U.S. v. LaCroix

• Decision Date: 03 May 1994
• Docket Number: No. 93-1845,93-1845
• Citation: 28 F.3d 223
• Parties: UNITED STATES of America, Appellee, v. Evangelist LaCROIX, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 223

28 F.3d 223

UNITED STATES of America, Appellee, v. Evangelist LaCROIX, Defendant, Appellant.

No. 93-1845.

United States Court of Appeals First Circuit.

Heard May 3, 1994.

Decided June 27, 1994.

William E. Brennan, with whom Timothy I. Robinson and Brennan, Caron, Lenehan & Iacopino, Manchester, NH, were on brief, for appellant.

John D. Chapman, Trial Atty., Fraud Section, U.S. Dep't of Justice, Washington, DC, with whom Paul Gagnon, U.S. Atty., Concord, NH, was on brief, for appellee.

Before SELYA, Circuit Judge, BOWNES, Senior Circuit Judge, and BOUDIN, Circuit Judge.

SELYA, Circuit Judge.

This sentencing appeal provides an opportunity to clarify the operative standards for identifying relevant conduct under U.S.S.G. Sec. 1B1.3(a)(1)(B) (Nov.1993). ¹ We seize the opportunity and, in the end, affirm the sentence imposed below.

I. BACKGROUND

For many years, defendant-appellant Evangelist LaCroix earned his livelihood as a building subcontractor in southern New Hampshire. He became acquainted with the brothers Zsofka, Matthew and Lazlos, who, through entities known as ZLM Realty and 101 Realty (the Zsofka entities), planned to develop a sizable single-family residential real estate complex known as "Sunview II." In late 1985, appellant and Matthew Zsofka (Zsofka), together with Zsofka's construction foreman, John Lee, formed a corporation, Alpha Construction Company, to serve as the general contractor for Sunview II. Appellant became Alpha's president, though by all accounts Zsofka retained ultimate control.

Construction and sales proceeded apace until the summer of 1987, when demand began to slacken. Alpha responded to adversity by retaining a marketing agent, Horns of New Hampshire (HNH), a firm headed by Richard Horn. Zsofka and Horn masterminded an illegal scheme that enabled their companies to market and sell roughly 90 homes over the following two years.

The conspirators' plan was seductively simple: they secretly gave money, secured by a late-filed second mortgage, to any would-be homeowner who lacked the wherewithal for the minimum down payment required by the prospective purchase-money mortgage lender (usually the Dime Savings Bank).

Appellant personally handled 31 closings at which he falsely represented, both orally and in writing, that no undisclosed financing arrangements existed. Appellant knew these statements to be apocryphal when made. The other 60-odd closings were handled in much the same fashion by one or the other of appellant's coconspirators. The transactions were structured in such a way that, on paper, Alpha conveyed the houses, but not the land, to the buyers. The company received in excess of $37,000 at every closing. These proceeds enabled Alpha, among other things, to assist the Zsofka entities in funding the clandestine second mortgages.

After Zsofka and Horn hatched the plot, appellant attended weekly staff meetings at which all the closings, including those handled by others, were discussed and approved. At no fewer than three of these meetings Zsofka preached to those present, appellant among them, about the importance of keeping all secondary financing hidden from the first mortgagees. Zsofka also gave instructions on how best to accomplish this furtive feat.

During the under-three-year period when the scheme was velivolant, appellant drew a total of approximately $385,000 in salary from Alpha. In sum, as a part-owner and salaried officer of Alpha, appellant participated in, or was present at the discussion of, every transaction, profited at least indirectly from each sale, and stood to gain more money later (when and if the buyers repaid the second mortgages).

Over time, many of the borrowers proved unable to pay the first mortgages, resulting in widespread foreclosures at a net cost to the Dime Savings Bank in excess of $2,800,000. Losses of this magnitude are seldom unremarked. In 1992, a federal grand jury returned a 102-count indictment against the three Alpha principals and four persons associated with HNH. The indictment charged appellant with conspiracy to defraud a federally insured financial institution in violation of 18 U.S.C. Sec. 371, and with various substantive offenses, including 12 counts of bank fraud, 18 U.S.C. Sec. 1344, and 12 counts of making false statements to a federally insured financial institution, 18 U.S.C. Sec. 1014. After a 17-day trial, the jury announced its inability to reach agreement on the 24 counts charging appellant with the commission of substantive offenses, ² but nevertheless found him guilty of conspiring to defraud the Dime Savings Bank.

II. SENTENCING AND ASSIGNMENTS OF ERROR

In July 1993, the trial judge convened a disposition hearing. Apparently fearing potential ex post facto problems, the judge, without objection, consulted the sentencing guidelines that had been in effect at the time the conspiracy wound down, namely, the June 15, 1988 edition. See United States v. Harotunian, 920 F.2d 1040, 1041-42 (1st Cir.1990) (explaining that a sentencing court should apply the guidelines in effect on the date of sentencing unless doing so will implicate ex post facto concerns); United States v. Arboleda, 929 F.2d 858, 871 (1st Cir.1991) (stating that, if the guidelines in effect at sentencing are not used, then members of a conspiracy are ordinarily "subject to the sentencing guidelines in effect at the time of the completion of the conspiracy").

Starting with a base offense level of six, see U.S.S.G. Sec. 2F1.1(a), the judge added ten levels on the theory that appellant shared responsibility for inflicting losses of at least $2,000,000 (but less than $5,000,000), see U.S.S.G. Sec. 2F1.1(b)(1)(K), and then added two incremental levels for more than minimal planning, see U.S.S.G. Sec. 2F1.1(b)(2)(A). These calculations yielded an adjusted offense level of 18, which, for a first offender, produced a guideline sentencing range (GSR) of 27-33 months. The court imposed an incarcerative sentence at the nadir of the range.

This appeal spotlights the court's determination of the aggregate losses properly attributable to LaCroix. Noting that the judge counted transactions handled by his coconspirators as "relevant conduct" under U.S.S.G. Sec. 1B1.3(a)(1), and, therefore, tagged him with the entire loss suffered by the defrauded bank, LaCroix assigns error. He contends that the sentencing court misconceived the applicable test for relevant conduct, mounted too shallow an inquiry into the subject, and, in all events, that the court found the facts in a quixotic manner, thereby misapplying the test.

Appellant's first contention poses a question of guideline interpretation, which sparks de novo review. See United States v. DeLuca, 17 F.3d 6, 7 (1st Cir.1994) (holding that, when "an appeal raises a purely legal question involving the proper interpretation of the sentencing guideline, appellate review is plenary"); United States v. St. Cyr, 977 F.2d 698, 701 (1st Cir.1992) (similar). Appellant's second contention also poses a pure question of law and is, therefore, to be reviewed under the same standard. Appellant's third contention is cut from different cloth; it hinges on a factbound determination under the applicable guideline, thus evoking clear error review. See United States v. Bradley, 917 F.2d 601, 605 (1st Cir.1990); see also United States v. Brandon, 17 F.3d 409, 458 (1st Cir.1994) (holding that valuation of losses for sentencing purposes must be reviewed under the clear error standard), petition for cert. filed (U.S. May 16, 1994) (No. 93-9135).

III. FORMULATING THE RELEVANT CONDUCT INQUIRY

It is beyond serious question that the losses stemming from the 31 transactions closed by appellant constitute relevant conduct under U.S.S.G. Sec. 1B1.3(a)(1). ³ Less obvious is whether the remaining transactions, approximately 60 in number, closed by coconspirators, may be attributed to him. This appeal centers around appellant's insistence that the court below misinterpreted the test governing what the Third Circuit aptly has called "accomplice attribution," see United States v. Collado, 975 F.2d 985, 990 (3d Cir.1992), by taking too permissive a view of the test's foreseeability prong.

A. The Accomplice Attribution Test.

The accomplice attribution test is restated in the case law with great frequency, but rarely in quite the same form or with quite the same emphasis. Thus, our perlustration must start with the guideline itself.

In its current iteration, ⁴ the applicable guideline states that relevant conduct includes "all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity, that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense." U.S.S.G. Sec. 1B1.3(a)(1)(B) (Nov.1993). Reading the 1988 version of section 1B1.3(a)(1) in light of subsequent clarifying amendments to both the guideline and its commentary, we understand the Sentencing Commission to have mandated a two-part inquiry for accomplice attribution in the relevant conduct milieu. First, the sentencing court must determine what acts and omissions of others were in furtherance of the defendant's jointly undertaken criminal activity. This task requires the court to ascertain what activity fell within the scope of the specific conduct and objectives embraced by the defendant's agreement (whether explicit or tacit). Second, the court must determine to what extent others' acts and omissions that were in furtherance of jointly undertaken criminal activity likely would have been foreseeable by a reasonable person in defendant's shoes at the time of his or her agreement. ⁵

We think it is important to emphasize that the vantage point for the foreseeability judgment is the time of the defendant's agreement--not necessarily the time he personally undertook the performance of criminal...