The seven defendants were convicted after a three-month jury trial of a variety of federal offenses, including mail fraud, RICO, and money laundering, arising out a scheme to defraud the Town of Cicero, Illinois. (Bonnie LaGiglio, however, was convicted only of a tax offense.) They received prison sentences ranging from 41 to 151 months, as well as being ordered to forfeit a total of $4 million in proceeds of their fraud (plus two real estate parcels)'— a fraud that cost the Town more than $10 million. Their appeals, together with the government’s cross-appeal, which seeks higher sentences for all but Bonnie LaGig-lio, present more than 20 issues, but many of them are too insubstantial to require discussion. Because the sentences were based in part on factfindings made by the judge, the government concedes that the defendants are entitled to the limited remand authorized by
United States v. Paladino,
Cicero is self-insured for its employees’ health benefits, and until 1992 used the Travelers insurance company to process the bills submitted to the Town by providers of health care to its employees. That year the Town switched to Specialty Risk Consultants. SRC, created by two of the defendants, was the instrument of the fraud; other defendants were Town officials, including the President of the Board of Trustees (i.e., mayor), Loren-Maltese. Millions of dollars that the Town paid to SRC were siphoned to a partnership, Plaza Partners, which was a tool of the conspirators and provided them with money and other things of value, including a golf course and a horse farm. The fraud, which continued until it was unmasked in 1996, has done nothing for the reputation of Cicero, a town notorious as the headquarters of Al Capone,
Hanania v. Loren-Maltese,
Loren-Maltese, though a key player in the fraud .by virtue of her position as the Town’s mayor, received only modest remuneration — primarily reimbursement of 100 percent of her medical bills; Cicero’s benefits plan entitled her to only 80 percent. She points out that there was a practice predating the fraud of reimbursing additional amounts upon written authorization by a Town official; her predecessor had been reimbursed for 100 percent of his medical bills on this basis, and presumably she would have been as well even if SRC had not replaced Travelers as the administrator of the Town’s plan.
She argues that if the extra coverage she received was not in exchange for her complicity in the fraud, she is not guilty of the form of fraud, with which she was charged, that consists of an official’s depriving the government of his or her honest services. 18 U.S.C. §§ 1341, 1343, 1346;
United States v. Martin,
In the case of a successful scheme, the public is deprived of its servants’ honest services no matter who receives the proceeds. In any event there was evidence that as a reward for her participation Loren-Maltese received accelerated reimbursement and, more important, reimbursement of 100 percent of the medical expenses incurred by members of her family; there was no evidence that her predecessor had received such largesse.
She makes the related complaint that she should not have been found liable to forfeit more than $3 million of illegal proceeds, since so little of that amount found its way into her pocket. But the proceeds of a conspiracy are a debt owed by each of the conspirators.
United States v. Genova,
A number of cases, it is true, though none in this circuit, require the defendant to forfeit only so much of the proceeds (not received by him) of the fraud as were foreseeable to him, e.g.,
United States v. Fruchter,
The only other significant issue she raises concerns the judge’s exclusion, as being unreliable, of minutes of meetings of the Town’s Board of Trustees held several months after the government’s investigation of the fraud became public knowledge. Loren-Maltese presided at meetings of the Board and other conspirators were among its members. The minutes of the meeting of January 6, 1997, contain a statement by one of the conspirator members (though he
*604
was acquitted), DeChicio, that no payments had been made by the Town to SRC since October 1996. That was false. A week later the minutes were amended to state that at the January 6 meeting Loren-Maltese had twice asked DeChicio whether any payments had been made to SRC “since the October 1996 Board Meeting at which time the board directed no further monies be paid to [SRC] unless by Town Board approval.” Neither the minutes of the October meeting nor those of the January 6 meeting had mentioned any such direction. The inference of doctoring, even in the case of the unamended version of the January 6 minutes, is strong, and the public-records exception to the hearsay rule is inapplicable when the “circumstances indicate lack of trustworthiness.” Fed.R.Evid. 803(8);
Beech Aircraft Corp. v. Rainey,
The provision is tailor-made for a case in which the records are controlled by the defendants themselves rather than by clerks assumed to be disinterested.
Reynolds v. Green,
Bonnie LaGiglio was the wife of one of the principal conspirators. Her name appears in the signature space of countless checks issued by Plaza Partners. In addition, funds that passed from the Town to SRC to Plaza Partners were disbursed by the partnership to her and reported on her income tax returns. If her signature on the checks was genuine, the jury was entitled to infer that she knew that the partnership was an instrument of fraud and thus knowingly helped it to succeed. Although the judge found “that there is simply insufficient evidence for this jury to conclude that she knew about the fraud against the town,” that finding is consistent with her conviction for conspiracy to impede the IRS in the assessment and collection of taxes. 18 U.S.C. § 371. The evidence revealed that she knew that Plaza Partners was a device for enabling her husband to avoid reporting income to the IRS, and thus knowingly assisted him in that project.
She claims that her husband forged all her signatures. The jury was shown handwriting exemplars — that is, signatures of Bonnie LaGiglio known to be genuine'— and asked to compare them with the signatures in her name on the checks and on other documents of Plaza Partners. No handwriting expert testified about the genuineness of the contested signatures. The checks and other documents were all copies, and in closing argument the prosecutor began to argue that handwriting experts are unable to authenticate signatures on copies. The defense rightly objected on the ground that no expert testimony or other basis had been provided for that implausible argument, and the judge ordered it stricken. It is doubtful that the argument helped the prosecutor; told that
*605
even an expert can’t verify the genuineness of signatures on copies, a juror asked to do just that might doubt his ability to do so, and vote to acquit. In any event, no rule of evidence makes a jury incompetent to determine the genuineness of a signature by comparing it to a signature known to be genuine. Fed.R.Evid. 901(b)(3);
United States v. Papia,
All the defendants complain about a pair of incidents involving the jury. Cicero has, as we noted, a long history of being a center of organized crime. During the trial one of the jurors brought into the jury room a book that discussed organized crime in Cicero in the 1920s to 1940s (a period that encompassed the Capone era— he was active in Chicago from 1920 to 1931, becoming boss of the Chicago mob in 1925). The other jurors reported this juror to the judge, who removed him from the jury but concluded after talking to the other jurors that they had not been contaminated by their exposure to the book. The judge observed realistically that most Chicagoans have some awareness of the association between Capone and Cicero.
The day after the jury was discharged, a Chicago newspaper reported that one of the jurors said that Spano, Sr.’s reputed mob connections had been mentioned during the jury deliberations. The judge did not think that the newspaper article required him to conduct a hearing at which the jurors would be asked what exactly they had heard about Spano, Sr.’s mob connections. Ordinarily when extraneous materials are brought into the jury room, a hearing is required (as in the case of the book about Cicero) to determine whether the jurors’ deliberations were fatally compromised by their exposure to the materials.
Remmer v. United States,
This trial lasted three months and the deliberations alone lasted 11 days; it is unlikely in the extreme that extraneous speculations were never voiced in the jury room. The trial judge, having observed the jury carefully and having been impressed by the jurors’ conscientiousness (remember how they reacted to the book),
*606
did not abuse his discretion in concluding that the likelihood that a reference to Spa-no, Sr.’s possible connections to organized crime had polluted the jury’s consideration of the case was too slight to warrant hauling the jurors before him for an examination. See, e.g.,
United States v. Berry,
Taylor, a key conspirator who had turned state’s evidence, was a principal witness for the government. After the trial the defendants discovered that he had been an alcohol abuser and marijuana user during the conspiracy. They moved for a new trial on the basis of this newly discovered evidence, which they would have liked to impeach him with. It is improper to impeach a witness by presenting evidence that he has engaged in criminal or otherwise illegal or socially reprobated behavior unless the evidence undermines the credibility of his testimony beyond whatever undermining would be accomplished just by besmirching the witness’s character.
United States v. Mojica,
The defendants are, however, entitled to a
Paladino
remand — which brings us to the government’s cross-appeal. The government asked us in its brief to affirm the defendants’ convictions and sentences, but, “alternatively” — meaning, presumably, that if we don’t affirm the convictions and sentences — to order the defendants (all but Bonnie LaGiglio) to be resentenced in accordance with the grounds presented in the cross-appeal.
Paladino
prevents us from affirming the sentences until the trial judge has advised us whether, had he known the federal sentencing guidelines were merely advisory, he would have given the defendants lighter sentences.
There are two ways to interpret the government’s position. One is that unless we affirm the sentences here and now, we should (if the cross-appeal has merit) remand for resentencing. The other is that, should there be a Paladino remand (as there must be), we should wait and see whether the remand results in a different sentence for any of the defendants; if not and if in consequence we affirm the original sentences, then the government has obtained its preferred result, and its alter *607 native submission (that the defendants be resentenced) becomes moot. If the second interpretation is correct, we could suspend consideration of the cross-appeal until we hear from the judge, and if he decided that he would not have sentenced differently we would then dismiss the cross-appeal. But if the cross-appeal has identified errors, it is better that we point them out now rather than have to order the defendants re-sentenced after the Paladino remand. So let us determine the merits of the cross-appeal and then return to the question of the precise sense in which the government is demanding sentencing relief “alternatively.”
The government contends that the sentences of some of the defendants should have been enhanced because they had corrupted a “financial institution,” U.S.S.6. § 2Fl.l(b)(6) (1997) (now § 2Bl.l(b)(13));
United States v. Lauer,
The government next contends that in calculating the loss caused by the fraud the judge should have disregarded all costs incurred by SRC in processing claims. The reasoning is that if the defendants are allowed to deduct those costs in figuring the Town’s loss, inefficient frauds will be penalized less severely than efficient ones, because the costs subtracted from the proceeds of the fraud to determine the loss to the victim will be larger and the net proceeds therefore smaller. The government is correct that the fraudster’s costs shouldn’t be deducted,
United States v. Hausmann,
*608
The judge did this. But the government is right that having determined that the loss caused by the fraud was $10.6 million the judge should not have rounded this figure off to below $10 million, which reduced the length of the defendants’ sentences. The judge’s reason was that $10.6 million was merely an estimate, which might therefore be off—might indeed be off by $600,001. No doubt. But unless he thought the estimate biased, he had no basis for rounding down any more than he would have had for rounding up. Reasonable estimates are proper predicates for calculating loss. U.S.S.G. § 2F1.1 Application Note 9 (1997) (now § 2B1.1 Application Note 3(C));
United States v. Bhutani,
This was error and ordinarily an error in a sentence requires resentencing. But not if the government would prefer the original sentences to stand than to take its chances with a resentencing that could result in lower sentences even after the error that the judge committed against the government (the rounding down) is corrected. If the defendants are resen-tenced, then since the guidelines are now merely advisory the district judge will not be strictly bound by the sharp line drawn by the sentencing guidelines between frauds that cause a loss of $9,999,999 and those that cause a loss of $10,000,000. Were he to decide that an estimate so close to the line did not, in the circumstances of this case, warrant the bump up in sentences that the guidelines decree at $10 million, and on that basis decided that the original sentences were proper, we would be unlikely to deem his action an unreasonable departure from the guidelines, and we would therefore have to affirm. This means that if, in a Paladino remand, the judge determined that he would have given the defendants the same sentences he imposed originally even if he’d known the guidelines were merely advisory, his decision would not be invalidated by the error that we have found. Those sentences would therefore stand.
If, however, the judge is required to resentence the defendants because of the error he committed against the government, he may conceivably give them lower sentences, the guidelines no longer being mandatory. The question is whether the government wants to run that risk. One of us asked the government’s lawyer at argument: “Do you want to pursue the cross-appeal after Booker? Of course, if you succeed on any aspect of the cross-appeal, instead of there being a limited Paladino remand, there will be a vacatur and a straight remand with instructions to resentence and, of course, at the resen-tencing, [the district judge] can give the very same sentence he gave if not a lower one.” To which the lawyer replied: “We’ve considered this very carefully, your honor, and we’re prepared to take our chances. We are pursuing the cross-appeal.” We interpret this to mean that the government wants the defendants resen-tenced—all but Bonnie LaGiglio, who, therefore, is alone entitled to a Paladino remand, pending which we retain jurisdiction of her appeal. We vacate the judgments of the other defendants and remand for resentencing.