U.S. v. Seligsohn, 91-2083

• Decision Date: 09 February 1993
• Docket Number: No. 91-2093,No. 91-2083,91-2093,No. 91-2100,Nos. 91-2083,92-1038 and 91-2100,No. 92-1038,91-2083,92-1038,91-2100,s. 91-2083
• Citation: 981 F.2d 1418
• Parties: UNITED STATES of America v. Marlene Esther SELIGSOHN, a/k/a Esther DeMarco, Appellant inUNITED STATES of America v. Melvin SELIGSOHN, a/k/a Mickey DeMarco, Appellant inUNITED STATES of America, Appellant in, v. Melvin SELIGSOHN, a/k/a Mickey DeMarco. UNITED STATES of America v. Mark SELIGSOHN, a/k/a Mark Mancini, Appellant in
• Court: U.S. Court of Appeals — Third Circuit

Page 1418

981 F.2d 1418

UNITED STATES of America v. Marlene Esther SELIGSOHN, a/k/a Esther DeMarco, Appellant in

No. 91-2083.

UNITED STATES of America v. Melvin SELIGSOHN, a/k/a Mickey DeMarco, Appellant in No. 91-2093.

UNITED STATES of America, Appellant in No. 92-1038, v. Melvin SELIGSOHN, a/k/a Mickey DeMarco.

UNITED STATES of America v. Mark SELIGSOHN, a/k/a Mark Mancini, Appellant in No. 91-2100.

Nos. 91-2083, 91-2093, 92-1038 and 91-2100.

United States Court of Appeals, Third Circuit.

Argued Oct. 6, 1992.

Decided Dec. 9, 1992.

Rehearing Denied Feb. 9, 1993.

Jack Zaremski (argued), New York City, for appellant Marlene Esther Seligsohn in No. 91-2083 and appellant-appellee Melvin Seligsohn in Nos. 91-2093 and 92-1038.

Peter Goldberger (argued), Pamela A. Wilk, Philadelphia, PA, for appellant Mark P. Seligsohn in No. 91-2100.

Michael M. Baylson, U.S. Atty., Walter S. Batty, Jr., Asst. U.S. Atty., Paul J. Van De Graaf (argued), Sp. Asst. U.S. Atty., David M. Howard, Asst. U.S. Atty., Philadelphia, PA, for U.S. in Nos. 91-2083, 91-2093, 91-2100, and 92-1038.

Before: GREENBERG, COWEN and WEIS, Circuit Judges.

OPINION OF THE COURT

WEIS, Circuit Judge.

In this white collar crime case, the district court imposed imprisonment terms and directed payment of substantial sums in restitution to unidentified consumer victims, as well as to certain named victims. Because the district court used the current Sentencing Guidelines for some of the counts rather than those in effect on the dates of the offenses, we must remand for recalculation. In addition, findings on some aspects of the restitution orders are lacking and, consequently, we must remand that portion of the case as well.

Defendants, Melvin Seligsohn, his wife Marlene, and their son Mark, were charged in a 67-count indictment with various offenses committed in the course of conducting their business. The defendants operated a number of companies engaged in roofing repair and sales in the Philadelphia area for many years. They were charged with using the mails to defraud consumers; skimming of cash receipts to pay under-the-table compensation to employees and owners; defrauding union welfare benefit plans of required contributions; paying bribes to a union shop steward; destroying company records; defrauding insurance carriers; and filing false tax returns.

The allegations of consumer fraud included such practices as schemes to sell unnecessary roofing work at excessive prices through blatant misrepresentations. For example, roofing vents which cost but a few dollars and did nothing were added to jobs at costs of hundreds of dollars. In other instances, while customers stood below, workmen would surreptitiously pour water off the roof as proof that water had been trapped below the existing roof and replacement was required. Frequently, the customers were elderly or disabled and unable to climb to the roof to verify the need for repairs.

By paying cash as part of wages earned by employees, the Seligsohns underreported their total payroll, filed false reports to the Internal Revenue Service on withholding taxes, and similarly deprived a union welfare plan of its entitlement. To carry out this scheme, the defendants bribed the union steward to secure his cooperation.

Pursuant to a plea agreement, Melvin pleaded guilty to one count of conspiracy, seven counts of mail fraud, two counts of labor bribery, three counts of obstruction of justice, one count of racketeering, two counts of submitting false employee benefit plan remittance reports, and two counts of submitting false tax returns.

Marlene Seligsohn pleaded guilty to one count of conspiracy, two counts of mail fraud, two counts of labor bribery, two counts of obstruction of justice, one count of racketeering, two counts of submitting false employee benefit plan remittance reports, and two counts of submitting false tax returns.

Mark Seligsohn pleaded guilty to one count of conspiracy, one count of mail fraud, one count of obstruction of justice, and one count of filing a false personal income tax return.

The district court imposed sentences of varying length of imprisonment and also directed restitution. On appeal, the defendants raise a number of objections to their sentences and the orders for restitution.

I. RESTITUTION

The defendants contend that the district court made insufficient findings and improperly ordered payments based on charges other than those of conviction.

Restitution is authorized by the Victim and Witness Protection Act, 18 U.S.C. § 3663(a), as incorporated into the Sentencing Guidelines, U.S.S.G. § 5E1.1. We exercise plenary review over whether an award is permitted under law, but we review specific awards for abuse of discretion. United States v. Furst, 918 F.2d 400, 408 (3rd Cir.1990).

In exercising its supervisory powers, this Court has required the district courts to make "findings as to the factual issues that are relevant to the application of the restitution provisions of the VWPA." United States v. Palma, 760 F.2d 475, 480 (3d Cir.1985). We have noted three areas where findings should be made: (1) the amount of loss actually sustained by the victim; (2) how the loss is connected to the offense of conviction; and (3) the defendant's financial needs and resources. See Furst, 918 F.2d at 410; United States v. Johnson, 816 F.2d 918, 924 (3d Cir.1987).

"Difficulties of measurement do not preclude the court from ordering a defendant to compensate the victim through some restitution." United States v. Hand, 863 F.2d 1100, 1104 (3d Cir.1988). We observed in that case that Congress had considered the unusual situation where the exact amount owed would be difficult to determine and authorized the court "to reach an expeditious, reasonable determination of appropriate restitution by resolving uncertainties with a view toward achieving fairness to the victim." Id. at 1104 (citing S.Rep. No. 532, 97th Cong., 2d Sess. 31, reprinted in 1982 U.S.C.C.A.N. 2515, 2537). Such determinations should nevertheless be on the record. Hence, in Furst, 918 F.2d at 410, we took exception to the district court's failure to state the total amount of restitution that it had the power to impose, to identify the victims, and to explain the connection between the loss and the conduct for which the defendant was convicted.

A.

In cases where the offenses were committed before recent amendments to the Victim and Witness Protection Act, if a defendant pleads to or is convicted of less than all the counts of an indictment, the critical inquiry for restitution purposes is not the total loss sustained by the victims. Instead, courts should determine whether the loss is "caused by the specific conduct that is the basis of the offense of conviction." Hughey v. United States, 495 U.S. 411, 413, 110 S.Ct. 1979, 1980, 109 L.Ed.2d 408 (1990).

The government suggests that we should follow our pre-Hughey case of United States v. Woods, 775 F.2d 82 (3d Cir.1985), where restitution was based on provisions of the Probation Act, 18 U.S.C. § 3651 (repealed). In that case, we held that where the offense is a scheme to defraud, each count of mail fraud was simply an act in furtherance of the scheme and that the trial court had the authority to direct restitution for the entire fraudulent operation. Woods, 775 F.2d at 88. The government points out that in Hughey no such scheme was implicated and, therefore, on the facts the case is distinguishable. We decline to adopt such a narrow reading of Hughey and, instead, decide that we should take the Supreme Court at its word that the count of conviction controls the amount of restitution. Furst, 918 F.2d at 410; see also United States v. Badaracco, 954 F.2d 928, 942-43 (3d Cir.1992); United States v. Cook, 952 F.2d 1262, 1264-65 (10th Cir.1991); United States v. Sharp, 941 F.2d Not long after the Supreme Court decided Hughey, Congress amended the Victim and Witness Protection Act in two respects. First, consistent with the rationale of Woods, when an offense involves as an element a scheme, conspiracy, or pattern of criminal activity, "victim" means a person who is directly harmed by the scheme, conspiracy, or pattern. 18 U.S.C. § 3663(a)(2); see H.R.Rep. No. 681(I), 101st Cong., 2d sess. 177, reprinted in 1990 U.S.C.C.A.N. 6472, 6583. In addition, the court is authorized to order restitution to the extent that the parties have agreed to it in a plea agreement. 18 U.S.C. § 3663(a)(3).

                811, 815 (9th Cir.1991);  United States v. Stone, 948 F.2d 700, 704 (11th Cir.1991).   But see United States v. Brothers, 955 F.2d 493, 496-97 (7th Cir.1992);  United States v. Bennett, 943 F.2d 738, 741 (7th Cir.1991);  cf. United States v. Hunt, 940 F.2d 130, 131 (5th Cir.1991)
                

The amendments became effective November 29, 1990, a date which preceded the entry of the plea agreements in this case. We do not consider the amendments applicable to the Seligsohns because ex post facto considerations come into play.

Restitution under the Act is part of the sentencing process. The amendments were intended to change the Hughey interpretation of the statute by enlarging the courts' power to order restitution beyond that permitted by Hughey and, thus, work to the detriment of criminal defendants. Because of the prejudice to the defendants here, whose principal offenses were committed before the effective date of the amendments, we will not apply the statutory amendments to the restitution orders. We also note in passing that the government has not argued for application of the amendments in this case.

B.

The district court directed Melvin to "pay his share, whatever he owes, jointly and severally as to the amount of restitution to the victims as specified by the U.S. Attorney's Office." The court then specifically identified the following debts: $426,040 to Local 30B Employee Benefit Funds, $150,000 to Westmoreland Casualty Company, $50,000 to UNUM Life Insurance Company, $5,000 to ...