the purchase price of the cars for sentencing purposes.

G. Employee Bonuses

Binet testified that in February 1990 a payment of

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

CU1. Both Binet and Lopez testified that Wiseman and

several other employees assisted in the cover-up of irreg-

ularities at CU1 prior to obtaining private insurance.

Lopez testified that these bonuses were approved by the

board. Although Lopez stated that most or all employees

received annual bonuses, the bonuses for these particular

employees (and only these employees) were issued on

February 28, 1990. The insurance conversion became

effective on February 11, 1990. The government maintains

the timing of the bonuses to these particular employees

indicates the payments were payoffs for assisting with

the fraud.

Minutes of the board meetings from December 1986,

December 1987, and December 1989 state that employee

year-end bonuses were authorized at those times. The

district court found that the people involved and the

timing indicated the payments were directly related to

App. 25

the change in insurance. We cannot say the district court

committed clear error in making this determination.

H. Restitution Ex Post Facto Claim

Lopez argues that ordering restitution under the

MVRA, 18 U.S.C. § 3663A,}5 which requires restitution be

ordered “without consideration of the economic circum-

stances of the defendant,” 18 U.S.C. § 3664(f)(1)(A), vio-

lates the Ex Post Facto Clause of the Constitution, Art. I,

§ 9, cl. 3. He asks us to overrule our holding in United

States v. Newman, 144 F.3d 531, 537 (7th Cir. 1998) (finding

that the MVRA applies to cases in which a defendant is

convicted on or after April 24, 1996, the date of the

enactment of the MVRA, even though the criminal con-

duct may have occurred prior to April 24, 1996).

Congress amended the Victim and Witness Protection

Act (“VWPA”) in 1996 in an effort to guarantee restitution

to the victims of criminal conduct. See Newman, 145 F.3d

at 537. The Ex Post Facto Clause prohibits the enactment

of a “law that changes the punishment, and inflicts a

greater punishment, than the law annexed to the crime,

when committed.” Calder v. Bull, 3 U.S. 386, 390 (1798). In

Newman, we held that restitution does not qualify as

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

v. Black, 125 F.3d 454, 467 (7th Cir. 1997). We observed in

Newman that other courts disagree with this finding and

the Eighth Circuit, in particular, does not agree with our

characterization of restitution under the VWPA. Id. at 539.

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

§ 4663A et seq.

App. 26

Lopez notes the split in the circuits on this issue and

asks us to adopt the argument of the Tenth Circuit in

United States v. Nichols, 169 F.3d 1255 (10th Cir. 1999). His

argument is misplaced, as Nichols states, “[WJe accept the

view of the Seventh Circuit [in Newman] that the Ex Post

Facto Clause does not bar application of the MVRA to a

defendant whose criminal conduct occurred before the

effective date of the statute and reject the views of the

Second, Third, Eighth, Ninth, Eleventh and D.C. circuits

to the contrary.” 169 F.3d at 1280 n. 9.

We decline to reconsider the holding in Newman.

III. CONCLUSION

Based on the above-stated reasons, we affirm the

findings of the district court.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

ed

App. 27

United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

JUDGMENT - WITH ORAL ARGUMENT

Date: August 17, 2000

BEFORE: Honorable JOEL M. FLAUM, Chief Judge

Honorable HARLINTON WOOD, JR.,

Circuit Judge

Honorable TERENCE T. EVANS,

Circuit Judge

No. 99-1724

UNITED STATES OF AMERICA,

Plaintiff-Appellee

v.

ANGEL C. LOPEZ,

Defendant-Appellant

Appeal from the United States District Court for the

Central District of Illinois, Urbana Division

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

The judgment of the District Court is AFFIRMED, in

accordance with the decision of this court entered on this

date.

App. 28

IN THE UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF ILLINOIS

UNITED STATES OF _)

AMERICA, Criminal No.

al 97-20014

Plaintiff, Peoria, Illinois

March 23, 1999

vs.

ANGEL LOPEZ,

i i i i a

Defendant.

CONTINUED SENTENCING HEARING

BEFORE:

HONORABLE MICHAEL M. MIHM

United States District Judge

APPEARANCES:

MS. HILARY W. FROOMAN

Assistant United States Attorney

201 S. Vine Street, Suite 226

Urbana, Illinois 61801

(Appeared on Behalf of the Government)

TODD FOSTER, ESQ.

MICHAEL GOLD, ESQ.

Cohen, Jayson & Foster

201 E. Kennedy Boulevard, Suite 1700

Tampa, Florida 33602

— and -

J. STEVEN BECKETT, ESQ.

MS. CAROL DISON

Beckett & Webber

508 S. Broadway

Urbana, Illinois 61801

(Appeared on behalf of Angel Lopez)

App. 29

Karen S. Hanna, C.S.R.

U.S. District Court Reporter

Central District of Illinois

Proceedings recorded by mechanical stenography, tran-

script produced by computer

[2] INDEX

WITNESS Page

TERRY STROM

Direct Examination by Mr. Foster................. 41

Cross Examination by Ms. Frooman............... 46

Re-Direct Examination by Mr. Foster.............. 47

RICHARD BINET

Direct Examination by Ms. Frooman.............. 60

Cross Examination by Mr. Foster.................. 72

Exammation Wy the Cotert ow. wie. ccc cece sees 84

Resumed Cross Examination by Mr. Foster........ 92

Re-Direct Examination by Ms. Frooman........... 94

[146] was a good deal of travel involved then by the agent

on the case, Inspector Berger, to actually move out of the

State of Illinois to have to find witnesses in other states

and it was just terribly, terribly time consuming.

Finally, because of the approach that the defendants

took in their fraud and their deliberate, how should I put

it, changing of documents, we were confused on

numerous occasions, had to keep going back and review-

ing documents again and again and comparing them to

App. 30

documents we would find later and perhaps in different

locations or from other witnesses to determine what the

accurate approach was on a particular issue.

THE COURT: All right. Thank you. Mr. Lopez,

would you approach the podium with your counsel,

please? First of all, the Court adopts the factual findings

and guideline application as contained in the pre-sen-

tence report except I have made some changes regarding

certain claims, disputes, and those have been reduced to

writing. |

I’m always uncomfortable in a sentencing like this

because it’s just so difficult for me to understand how it is

that you came to be involved in this. There certainly is

nothing in your record to indicate or explain that. I have

no reason to doubt that you have made positive contribu-

tions to your community and have done a good job

raising your family and all that. It’s just inexplicable to

me.

[147] I realize these things don’t begin dramatically.

My guess is that this was a process that probably

occurred incrementally in terms of your decisions to

become involved in this fraud. It was a major fraud and it

was a pervasive fraud in terms of what was going on at

that credit union. It may be that you would never have

gotten involved in this were it not for Mr. Binet. That's

possible, may even probable. But that doesn’t change

anything. A lot of the things that your attorney has said

about Mr. Binet in that —- at last in that period of time, no

one could disagree with him. [Illegible] you’re not an

unsophisticated man. You knew at some point had to

ei i astmtrt=<; 2 Ow

a

App. 31

know, there was a pervasive series of acts here in differ-

ent ways, money was defrauded from the company, from

the credit union.

The idea that you were well trusted is well taken.

You were well trusted, I’m sure, by many of the deposi-

tors who knew you, by the people who worked there and

unfortunately by the board of directors. I think I made

some comment about that when I sentenced Mr. Binet,

that this board of directors didn’t do their job either, that

they basically went along with the flow. Whatever was

going on at the time, sure, fine, moved, seconded, rubber

stamped. And I guess maybe that’s the case in most of

these boards. You have people from the community who

like to be part of something, it’s out of the ordinary, they

go to the meetings, [148] makes them feel good about

themselves, maybe get a couple of free dinners out of it or

a trip somewhere for a convention. But, I'll tell you, this

case is a good example of it, if you’re on a board of

directors of a financial institution, you’d better take your

responsibilities very seriously. Unfortunately, I don’t

think — I think what they did here was a combination of

putting too much trust in you and Mr. Binet and not

putting enough commitment to their obligations to the

shareholders there.

In any event, so here I am. I have a 61-year old man

who has been involved in a major fraud. The credit

union, although we have been - we could fight for the

rest of the year about how much money they lost, they

lost a lot of money. So it’s my duty to sentence you. I

don’t take any joy in that. At the same time, I don’t

App. 32

apologize for it. It’s a good thing this case was pros-

ecuted. It’s a good thing that you’re standing here to be

sentenced.

I do have a problem with the Government’s explana-

tion for why it took so long to bring this case. I don’t -

I’m not doubting what you said and I don’t mean to put

you on the spot other than, as I’ve said other times there

is something wrong with this system if it takes that long

for this kind of case or any case to be investigated and a

decision made as to prosecution. It’s just too long. And I

don’t know what the answer is. If it means hiring more

[149] people, hiring more U.S. Attorneys or hiring more

investigators or hiring investigators with different

degrees or accountants or whatever, I don’t know. All I’m

saying is that when an indictment doesn’t occur until

1997 regarding incidents that occurred in 1988 and ‘89,

there’s something wrong.

I do believe that the Government did benefit to some

degree from the information that you gave them. Your

attorney’s representation of that benefit may have been a

little bit overstated, but I think there was some value that

came from it.

I also want to make a point that this sentencing

hearing, it’s not the longest one I’ve had, but it’s certainly

one of the most difficult in the sense of making a good

faith effort to resolve the objections that have been made

based on an understanding of the facts and the applica-

tion of law to those facts.

There is a temptation in a situation like this to get

irritated with the defense attorney because it is so time

consuming, but I’m not irritated by this. The law was

anata

APO A ATT OTE ON eet Nt sO RC ec

App. 33

never meant to be just efficient in every case. Not all

cases qualify for a one hour sentencing hearing. I think

you have been very well served by your attorneys in this

case in terms of not only the attention that they have

given to the matter but also the obvious degree to which

they have familiarized [150] themselves with all of the

exhibits and history of the case. I don’t know how you

could have been more aggressively represented and that’s

certainly not something I would hold against you.

Concerning the question of restitution, as your coun-

sel has indicated - and I didn’t have the case name in my

head when I asked the question, but I was pretty confi-

dent that there was a Seventh Circuit case that had

addressed this and I do appreciate the fact that you

brought that to my attention even though it’s against the

interests of your client because, as an officer of the Court,

you have a duty to do that.

Regarding the issue of restitution, I don’t believe that

I have the freedom that I would have had prior to the

application of this act to make decisions on the basis of

your — what appears is your ability to pay. That’s not all

bad. In fact, the Mahoney case that I mentioned earlier

was out of my court where a guy had stolen several

hundred thousand dollars from a bank and I ordered him

to pay full restitution even though it appeared he

couldn’t do it on the idea that hey, I don’t know what’s

going to happen tomorrow. Maybe he’ll win the lottery

tomorrow. Maybe he has some relative who will die and

leave him a lot of money. He has an obligation to pay that

money. If he is not able to pay it, there is no way the

Court can force him to pay it. But [151] at that time the

Seventh Circuit said that’s not the right approach and I

App. 34

had a duty to determine what reasonably could be

expected to be repaid. I think in part because of that case

and others like it, Congress decided they did not want

that situation to stay as it was and so they passed the law

that they did.

Taking all of these various things into consideration,

the length of time - I should say the delay between the

discovery of these events and the prosecution in some

respects the assistance you gave to the Government - at

the same time, I also believe there were things you didn’t

tell them that you were aware of and should have told

them and didn’t until they were discovered somewhere

else — the gravity of the crimes involved, all of the things

that have been taken into account by the guidelines, this

is the sentence of the Court.

Pursuant to the Sentencing Reform Act of 1984, it is

the judgment of the Court that the defendant, Angel

Lopez, is hereby committed to the custody of the Bureau

of Prisons for a term of 38 months. It is ordered further

that you pay, pursuant to the mandatory Victim Restitu-

tion Act, you pay restitution to Credit Union 1 or its

bonding company in the amount of $1,029,867.00. That

restitution is ordered payable immediately. Of course you

won't be able to pay it immediately, but the order does

become effective immediately.

[152] Upon release from imprisonment, you shall be

placed — strike that. The Court finds the defendant does

not have the ability to pay a fine either immediately or

through installment payments due to the restitution

obligation.

App. 35

Upon release from imprisonment, the defendant shall

be placed on supervised release for a term of three years.

Within 72 hours of release from the Bureau of Prisons,

you shall report in person to the probation office in the

district to which you are released.

The Court finds that you present a low risk of future

substance abuse and waives the mandatory drug testing

provision.

In addition to the standard conditions of supervision,

you shall comply with the following special conditions.

Number one: You shall not incur any new debts or

open any additional lines of credit in excess of $250.00

without the prior approval of the probation officer.

Number two: You shall provide the probation offi-

cer access to any requested financial information, includ-

ing both your business and personal income tax returns.

Number three: You shall notify your employer of

your conviction and allow the probation officer to verify

that disclosure. That’s true in terms of your present [153]

employer and any employer you may have during the

period of supervision.

Number four: You shall not own, purchase or pos-

sess a firearm, ammunition or other dangerous weapon.

It is further ordered that you pay a special assess-

ment to the United States in the amount of $50.00 and

that special assessment is due immediately. Was there a

waiver of appeal in this case?

MR. FOSTER: No, sir.

App. 36

THE COURT: You do of course have the right to file

a notice of appeal in this case. If it is your wish to appeal,

I instruct you that that notice of appeal must be filed with

the Clerk of the Court within ten days of today’s date.

Your attorneys have an absolute responsibility to file that

notice of appeal for you if it is your wish to appeal.

I will recommend to the Bureau of Prisons that you

serve your sentence in a facility — in a minimum security

facility as close to your family as possible. And I have no

problem recommending Eglin Air Force base to be the

place to which you will report. Does the Government

have any objection to voluntary surrender?

MS. FROOMAN: No, Your Honor.

THE COURT: Alright. I could order you to be taken

into custody now. The alternative is that you leave here,

you go home, and then on a date certain you appear at

[154] the place you are to begin your sentence. I assume

that’s what you want.

MR. LOPEZ: Yes, if I could.

THE COURT: I’m going to set your voluntary sur-

render date at April 19, Monday, April 19. It will be your

duty to get to that place on your own at your own

expense. If you don’t show up there when you're sup-

posed to, you will be considered as being on escape

status. Do you understand? And if you haven’t heard by

somebody before April 12, which is a week ahead of time,

be sure and contact your probation people and find out

where it is you are to report.

Now between now and April 19, all of the conditions

of bond which have been in place will continue to be in

ee ee ee err eee errr

App. 37

place. If it comes to the Court’s attention that you have

violated any of the conditions of bond, you will be

arrested immediately. Do you understand?

Okay. I don’t know. Your lawyer has painted a pretty

grim picture when you come out of prison. I don’t know.

That may be correct. It may not be. It seems to me you

have many talents and I still have some confidence that

you will be able to find good employment when you

come out. It won’t be easy, but good luck.

MR. FOSTER: Judge, on this voluntary surrender,

what has been my experience, at least with the Florida

[155] prisons, is that the designation sometimes takes

longer. I would ask, Judge, if you would consider having

him report by notice. And what happens, he gets classi-

fied and the marshal’s service gives him a notice, tells

him where he has been designated and when to show up.

Because he may go to Eglin and they may say “Hey, we

don’t have room for you, you need to go to” -

THE COURT: Well, I prefer not to do it that way.

Obviously if they haven’t determined where it is he is to

report, then I would be willing to change the surrender

date, but I’m not willing to structure it the way you have

requested.

MR. FOSTER: And Judge, for the record, I am objec-

ting to the application of the mandatory restitution. There

is a split in the circuits. This circuit does hold it’s binding,

but the Eighth Circuit, for example, does not say it’s ex

post facto, so I would like to register that objection.

THE COURT: So noted. Anything else?

App. 38

MR. FOSTER: Just one other thing. Would the Court

consider an appeal bond for Mr. Lopez?

THE COURT: Well, the requirements of an appeal

bond are that he not be a risk of flight er a danger to the

community and that there is an issue or issues in the case

that are not probably going to be overturned but where

there [156] is enough of a serious question about reversal

that it would call into question whether or not he would

actually serve time in prison before — I mean enough time

in prison that would fill in the time between the time he

surrenders and the time that an appeal is over.

I did think about this this morning and considered

and went through the issues that we have addressed and

I don’t believe I can justify a finding that the third ingre-

dient has been met.

MR. FOSTER: I understand, Judge. I think that if we

prevailed on that proffer issue, on that qualified immu-

nity issue, I think that that knocks the sentence poten-

tially way down and I don’t know - I know how long it

takes to get appeals out of the Eleventh Circuit. It’s a real

long time. I don’t know what the turn-around is here. It

could be a year or more.

THE COURT: I think it’s usually less than a year,

unless those issues — I mean it could be. As I indicated,

you have obviously raised a lot of questions, but I don’t

feel that the issues involved or the rulings thereon, either

taken separately or together, are so likely to be over-

turned on appeal or, if they are, likely that they would

cause enough of a change in the Court’s ruling that it

would be appropriate to do that, so I’m going to deny

that request.

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App. 39

MS. FROOMAN: There are counts to be dismissed,

[157] Your Honor, Counts 2 through 7, and we make that

motion.

THE COURT: Those counts are dismissed. Anything

else?

MR. LOPEZ: May I say something to you, Judge?

Thank you for listening to my lawyers and giving them a

chance to speak.

THE COURT: Not at all. That’s what we’re sup-

posed to do. Thank you.

MR. FOSTER: Judge, for the record, will all the

exhibits be deemed admitted? I'll deal with the clerk and

all the exhibits will be deemed admitted?

THE COURT: Right.

*** HEARING CONCLUDED ***

CERTIFICATE

I, KAREN S. HANNA, certify that the foregoing tran-

script constitutes a true and accurate transcript of the

original shorthand notes of the proceedings had at the

time and place aforesaid before the HONORABLE

MICHAEL M. MIHM, U.S. District Judge.

/s/ Karen S. Hanna 4-8-99

Karen S. Hanna, CSR Date

License #084-001760

App. 40

United States District Court

Central District of Illinois

UNITED STATES JUDGMENT IN A

OF AMERICA CRIMINAL CASE

. (For Offenses Committed

On or After

Angel C Lopez November 1, 1987)

Case Number:

2:97CR20014-002

J. Steven Beckett and Todd Foster

Defendant’s Attorney

THE DEFENDANT:

[X] pleaded guilty to count(s) I

[ ] pleaded nolo contendere to count(s)

which was accepted by the court.

[ ] was found guilty on count(s)

after a plea of not guilty.

Date

Title & Nature of Offense Count

Section Offense Concluded Number(s)

18 U.S.C. Conspiracy to 02/11/1990 |

§ 371 Embezzle and Mis-

apply Credit

Union Funds &

Connspiracy [sic]

to Execute a

Scheme to Defraud

The defendant is sentenced as provided in pages 2

through 6 _ of this judgment. The sentence is imposed

pursuant to the Sentencing Reform Act of 1984.

ib AS et ES A AO PON

App. 41

[ ] The defendant has been found not guilty on count(s)

[X] Count(s) II through VII are dismissed on the

motion of the United States.

IT IS FURTHER ORDERED that the defendant shall

notify the United States attorney for this district within 30

days of any change of name, residence, or mailing address

until all fines, restitution, costs, and special assessments

imposed by this judgment are fully paid.

Defendant’s Soc. Sec. No.: 03/23/1999

271-34-5092 Date of Imposition

Defendant's Date of Birth: of Judgment

02/27/1938 /s/ Michael M. Mihm

Defendant’s USM No:: Signature of Judicial Officer

11092-026 Michael M. Mihm

U.S. District Judge

Name & Title of

Judicial Officer

March 25, 1999

Date

Defendant’s Residence

Address:

28808 Hanging Moss Loop

Wesley Chapel FL 33543

Defendant’s Mailing

Address:

28808 Hanging Moss Loop

Wesley Chapel FL 33543

App. 42

IMPRISONMENT

The defendant is hereby committed to the custody of the

United States Bureau of Prisons to be imprisoned for a term

of 38 month(s)

[X] The court makes the following recommendations to the

Bureau of Prisons:

That the defendant be placed at a minimum security

camp nearest his family and at Eglin Air Force Base, if

possible.

[ ] The defendant is remanded to the custody of the

United States Marshal.

{ ] The defendant shall surrender to the United States

Marshal for this district:

[ ] ats a.m./p.m. on

{ ] as notified by the United States Sisien Rardisl.

[X] The defendant shall surrender for service of sentence at

the institution designated by the Bureau of Prisons:

[X] before 2 p.m. on - 04/19/1999 .

[ ] as notified by the United States Marshal.

[ ] as notified by the Probation or Pretrial Services

Office.

RETURN

I have executed this judgment as follows:

App. 43

Defendant delivered on to at

, with a certified copy of this judgment.

UNITED STATES MARSHAL

By

Deputy U.S. Marshal

SUPERVISED RELEASE

Upon release from imprisonment, the defendant shall be

on supervised release for a term of 3 year(s)

The defendant shall report to the probation office in

the district to which the defendant is released within 72

hours of release from the custody of the Bureau of

Prisons.

The defendant shall not commit another federal, state, or

local crime.

The defendant shall not illegally possess a controlled

substance.

For offenses committed on or after September 13, 1994:

The defendant shall refrain from any unlawful use

of a controlled substance. The defendant shall submit to

one drug test within 15 days of release from imprison-

ment and at least two periodic drug tests thereafter, as

directed by the probation officer.

[X] The above drug testing condition is suspended

based on the court’s determination that the defen-

dant poses a low risk of future substance abuse.

(Check, if applicable.)

[X] The defendant shall not possess a firearm as defined in

18 U.S.C. § 921. (Check, if applicable.)

App. 44

If this judgment imposes a fine or a restitution

obligation, it shall be a condition of supervised release

that the defendant pay any such fine or restitution that

remains unpaid at the commencement of the term of

supervised release in accordance with the Schedule of

Payments set forth in the Criminal Monetary Penalties

sheet of this judgment.

The defendant shall comply with the standard condi-

tions that have been adopted by this court (set forth below).

The defendant shall also comply with the additional condi-

tions on the attached page (if indicated below).

1)

2)

3)

4)

5)

6)

See Special Conditions of Supervision - Sheet 3.01

STANDARD CONDITIONS OF SUPERVISION

the defendant shall not leave the judicial district with-

out the permission of the court or probation officer;

the defendant shall report to the probation officer as

directed by the court or probation officer and shall

submit a truthful and complete written report within

the first five days of each month;

the defendant shall answer truthfully all inquiries by

the probation officer and follow the instructions of the

probation officer;

the defendant shall support his or her dependents and

meet other family responsibilities;

the defendant shall work regularly at a lawful occupa-

tion unless excused by the probation officer for school-

ing, training, or other acceptable reasons;

the defendant shall notify the probation officer ten days

prior to any change in residence or employment;

the defendant shall refrain from excessive use of alco-

hol;

8)

9)

10)

11)

12)

13)

App. 45

the defendant shall not frequent places where con-

trolled substances are illegally sold, used, distributed,

or administered;

the defendant shall not associate with any persons

engaged in criminal activity, and shall not associate

with any person convicted of a felony unless granted

permission to do so by the probation officer;

the defendant shall permit a probation officer to visit

him or her at any time at home or elsewhere and shall

permit confiscation of any contraband observed in plain

view by the probation officer;

the defendant shall notify the probation officer within

seventy-two hours of being arrested or questioned by a

law enforcement officer;

the defendant shall not enter into any agreement to act

as an informer or a special agent of a law enforcement

agency without the permission of the court;

as directed by the probation officer, the defendant shall

notify third parties of risks that may be occasioned by

the defendant's criminal record or personal history or

characteristics, and shall permit the probation officer to

make such notifications and to confirm the defendant's

compliance with such notification requirement.

SPECIAL CONDITIONS OF SUPERVISION

1. The defendant shall not incur any new debts or open any

additional lines of credit in excess of $250 without prior

approval of the probation officer. 2. Defendant shall provide

the probation officer access to any requested financial infor-

mation including both his business and personal income tax

returns. 3. Defendant shall notify his present and future

employers of his conviction and allow the U.S. Probation

officer to verify said disclosure. 4. Defendant shall not own,

App. 46

purchase, or possess a firearm, ammunition, or other dan-

gerous weapon.

CRIMINAL MONETARY PENALTIES

The defendant shall pay the following total criminal

monetary penalties in accordance with the schedule of pay-

ments set forth on Sheet 5, Part B.

Assessment Fine Restitution

Totals: $ 50.00 $ $ 1,029,867.00

[ ] If applicable, restitution amount

ordered pursuant to plea agreement....... $

FINE

The above fine includes costs of incarceration and/or super-

vision in the amount of $

The defendant shall pay interest on any fine of more

than $2,500, unless the fine is paid in full before the fifteenth

day after the date of judgment, pursuant to 18 U.S.C.

§ 3612(f). All of the payment options on Sheet 5, Part B may

be subject to penalties for default and delinquency pursuant

to 18 U.S.C. § 3612(g).

[ ] The court determined that the defendant does not have

the ability to pay interest and it is ordered that:

[ ] The interest requirement is waived.

[ ] The interest requirement is modified as follows:

App. 47

RESTITUTION

[ ] The determination of restitution is deferred in a case

brought under Chapter 109A, 110A and 113A of Title 18

for offenses committed on or after 09/13/1994, until

. An Amended Judgment in a Criminal Case

will be entered after such a determination.

[X] The defendant shall make restitution to the following

payees in the amounts listed below.

If the defendant makes a partial payment, each payee

shall receive an approximately proportional payment unless

specified otherwise in the priority order or percentage pay-

ment column below.

Priority

** Total Amount of Order or

Amount Restitution Percentage

Name of Payee of Loss Ordered of Payment

Credit Union

One $1,029,867.00 $1,029,867.00

Totals: $1,029,867.00 $1,029,867.00

** Findings for the total amount of losses are required

under Chapters 109A, 110, 110A, and 113A of Title 18 for

offenses committed on or after September 13, 1994.

SCHEDULE OF PAYMENTS

Payments shall be applied in the following order: (1)

assessment; (2) restitution; (3) fine principal; (4) cost of pros-

ecution; (5) interest; (6) penalties.

Payment of the total fine and other criminal monetary

penalties shall be due as follows:

App. 48

A [X] in full immediately; or

B[i] $ immediately, balance due (in accordance

with C, D, or E); or

C [ ] not later than ; or

D | ] in installments to commence day(s) after the

date of this judgment. If the event the entire

amount of criminal monetary penalties imposed is

not paid prior to the commencement of supervi-

sion, the U.S. probation officer shall pursue collec-

tion of the amount due, and shall request the court

to establish a payment schedule if appropriate; or

E [] in (e.g. equal, weekly, monthly, quarterly)

installments of $ over a period of

year(s) to commence __ day(s) after the date of

this judgment.

The National Fine Center will credit the defendant for

all payments previously made toward any criminal mone-

tary penalties imposed. Special instructions regarding the

payment of criminal monetary penalties:

{ ] The defendant shall pay the cost of prosecution.

[ ] The defendant shall forfeit the defendant's interest in

the following property to the United States:

Unless the court has expressly ordered otherwise in the

special instructions above, if this judgment imposes a period

of imprisonment payment of criminal monetary penalties

shall be due during the period of imprisonment. All criminal

monetary penalty payments are to be made to the United

States Courts National Fine Center, Administrative Office of

the United States Courts, Washington, DC 20544, except

App. 49

those payments made through the Bureau of Prisons’ Inmate

Financial Responsibility Program. If the National Fine Center

is not operating in this district, all criminal monetary penalty

payments are to be made as directed by the court, the

probation officer, or the United States attorney.

[ ]

[X]

STATEMENT OF REASONS

The court adopts the factual findings and guideline

application in the presentence report.

OR

The court adopts the factual findings and guideline

application in the presentence report except (see attach-

ment, if necessary):

Guideline Range Determined by the Court:

Total Offense Level: 21

Criminal History Category: I

Imprisonment Range: 37 to 46 months

Supervised Release Range: 2 to 3 _ years

Fine Range: $ 7,500.00 to$ 2,102,086.00

[X] Fine waived or below the guideline range

because of inability to pay.

Total Amount of Restitution: $ 1,029,867

[ ] Restitution is not ordered because the complica-

tion and prolongation of the sentencing process

resulting from the fashioning of a restitution

order outweighs the need to provide restitution

to any victims, pursuant to 18 U.S.C. § 3663(d).

[ ] For offenses that require the total amount of loss

to be stated, pursuant to Chapters 109A, 110,

[X]

[ ]

App. 50

110A, and 113A of Title 18, restitution is not

ordered because the economic circumstances of

the defendant do not allow for the payment of

any amount of a restitution order, and do not

allow for the payment of any or some portion of

a restitution order in the forseeable future under

any reasonable schedule of payments.

[ ] Partial restitution is ordered for the following

reason(s):

The sentence is within the guideline range, that range

does not exceed 24 months, and the court finds no

reason to depart from the sentence called for by appli-

cation of the guidelines.

OR

The sentence is within the guideline range, that range

exceeds 24 months, and the sentence is imposed for the

following reason(s):

OR

The sentence departs from the guideline range:

{ ] upon motion of the government, as a result of

defendant’s substantial assistance.

[ ] for the following specific reason(s):

App. 51

18 U.S.C. § 3663A. Mandatory restitution to victims of

certain crimes

(a)(1) Notwithstanding any other provision of law,

when sentencing a defendant convicted of an offense

described in subsection (c), the court shall order, in addi-

tion to, or in the case of a misdemeanor, in addition to or

in lieu of, any other penalty authorized by law, that the

defendant make restitution to the victim of the offense or,

if the victim is deceased, to the victim’s estate.

(2) For the purposes of this section, the term “vic-

tim” means a person directly and proximately harmed as

a result of the commission of an offense for which restitu-

tion may be ordered including, in the case of an offense

that involves as an element a scheme, conspiracy, or

pattern of criminal activity, any person directly harmed

by the defendant's criminal conduct in the course of the

scheme, conspiracy, or pattern. In the case of a victim

who is under 18 years of age, incompetent, incapacitated,

or deceased, the legal guardian of the victim or represen-

tative of the victim’s estate, another family member, or

any other person appointed as suitable by the court, may

assume the victim’s rights under this section, but in no

event shall the defendant be named as such representa-

tive or guardian.

(3) The court shall also order, if agreed to by the

parties in a plea agreement, restitution to persons other

than the victim of the offense.

(b) The order of restitution shall require that such

defendant -

App. 52

(1) in the case of an offense resulting in damage

to or loss or destruction of property of a victim of the

offense -

(A) Return the property to the owner of the

property or someone designated by the owner;

or

(B) if return of the property under subpara-

graph (A) is impossible, impracticable, or inade-

quate, pay an amount equal to -

(i) the greater of —

(I) the value of the property on the

date of the damage, loss, or destruction;

or

(II) the value of the property on

the date of sentencing, less

(ii) the value (as of the date the prop-

erty is returned) of any part of the property

that is returned;

(2) in the case of an offense resulting in bodily

injury to a victim -

(A) pay an amount equal to the cost of

necessary medical and related professional ser-

vices and devices relating to physical, psychi-

atric, and psychological care, including

nonmedical care and treatment rendered in

accordance with a method of healing recognized

by the law of the place of treatment;

(B) pay an amount equal to the cost of nec-

essary physical and occupational therapy and

rehabilitation; and

(C) reimburse the victim for income lost by

such victim as a result of such offense;

App. 53

(3) in the case of an offense resulting in bodily

injury that results in the death of the victim, pay an |

amount equal to the cost of necessary funeral and

related services; and

(4) in any case, reimburse the victim for lost

income and necessary child care, transportation, and

other expenses incurred during participation in the

investigation or prosecution of the offense or atten-

dance of proceedings related to the offense.

(c)(1) This section shall apply in all sentencing

proceedings for convictions of, or plea agreements

relating to charges for, any offense -

(A) that is -

(i) a crime of violence, as defined in

section 16;

(ii) an offense against property under

this title, including any offense committed

by fraud or deceit; or

(iii) an offense described in section

1365 (relating to tampering with consumer

products); and

(B) in which an identifiable victim or vic-

tims has suffered a physical injury or pecuniary

loss.

(2) In the case of a plea agreement that does not

result in a conviction for an offense described in para-

graph (1), this section shall apply only if the plea speci-

fically states that an offense listed under such paragraph

gave rise to the plea agreement.

(3) This section shall not apply in the case of an

offense described in paragraph (1)(A)(ii) if the court

finds, from facts on the record, that —

App. 54

(A) The number of identifiable victims is so

large as to make restitution impracticable; or

(B) determining complex issues of fact related

to the cause or amount of the victim’s losses would

complicate or prolong the sentencing process to a

degree that the need to provide restitution to any

victim is outweighed by the burden on the sentenc-

ing process.

(d) An order of restitution under this section shall

be issued and enforced in accordance with section 3664.

App. 55

THE CONSTITUTION OF THE UNITED STATES

ARTICLE I, Section 9.3

No Bill of Attainder or ex post facto Law shall be

passed.