U.S. v. Aramony

• Decision Date: 28 January 1999
• Docket Number: Nos. 97-4363,97-4540,s. 97-4363
• Parties: -766 UNITED STATES of America, Plaintiff-Appellee, v. William ARAMONY, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Thomas J. Merlo, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 655

166 F.3d 655

83 A.F.T.R.2d 99-766

UNITED STATES of America, Plaintiff-Appellee, v. William ARAMONY, Defendant-Appellant.

United States of America, Plaintiff-Appellee, v. Thomas J. Merlo, Defendant-Appellant.

Nos. 97-4363, 97-4540.

United States Court of Appeals, Fourth Circuit.

Argued Dec. 2, 1998.

Decided Jan. 28, 1999.

ARGUED: John DeWitt Cline, Freedman, Boyd, Daniels, Hollander, Guttmann & Goldberg, Albuquerque, New Mexico, for Appellant Aramony; Richard Dennis Heideman, The Heideman Law Group, P.C., Washington, D.C., for Appellant Merlo. Gordon Dean Kromberg, Assistant United States Attorney, Alexandria, Virginia, for Appellee. ON BRIEF: William B. Moffitt, Asbill, Junkin & Moffitt, Washington, D.C., for Appellant Aramony. Helen F. Fahey, United States Attorney, Randy I. Bellows, Assistant United States Attorney, Alexandria, Virginia, for Appellee.

Before HAMILTON, LUTTIG, and KING, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge HAMILTON wrote the opinion, in which Judge KING joined. Judge LUTTIG wrote a separate opinion concurring in part and dissenting in part.

OPINION

HAMILTON, Circuit Judge:

Codefendants William Aramony and Thomas Merlo (collectively the Defendants) appeal their respective sentences imposed following our remand for resentencing in United States v. Aramony, 88 F.3d 1369 (4th Cir.1996), cert. denied, 520 U.S. 1239, 117 S.Ct. 1842, 137 L.Ed.2d 1046 (1997) (Aramony I ). We affirm the Defendants' sentences in all respects except for the district court's imposition of a $300,000 fine on Aramony and a $30,000 fine on Merlo. Accordingly, we vacate the fine components of the district court's respective judgments and remand for reconsideration of its decisions imposing fines on the Defendants in accordance with our instructions as set forth herein.

I

In Aramony I, we affirmed the Defendants' convictions on various counts of fraud, see 18 U.S.C. §§ 371, 1341, 1343; various counts of engaging in the interstate transportation of fraudulently acquired property, see 18 U.S.C. § 2314; various counts of filing false income tax returns, see 26 U.S.C. § 7206(1); and various counts of aiding the filing of false income tax returns, see 26 U.S.C. § 7206(2). See Aramony I, 88 F.3d at 1373. However, we vacated the Defendants' convictions on various counts of money laundering, see 18 U.S.C. § 1957, because the district court did not require the jury to make a finding on an essential element of money laundering, and under the circumstances of the case, we were precluded from applying harmless-error analysis. See Aramony I, 88 F.3d at 1373, 1385-87.

Our vacatur of the Defendants' money laundering convictions required us to vacate the Defendants' respective sentences and remand for resentencing, because the Defendants' total offense levels under the United States Sentencing Guidelines (the Sentencing Guidelines or USSG) had been based upon their money laundering convictions. We also vacated the district court's $552,188.97 forfeiture orders against Aramony and Merlo, which were premised on their money laundering convictions. See id. at 1392.

A. Background.

The facts underlying the Defendants' convictions are set forth in detail in Aramony I. See id. at 1372-76. Accordingly, we need only briefly summarize them here.

Aramony was the chief executive officer of the United Way of America (UWA) from 1970 until his termination in March 1992. UWA is "a nonprofit organization that acts as a service organization for local United Way organizations located throughout the United States." Id. at 1373. UWA was incorporated in New York and is headquartered in Alexandria, Virginia. Merlo served as UWA's chief financial officer from January 1990 until his termination in March 1992.

In their leadership positions, both men improperly used UWA money for personal gain. For example, Aramony charged personal chauffeuring expenses to UWA and purchased a condominium in Florida for his personal use with UWA funds, and Merlo used his position at UWA to personally obtain $120,000 in proceeds of an annuity belonging to UWA. Merlo also used his position at UWA to aid Aramony in his various frauds on UWA, many of which served to further Aramony's relationships with various women.

B. The Defendants' Initial Sentencings.

The district court initially sentenced the Defendants on June 22, 1995. Pursuant to the grouping rules of the Sentencing Guidelines, see USSG § 3D1.1-5 (1991), ¹ the Defendants' money laundering convictions provided their respective base offense levels for purposes of calculating their sentencing ranges. The district court sentenced Aramony to eighty-four months' imprisonment and Merlo to fifty-five months' imprisonment, with each to serve three years of supervised release. Additionally, pursuant to 18 U.S.C. § 982, the district court ordered the Defendants to forfeit $552,188.97 on account of their money laundering convictions. In light of this forfeiture order, the district court did not impose any fines upon the Defendants.

Of relevance in the present appeal is the fact that the Presentence Report (PSR) prepared for the Defendants' initial sentencings, recommended a two-level increase in the Defendants' offense level with respect to the fraud counts pursuant to USSG § 2F1.1(b)(2) (1991). USSG § 2F1.1(b)(2) (1991) provides for a two-level increase in a defendant's base offense level with respect to any fraud counts "[i]f the offense involved (A) more than minimal planning, or (B) a scheme to defraud more than one victim...." Id. (emphasis added).

The Defendants objected to this recommended increase. At sentencing, the district court sustained the Defendants' objections with respect to USSG § 2F1.1(b)(2)(A) (1991), separately commenting with regard to each defendant that his fraud crimes did not involve more than minimal planning. However, the district court never expressly addressed the applicability of a two-level increase pursuant to USSG § 2F1.1(b)(2)(B) (1991) for a scheme to defraud involving more than one victim.

C. The Defendants' Resentencings.

Following remand, the probation officer prepared revised PSRs for the Defendants. The revised PSRs are identical to the initial PSRs with the exception of certain redactions and other changes made to reflect the reversal of the Defendants' convictions on the money laundering counts. With the money laundering convictions vacated, the grouping rules of the Sentencing Guidelines, see USSG § 3D1.1-5(1991), required the Defendants' respective base offense levels to be premised upon their fraud convictions.

1. Aramony.

The district court resentenced Aramony on April 25, 1997. In resentencing Aramony, the district court determined that Aramony's total offense level under USSG § 2F1.1 (1991), which is the section of the Sentencing Guidelines dealing with offenses involving fraud or deceit, was twenty-seven, consisting of a base offense level of six, an eleven-level increase based upon the amount of loss involved as quantified in a dollar amount, ² a two-level increase pursuant to USSG § 2F1.1(b)(2)(B) (1991) for a scheme to defraud involving more than one victim, a two-level increase pursuant to USSG § 2F1.1(b)(3)(A) (1991) for a misrepresentation that Aramony was acting on behalf of a charitable organization, a four-level increase pursuant to USSG § 3B1.1(a) (1991) for Aramony's role in the offense, and a two-level increase pursuant to USSG § 3B1.3 (1991) for Aramony's abuse of a position of trust. The district court determined Aramony's Criminal History Category to be I. Aramony's total offense level of twenty-seven when combined with his Criminal History Category of I resulted in a sentencing range of seventy to eight-seven months' imprisonment. ³ Within this range, the district court sentenced Aramony to eighty-four months' imprisonment.

The district court then imposed a $300,000 fine on Aramony. In this regard, the district court made a conclusory finding that Aramony had the financial means to pay a $300,000 fine. Furthermore, the district court commented that it did not impose a fine on Aramony at his initial sentencing "because of the amount of forfeiture that was involved." (J.A. 382). The district court then commented that absent the forfeiture, it found the imposition of a $300,000 fine appropriate. Of relevance in this appeal, Aramony objected to the inclusion of any loss sustained by PUI in the calculation of his offense level, to the two-level increase in his offense level under USSG § 2F1.1 (1991) pursuant to USSG § 2F1.1(b)(2)(B) (1991) for a scheme to defraud involving more than one victim, and to the two-level increase in his offense level under USSG § 2F1.1 (1991) pursuant to USSG § 2F1.1(b)(3)(A) (1991) for a misrepresentation that Aramony was acting on behalf of a charitable organization. Aramony also objected to the district court's refusal to grant his motion for a downward departure based upon his allegedly extraordinary good works.

Finally, Aramony objected to the imposition of a fine on the ground that he lacked the ability to pay any amount of fine given his then current financial condition, his term of imprisonment, and his likely inability to earn any significant amount of money upon expiration of his term of imprisonment in light of his advanced age and status as a convicted felon. Aramony also pointed out that the information contained in his revised PSR concerning his financial condition had not been updated from his initial PSR.

In response to Aramony's objection to the imposition of a $300,000 fine, the district court acknowledged that its finding that Aramony had the ability to pay a $300,000 fine was based upon the information in the original PSR. The district court then invited Aramony to update his financial information by motion, stating that it would "be glad to examine" such information. (J.A. 384).

On May 1, 1997, Aramony filed a notice of appeal. On May 9, 1997,...