U.S. v. Maurello, 95-5109

• Decision Date: 22 February 1996
• Docket Number: No. 95-5109,95-5109
• Citation: 76 F.3d 1304
• Parties: UNITED STATES of America v. Arthur MAURELLO, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 1304

76 F.3d 1304

UNITED STATES of America v. Arthur MAURELLO, Appellant.

No. 95-5109.

United States Court of Appeals Third Circuit.

Argued Nov. 20, 1995.

Decided Feb. 22, 1996.

On Appeal from the United States District Court for the District of New Jersey; Garrett E. Brown, Judge.

Brian P. Reilly (argued), Office of Federal Public Defender, Trenton, NJ, for Appellant.

Kevin McNulty (argued), Office of United States Attorney, Newark, NJ, for Appellee.

Before: BECKER, SAROKIN and WELLFORD, ^* Circuit Judges.

OPINION OF THE COURT

SAROKIN, Circuit Judge:

Defendant, a disbarred lawyer, was convicted of mail fraud by virtue of his unauthorized practice of law. The gross amount of fees he received from his clients was used to calculate the loss caused by his fraud, and in turn, the sentence to be imposed under the guidelines. With some reluctance because of the conduct involved, we conclude and agree with defendant's contention that fees paid by those who received satisfactory services are not to be included in determining the measurement of loss from his fraudulent scheme. In addition, we remand to the district court for factual findings as to whether defendant's self-professed dissatisfied clients suffered actual financial loss as a result of his scheme, and if so, in what amount.

Because defendant utilized his special skills as an attorney in procuring clients, we conclude that imposing a two-point upward adjustment for using a special skill in the commission of the offense was warranted.

Finally, we vacate and remand with respect to the restitution imposed for the reasons hereinafter set forth.

After pleading guilty to mail fraud and credit card fraud, defendant was sentenced pursuant to the Federal Sentencing Guidelines to two concurrent prison terms of thirty-six months each, to be followed by three years of supervised release. In addition, he was ordered to pay $25,000 in restitution on each charge. The issues presented for review are threefold: 1) whether the district court properly calculated the amount of loss caused by defendant's mail fraud for purposes of guideline § 2F1.1; 2) whether the district court erred in imposing a two-point upward adjustment to defendant's base offense level on the ground that he abused a position of trust and/or used a special skill to significantly facilitate the commission or concealment of either offense; and 3) whether the district court erred in ordering defendant to pay $50,000 restitution ($25,000 on each count). We will affirm in part, reverse in part, and remand in part to the district court for further findings of fact.

I.

A. Mail Fraud

Arthur Maurello was admitted to the New Jersey State Bar in 1976. From 1976 to 1990, he practiced as a licensed solo practitioner. In 1988, however, an ethics complaint was filed against him. The Disciplinary Review Board conducted an investigation and found that Mr. Maurello had, among other things, fraudulently obtained credit cards in the name of his former wife and tampered with a witness in the course of the ethics investigation. In re Maurello, 121 N.J. 466, 478-79, 582 A.2d 622 (1990). As a result, on October 26, 1990, Mr. Maurello was permanently disbarred by the New Jersey Supreme Court. Id.

In 1989, apparently in anticipation of his possible disbarment, defendant took steps to set up a law practice under an assumed name. From the New Jersey Lawyer's Diary, defendant selected the names of two members of the New Jersey Bar who no longer practiced law: Robert Burdette and Alan Jeffrey Miller. Although the facts are not clear from the record, it appears that defendant acquired personal information about Burdette by "simple inquiry to the Bar," and about Miller by calling a toll-free information line provided to the public by the California Bar. Defendant used this information to obtain driver's licenses, credit cards and social security cards under the assumed names.

In 1989, defendant briefly established a law practice entitled "Bell and Burdette." It is unclear whether or to what extent he actually practiced under this name. He then reactivated Miller's license to practice law, establishing a law firm under the name "Alan Jeffrey Miller Chartered" in 1990. He hired staff and associates, and provided legal services to hundreds of clients.

B. Credit Card Fraud

From 1988 until December 1991, defendant engaged in a scheme to commit credit card fraud. Drawing on biographical information gleaned from obituaries, he obtained birth certificates, death certificates, and other information on at least twelve different individuals ¹ from public records. He then ran credit checks and obtained driver's licenses under the assumed names. Finally, he applied for and received credit cards, on which he charged approximately $230,000 worth of merchandise.

II.

In 1994, a U.S. Postal Inspector filed a criminal complaint in the District of New Jersey which charged that defendant committed mail fraud in connection with his unauthorized law practice. Defendant waived indictment in open court, and a six-count Information was filed against him. The Information charged defendant with five counts of mail fraud in violation of 18 U.S.C. §§ 1341 and 1342 and one count of credit card fraud in violation of 18 U.S.C. §§ 1029 and 1022.

Defendant pled guilty to Count 1 (mail fraud) and Count 6 (credit card fraud). The district court sentenced him as stated above.

III. Jurisdiction

The district court had jurisdiction pursuant to 18 U.S.C. § 3231. We have appellate jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. 3742.

IV. Standard of Review

Our review of the district court's interpretation of "loss" for purposes of § 2F1.1 is plenary. United States v. Badaracco, 954 F.2d 928 (3d Cir.1992).

The appropriate standard of review of a district court's decision regarding the applicability of an adjustment under the Guidelines "depends on the mixture of fact and law necessary to that court's determination." United States v. Bierley, 922 F.2d 1061, 1064 (3d Cir.1990). If the decision is "essentially factual," we apply a clearly erroneous standard. Id. If the claimed error is legal, however, we review the district court's decision de novo. Id.

We review a district court's restitution order under a bifurcated standard: plenary review as to whether restitution is permitted by law, and abuse of discretion as to the appropriateness of the particular award. United States v. Hunter, 52 F.3d 489, 492 (3d Cir.1995).

V. Discussion

A. Loss Calculation on Mail Fraud Count

Defendant was sentenced pursuant to § 2F1.1 of the Federal Sentencing Guidelines, which governs sentencing for fraud. Under that guideline, the offense level for sentencing purposes is based in part on the amount of "loss" due to the fraud, with higher losses resulting in higher sentences. The issue here is whether money paid by clients for apparently satisfactory legal services performed by an unlicensed attorney is considered part of the "loss" from the attorney's fraudulent acts for purposes of § 2F1.1.

The Presentence Investigation Report ("PSR") took the position that only fees paid by dissatisfied clients should be considered in calculating loss. To compute the monetary loss from the mail fraud, the probation office sent letters to all known clients of defendant's unauthorized practice, inquiring whether they considered themselves victims or believed themselves entitled to restitution. From approximately 225 letters, the probation office received ninety-seven responses. Seventy of those who responded expressed satisfaction with defendant's services, while twenty-seven stated that they were dissatisfied with the legal services they received and requested their money back. The fees paid by those twenty-seven persons totalled approximately $62,000. The probation office recommended that figure to the court as the total loss from defendant's unlicensed practice.

At the sentencing hearing, both sides challenged the PSR's loss computation. Defendant argued that loss should be zero, because his clients received the legal services for which they paid. The government, on the other hand, argued that the loss should include the gross total of all fees paid to defendant during the period of his illegitimate practice, on the theory that none of defendant's clients received that for which they had paid: the services of a licensed attorney.

The district court accepted the government's argument, reasoning that "[n]o client would have paid any money had he or she known the defendant assumed the identity of another person, did not have a license to practice law." App. 598. The court concluded that since all of the clients "paid ... the defendant for something the defendant could never provide ..., every dollar that they paid was a loss." Id. Adding together all of the fees received by the firm, less those fees paid to defendant's partner, the court calculated the total loss from defendant's mail fraud scheme to be $428,902.

1.

In determining the way in which loss should properly be measured in this case, we look first to the Guidelines and Commentary thereto. The Commentary to § 2F1.1 defines loss as "the value of the money, property, or services unlawfully taken." Commentary, App. Note 7. The loss calculation need not be precise; the guidelines require only a "reasonable estimate" based on the information available. Id. at Note 8.

This estimate, for example, may be based on the approximate number of victims and an estimate of the average loss to each victim, or on more general factors, such as the nature and duration of the fraud and the revenues generated by similar operations. The offender's gain from committing the fraud is an alternative estimate that ordinarily will underestimate the loss.

Id.

The Commentary to § 2F1.1 then refers the reader to the Commentary to § 2B1.1 for a fuller discussion of loss valuation. Section 2B1.1 is the guideline for larceny, embezzlement, and...