U.S. v. Lombardi, s. 92-2450

• Decision Date: 06 May 1993
• Docket Number: Nos. 92-2450,93-1008,s. 92-2450
• Citation: 5 F.3d 568
• Parties: UNITED STATES, Appellee, v. Domenic LOMBARDI, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 568

5 F.3d 568

UNITED STATES, Appellee, v. Domenic LOMBARDI, Defendant, Appellant.

Nos. 92-2450, 93-1008.

United States Court of Appeals First Circuit.

Heard May 6, 1993.

Decided Sept. 24, 1993.

Robert B. Mann with whom Mann & Mitchell, Providence, RI, was on brief, for defendant, appellant.

Margaret E. Curran, Asst. U.S. Atty., with whom Lincoln C. Almond, U.S. Atty., and James H. Leavey, Asst. U.S. Atty., Providence, RI, were on brief, for appellee.

Before BOUDIN, Circuit Judge, COFFIN, Senior Circuit Judge, and OAKES, ^* Circuit Judge.

BOUDIN, Circuit Judge.

Domenic Lombardi pled guilty on August 12, 1992, to six counts of a nine-count superseding indictment, the remaining counts being dismissed at the government's behest. The nature and interrelationship of the charges is critical to an understanding of the case.

Three of the counts to which Lombardi pled guilty charged conspiracy to commit mail fraud (count I) and two acts of mail fraud (counts III and VI). 18 U.S.C. Secs. 371, 1341. All three counts related, at least in part, to Lombardi's conduct in fraudulently securing insurance proceeds by having another man set fire to Lombardi's property. One of the properties was a building owned by Lombardi; the other was a mobile home that Lombardi was renting to a tenant.

Two further counts (VIII and IX) were for depositing in a bank the insurance proceeds received in the respective episodes. 18 U.S.C. Sec. 1957. That statute makes it an offense to engage knowingly in a monetary transaction involving criminally derived property of a value greater than $10,000 where the property resulted from one of a number of specified offenses, including mail fraud. ¹ The remaining count (VII) was for using a fire to commit mail fraud, 18 U.S.C. Sec. 844(h), specifically, the setting of the fires involved in the mail fraud counts.

On December 3, 1992, the district court sentenced Lombardi to 63 months, comprising concurrent and consecutive sentences of varying amounts, on the conspiracy, mail fraud, and money laundering counts; to an additional, consecutive 60-month sentence, which is mandatory, on the using a fire count; and to a three-year term of supervised release. The district court also imposed a $60,000 fine and ordered that Lombardi pay restitution in the amount of $190,880.08, representing losses to insurers. ²

On this appeal, Lombardi has raised one seemingly novel issue under the Sentencing Guidelines, and several other objections more readily answered. The novel issue concerns the grouping rules and presents an issue of law on which our review is plenary. United States v. Phillips, 952 F.2d 591, 594 (1st Cir.1991), cert. denied, --- U.S. ----, 113 S.Ct. 113, 121 L.Ed.2d 70 (1992). In this effort we are aided by the careful sentencing memorandum of the district court explaining why it rejected Lombardi's position on grouping. We first describe how the district court calculated Lombardi's sentence.

The court first separated the conspiracy/mail fraud counts into one group of offenses and the money laundering counts into another. U.S.S.G. Sec. 3D1.2 (grouping of closely related counts). The using a fire count was excluded from the grouping rules because the statute imposes a mandatory consecutive sentence. See U.S.S.G. Sec. 3D1.1(b). Then, the court calculated the base offense level for each group, that being in each of the groups here involved the level for the highest-level count in the group. U.S.S.G. Sec. 3D1.3(a). Based in part on the dollar amounts involved, the base level for the conspiracy/mail fraud group was 16, U.S.S.G. Sec. 2F1.1, and for money laundering the base offense level was 17. U.S.S.G. Sec. 2S1.2.

Then--and this is the point critical to Lombardi's argument--the district court increased the base offense level for the money laundering group by 2 levels, to 19, because the guideline for money laundering provides as a specific offense characteristic that a two-level increase is required "[i]f the defendant knew that the funds were the proceeds of any ... specified unlawful activity" other than narcotics. U.S.S.G. Sec. 2S1.2(b)(1)(B). "Specified unlawful activity" refers to a list of crimes, including mail fraud. See id. Sec. 2S1.2, application note 1; 18 U.S.C. Secs. 1956(c)(7), 1961(1). Since Lombardi committed the mail frauds, it is unquestioned that he knew that the funds laundered were obtained through mail fraud. ³

Under the grouping rules, the offense level where one group is level 19 and the other level 16 is derived by taking the higher level and increasing it by 2 levels. U.S.S.G. Sec. 3D1.4 (prescribing two-level increase where the offense levels for the two groups are within four levels of one another). This combined offense level of 21 was then reduced by two levels for acceptance of responsibility. U.S.S.G. Sec. 3E1.1(a). The resulting final offense level of 19 was used, in conjunction with Lombardi's substantial criminal history (category V), to specify the range--57 to 71 months--on which his 63 month sentence was based. See U.S.S.G. sentencing table. As earlier noted, the sentence for the using a fire count was separately determined, and it is not in issue.

Lombardi's central claim on this appeal is that the money laundering counts should not have been grouped separately but should have been included in a single group with the conspiracy/mail fraud counts. If so, the money laundering counts would have represented the highest level count in this single group, producing an offense level of 19 for the single group. After reducing this figure to level 17 for acceptance of responsibility, the sentencing range fixed by the sentencing table would have been 46 to 57 months, well below the 63 months actually imposed.

The rules for grouping of closely related counts, set forth in U.S.S.G. Sec. 3D1.2, largely eliminate cumulative punishment for multiple counts in the same group (although one count may comprise a specific offense characteristic or adjustment for another count in the group). The introductory commentary says that a single group combines "offenses [that] are closely interrelated," U.S.S.G., part D, intro. commentary, and the guideline for grouping closely related counts says that it covers "counts involving substantially the same harm," U.S.S.G. Sec. 3D1.2. But this is background: what controls are the four subsections of the guideline that say precisely when grouping shall occur.

Subsection (a) of section 3D1.2 applies when the counts involve the same victim and the same act or transaction, and the latter requirement is clearly not met here since the fraud and money laundering are distinct acts. Subsection (b) applies when there is the same victim and multiple acts or transactions that have a common objective or comprise a common plan. The guidelines are clear that, for purposes of these subsections, the victim of fraud is the insurance company and the victim of money laundering is society. See U.S.S.G. Sec. 3D1.2, application note 2. To the extent that Lombardi is relying upon subsection (b), the argument is foreclosed.

Lombardi's best, and main, argument hinges upon U.S.S.G. Sec. 3D1.2(c) which provides that counts shall be grouped together

[w]hen one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts.

Because knowledge that the money laundered funds were derived from mail fraud was a specific offense characteristic in the guideline applicable to the money laundering counts, Lombardi contends that section 3D1.2(c) governs in this case and requires that all five counts--conspiracy/mail fraud and money laundering--be grouped together.

Neither Lombardi nor the government has found any decision that directly addresses this issue. In our view, the better reading of section 3D1.2(c) is that it does not apply to this case. The "conduct" embodied in the mail fraud counts is the various acts constituting the frauds, coupled with the requisite intent to deceive; the "specific offense characteristic," in U.S.S.G. Sec. 2S1.2(b)(1)(B), is knowledge that the funds being laundered are the proceeds of a mail fraud. It happens that Lombardi's knowledge of the funds' source derives from the fact that he committed the frauds, but that does not make the fraudulent acts the same thing as knowledge of them.

Lombardi's reading would also create a disturbing anomaly in the guideline's application. One who commits a fraud and launders the money (thereby knowing of its source) is normally more culpable than one who merely launders the money knowing of its source. Yet if Lombardi's interpretation were adopted, a defendant would get exactly the same total offense level whether the defendant committed the mail fraud or merely knew that someone else had committed it: in either case, all five counts would be a single group, and the money laundering count would generate a level 19 (17 as the base offense level and a 2 level increase for knowledge of source). The anomaly is not conclusive but it reinforces our inclination to read the guidelines literally.

If there is any discomfort in the interpretation, it may come less from the illusion of double counting than from other sources. Some might think it odd to punish a defrauder separately for depositing his ill-gotten gains in a bank rather than spending the money outright. But that is the consequence of a deliberate policy choice by Congress, and one that is much easier to understand when one thinks of the relationship between bank deposits, money laundering and organized crime. As for the choice to increase the...