United States v. Anthony J. Gricco, William T. McCardell in 00-2179

339 camps: the same as at the F.Supp.2d make sure 104 at 499. This is only prisoners escaped. no sur- Guards reasonable conclusion to be drawn from guns rounded the train cars with not, drawn the record. Even if he did the Court every stop. at (“Wrong/Right” continued, illustra- the concentration camp guards guards tion depicting guns book with all guns carried and were under strict pointed prisoners at as board and them, orders use Szehinskyj was an boxcar). prisoners exit a Conditions Totenkopf armed camp concentration heat, abysmal, food, were with no or guard. and, “By add, by we definition”— sanitation. “clear, unequivocal, and convincing” evi- Totenkopf dence—“the assisted in [the]

While the Nazi documents Dr. persecution of Jews and others considered Sydnor’s testimony paint a horrifyingly racially inferior or ‘defective’”—this was picture clear of life in the concentration Szehinskyj’s “very role at camp[s].” camps, the stories contained the affi- was, Szehinskyj thus, Id. ineligible for a camp davits of four survivors offer vivid visa DPA under the and could not have living testimony nightmare of what a lawfully been naturalized in 1958. The prisoner’s daily camps life was in the clearly supported evidence that conclusion. involved this case. II. Sydnor Dr. specifically noted that The District Court’s order revoking conditions, inhuman these of which we Szehinskyj’s citizenship ordering him flavor, provided only have existed at to surrender his certificate of naturaliza- camps Rosen, at Gross Sachsenhau- tion will be affirmed. sen, and Warsaw from through 1945, during Szehinskyj’s alleged period

of Nazi service. Conditions at Mauthau-

sen and Flossenburg were no better.

Szehinskyj, 104 F.Supp.2d at 485-488. It personal partic is clear that America, UNITED STATES of

ipation in required atrocities is not for one v. to have assisted in persecution-being an armed camp guard concentration is suffi Anthony GRICCO, Appellant. J. Fedorenko, 512, cient. 449 U.S. at McCardell, William T. 737; William 890; Breyer, S.Ct. F.3d United McCardell, Appellant Kairys, v. States 782 F.2d 1377 n. 3 (7th Cir.1986). 00-2179. Indeed, we have found as persecution sistance an editor who 00-2149, Nos. 00-2179. only newspaper “armed” with a which United States of Appeals, Court spewed anti-Semitic bile. In so doing, we Third Circuit. recalled the maxim that pen “the is at least mighty, as if mightier, than the Argued March 2001. Koreh, sword.” 59 F.3d at 439. Jan. that, The District Court found given the “horrific” camp regulations practices,

it was “unlikely” that Szehinskyj never

physically harmed an inmate. Szehinskyj, Fitzpatrick

F. Phila- (Argued), Emmett PA, delphia, Appellant Counsel for William (No. 00-2179). T. McCardell A. Goldberger (Argued), Peter Pamela Wilk, Ardmore, PA, Appellant for Counsel (No. 00-2149). Gricco, Anthony J. Stiles, Attorney Michael R. U.S. Walter Jr., Batty, Lappen (Argued), Louis'D. S. (Argued), Richard J. Office of the Zack PA, Attorney, Philadelphia, United States Appellee. Counsel for Before: ALITO and McKEE and KRAVITCH,* Judges. Circuit * Kravitch, Phyllis Judge, Appeals The Honorable A. Cir- cuit States Court of for Senior United

OPINION OF THE COURT cashier would together bundle the tickets and cash put received and them a brown ALITO, Judge. Circuit bag labeled with the cashier’s name and Appellants Anthony Gricco and Michael the number the tollbooth. Each cashier McCardell were of conspiracy convicted would also place bag tape the a from the States, defraud the evasion, United ticket-reading provided machine that a and making false tax All returns. of the record of the tickets that the machine had charges related conspirators’ to the failure processed. supervisors The then would report on personal their income tax forward bags to Gricco’s assistants. money returns that had been stolen from airport parking facilities. We affirm the early 1990, Gricco, McCardell, and appellants’ convictions, but we vacate their others plan made a to steal money by sentences and remand for further sentenc- substituting customers’ real tickets with ing proceedings and resentencing. replacement tickets showing false dates entry. times of A customer who had I. parked in the lot long period for a of time From 1990 to Anthony Gricco was would have a real ticket reflecting high the regional manager private for compa- parking lot, fee. On leaving the the cus- nies that contracted with Philadelphia tomer pay would this fee to the cashier. Parking Authority operate parking However, instead of inserting the real tick- facilities at the Philadelphia International et into the machine, ticket-reading a cash- Airport. responsible Gricco was for the ier participating in the scheme would in- general operation facilities, including replacement ticket, sert a and the machine hiring employees and the collection would calculate the parking fee based on of parking McCardell, fees. Michael Gric- the false date and stamped time on the brother-in-law, co’s was Gricco’s chief as- replacement replacement ticket. This sistant. McCardell day-to- oversaw the ticket would indicate that the customer day activities of the picked tollbooths and parked had only time, a short period of up money from the cashiers at the end of and thus the parking fee would be much their shifts. lower. The thieves pocket would the dif- ference between the paid by amount parking facilities airport at the used customer and the amount of the automated ticket fee shown as well machines as cash- replacement on the iers. tickets. lot, Upon entering a customer would take a ticket from a machine. The Flannery, Michael a technician for the date and time printed would be on the company responsible for maintaining the ticket and encoded in magnetic strip machines, ticket provided replacement on lot, the back. To leave custom- Flannery tickets. also disabled the fare er would drive to a tollbooth and the ticket displays on ticket-reading machines so would put be into another machine. This could customers not see that park- machine would read the date and time of ing fees that paying were higher were issuance, length calculate the of time that than the by fees recorded the machines. the customer had parked lot, in the and display parking fee owed. The cus- Flannery initially supplied Gricco with tomer pay would then the cashier in replacement by tickets removing tickets tollbooth. At shift, the end aof each from the ticket-issuing machines and then Circuit, sitting by designation. Eleventh The in the counters on those machines. cashiers involved the scheme also resetting report to failed their unlawful income on beginning, Flannery In obtained 30 their method, They income tax returns. did not day using this and one tickets deposit their embezzled funds into banks Gricco, cashier, by enlisted used the re- being by for fear of detected the Internal placement tickets to steal cash. Gricco Revenue Service. Gricco cautioned some scheduled either McCardell or David Mil- put banks, cashiers not money to their in lion, supervisor, another to oversee the Flannery and he advised and Million to plaza tollbooth at which this cashier in through Capozzi. invest real estate Gradually, corrupt worked. more cashiers enlisted, eventually Flannery were and be- September The ended in scheme gan printing Philadelphia Attorney’s counterfeit tickets. when the District Office executed search warrants at the air- Gricco, McCardell, Million, Flannery and port. July the Commonwealth of four expanded their scheme over next Pennsylvania brought state charges of first, years. At Gricco enlisted cashiers theft, forgery, and unlawful use of a com- in engaged who had a similar but smaller Gricco, puter McCardell, against Flannery, Eventually in re- scheme Gricco Million, and numerous cashiers. The cash- partici- about cruited 15 other cashiers right jury iers waived their to a trial and pate. Flannery delivered the counterfeit Philadelphia were convicted in the Court Gricco, tickets he manufactured to Pleas. After a three-day jury Common McCardell, or McCardell’s wife. McCar- trial, Gricco, McCardell, and Million were replacement dell then distributed the tick- acquitted, judge and the dismissed Flan- cashiers, corrupt ets and the end nery’s case. shifts, picked up of their McCardell In April grand jury a federal re- Gricco, money stolen and it to forwarded Gricco, against turned an indictment money among par- who distributed the McCardell, Million, Flannery and for con- ticipants. portion The cashiers received a spiracy to defraud the United States shifts, proceeds during stolen their obstructing the lawful function of the In- equal and the rest was divided into four ternal Revenue in Service the collection of McCardell, Million, Gricco, shares for taxes, federal income violation of 18 Flannery. evasion, 371; § U.S.C. tax violation of 7201; § making U.S.C. false feder- leading participants The the scheme returns, al income violation of 26 report did not on their unlawful income 7206(1). trial, U.S.C. Prior to Million their federal income tax returns. Gricco Flannery pleaded guilty agreed safe, kept money his in a loaned cash to testify prosecution. for the Gricco and repayments others and received in the proceeded to trial. orders, form of money gave checks or cash members, family placed real estate jury The found Gricco and McCardell family under his members’ names. guilty on all counts. The sub- Through a real estate broker named Lud- sentencing mitted memorandum assert- wig Cappozi, purchased Gricco several ing the total amount stolen between properties Capozzi for cash. also engaged 1990 and 1994 was million and that $3.4 in real $952,000 (i.e., estate transactions with McCar- the tax loss 28% $3.4 wife, million). purchase dell’s who used cash to presentence reports adopted properties under her own and both McCar- the conclusion that the loss was applied dell’s name. the base-offense level 348

corresponding sought to that amount. as an in Gricco end itself: an intent to objections McCardell submitted written to hide unlawful income from the in or IRS calculations, these as well as to various to an underlying der conceal crime is presentence report in the See, other statements enough. e.g., Fur United States v. concerning airport their roles in the kin, (7th Cir.1997). theft. 1276, 119 F.3d 1280-81 Moreover, case, in conspiracy a Klein as in sentencing

The district court held a conspiracy prosecutions, objec other hearing. briefly para- The court first conspiracy may tives of the sometimes be phrased parts presentence of the re- partici inferred from the conduct of the ports relating sentencing to the enhance- See, pants. e.g., Apple United States v. gave ments. The court Gricco and whaite, (3d Cir.1999). 679, 195 F.3d 684 opportunity present McCardell an evi- end, however, In the the evidence must be sentencing purposes, dence for but prove beyond sufficient to a reasonable declined and instead rested on their writ- that impeding ten doubt the IRS was one of submissions. The court then stated conspiracy’s objects that it party’s arguments merely had read each and not adopt and would the facts set out in consequence foreseeable or collateral ef presentence reports. fect. Goldberg, See United States v. 105 770, (1st Cir.1997) (“[M]ere F.3d 774 col The district court sentenced Gricco to jointly agreed-to lateral effects of activity, imprisonment 120 months of and McCar- generally foreseeable, if even are not me imprisonment. dell to 108 months of The chanically object to be an treated as court also sentenced each defendant Adkinson, conspiracy.”) United States v. years release, three supervised (11th Cir.1998) (The 158 F.3d 1154 $75,000 fine, special assess- $700 government “prove must that there anwas ments. appealed. Gricco

agreement purpose impede whose was to (the II. conspiracy), the IRS and that each knowingly participated defendant in that appellants contend that their omitted)). conspiracy.” (emphasis In de conspiracy sup convictions for are not termining whether the evidence is suffi ported by appel sufficient evidence. The cient, we proof must of course view the lants were convicted for a so-called “Klein” light most favorable to the verdict and conspiracy1 conspiracy to defraud the —a any jury ask whether rational could have by obstructing United States the lawful government found that the met its burden. function of the Internal Revenue Service See, e.g., v. Frorup, United States 963 assessing collecting federal income (3d Cir.1992). F.2d, 41, case, 42 In this Shoup, taxes. See United States v. government contends that the evidence (3d Cir.1979). F.2d is sufficient to meet this standard and conspiracy order for a Klein chiefly relies on three categories of cir exist, agreed-upon objective an must be proof. cumstantial impede Ingram the IRS. v. United States, 672, 679-80, First, 360 U.S. S.Ct. relies on evidence (1959). Gricco, McCardell, 3 L.Ed.2d 1503 This need not partici- be and other major objective pants sole or even a report the scheme did not their addition, conspiracy. impeding Id. In illicit parallel income. This evidence of objective probative IRS need not be an individual conduct some has val- Klein, Cir.1957). 1. See United States v. (2d 247 F.2d 908 taxes, purposes, plainly structuring but it is action of does not present ue for necessarily agreed- itself to show an result in the evasion of taxes. enough not objective impede to the IRS. It would upon government’s against The best evidence if surprising at all all of these not be testimony Gricco is that he told various independently reached the participants participants deposit not to illicit in- their to conclusion that it would be best not come in a to purchase bank but instead report them illicit income—either because safes for their homes. These individuals investigative they attracting feared atten- they that testified followed this advice be- they simply to tion because wanted or they cause did not want to attract money they that would have keep the been likely attention of the IRS. It is that a n if in- required pay to taxes the extra person illegal acquires places who cash and reported. Accordingly, come had been safe, that in a cash home rather than a participants fact that the scheme mere bank, report will not the cash as income on can- report question did not the income or Accordingly, his her tax returns. a reasonably as to giving not be viewed rise jury rational could infer that Gricco knew strong participants a inference that participants that the to gave whom he this agreed upon this course of action. would, likelihood, in all pay advice not on their illicit income. Second, government points to evi- question The difficult is a ra- whether Capozzi, dence that Gricco and the real jury go tional could further and find that him in purchas- estate broker who assisted only not that Gricco foresaw this would ing property, structured various financial actually occur for it to but intended occur. filing transactions so as to avoid the close, Although question we conclude addition, currency reports.2 transaction evidence, whole, a viewed as could that on one

350 purchase that Gricco told him to a safe and arguments relating vance reasonable jury that he did A question. may so. rational could infer that a defendant Whether objective agreed upon punished separate that McCardell be statutory under two reporting paying provisions of not or taxes on the for the same act or transaction illicit income to do so depends because would have on the intent of the lawmakers. States, 856, discovery. created a risk of cannot Ball v. We See United 470 U.S. 861, 1668, say against that the evidence McCardell is 105 S.Ct. 84 L.Ed.2d 740 (1985). however, presumed, insufficient as a matter of law. It is that

punishment provisions under both provisions proscribe not intended if the III. ’ offense,” see, the “same e.g., Rutledge v. count, In conspiracy addition to the States, 292, 297, 517 United U.S. 116 and each Gricco McCardell were convicted 1241, (1996), 134 S.Ct. L.Ed.2d 419 evasion, multiple tax counts of viola- provisions proscribe whether two 7201, § tion making of 26 U.S.C. false generally by same offense is determined returns, tax in violation of 26 U.S.C. applying the rule set out in Blockburger 7206(1). § Gricco and McCardell contend States, 299, 304, v. United 284 U.S. 52 violating § that their convictions for 7201 180, (1932), S.Ct. 76 L.Ed. 306 which asks 7206(1) § merge and that the district requires proof whether each offense anof court in entering judg- therefore erred element that If the other does not. each ments of convictions and sentences under element, offense contains such an it is provisions. both subject rebuttal, presumed, that multi ple punishment Neither Gricco nor is allowed. Rutledge, See court, 1241; argument raised this in the 517 district U.S. 116 S.Ct. Block governed by burger, and therefore our review is 284 U.S. at S.Ct. 52(b), Fed. Proc. provides R.Crim. which case, In present ar- “[p]lain errors or affecting defects (26 gues that the offenses of tax evasion rights may substantial although be noticed 7201) § making U.S.C. a false return brought were not to the attention of (26 7206(1)) § U.S.C. each an contain ele- the court.” In order reverse under ment that the other lacks. The offense of 52(b), Rule an “[t]here must be ‘error’ that requires proof tax evasion attempt of an ‘plain’ is and that substantial ‘affect[s] due, payment evade the of a tax that ” Olano, rights.’ United States v. 507 U.S. making whereas the offense of a false re- 725, 732, 113 S.Ct. 123 L.Ed.2d 508 require proof turn does not of this ele- (1993). 52(b) “Moreover, Rule leaves the taxpayer ment: a who makes a material discretion to correct the forfeited error may misstatement of fact on a return be within the sound discretion of court 7206(1) § convicted under 26 U.S.C. even appeals, and the court should not exercise taxpayer pays if the the full amount that is ‘ “seriously discretion unless the error Similarly, due. making the offense of a fairness, integrity public affect[s] the or requires false return proof of a false state- ’ ” reputation judicial proceedings.” Id. return, ment on a whereas violation of 26 (citations omitted). may if U.S.C. be shown even taxpayer did not file a return at all. case, parties’ this primarily however, briefs focus question argue, on the The defendants that the whether the district any Blockburger merely presump- court committed test raises all, sort of error at Congress permit pun- and both sides ad- tion that meant to provisions, many rights substantial had been an ishment under both affected that the offenses alleged other circuits have held error provide and did not an ade- making a false return court, evasion quate basis for the in the exercise of they are on the same merge when based discretion, its to notice an error under act,3 in Supreme and that the Court San 52(b). Rule We reach the same conclusion 349, States, 343, v. 380 U.S. 85 sone United here. do not We believe that Gricco and 1004, (1965), L.Ed.2d stated S.Ct. 13 882 deprivation McCardell have suffered a return, filing a in that the offense of false rights,” in “substantial the exercise of 7203, may § violation of 26 U.S.C. be discretion, our we decline to entertain the in offense of tax evasion lesser included argument that the defendants did not raise some circumstances. below. unnecessary it in this

We find whether the district court IV. case decide judgments an in entering committed error challenges McCardell the suffi imposing of conviction and sentences on ciency supporting of the evidence his con Assuming for the sake of both offenses. evasion, tax in victions for violation of erred, argument that the district court we 7201, returns, § making false in viola prongs of the conclude that the other test ,In 7206(1).' § considering tion of ar this 52(b) under Rule are not met. The sen gument, again we must view the evidence imposed tences on Gricco and McCardell light in the most favorable to the verdict making false returns are concurrent to jury and ask whether a reasonable could evasion, tax and thus their sentences for beyond find a reasonable doubt that the former sentences do not increase the McCardell committed these offenses. See length only of their incarceration. The Frorup, 963 F.2d at 42. practical of the concur immediate effects 7206(1) participants underly- At least ten in the § counts rent sentences on the are ing scheme testified that McCardell was special totaling assessments for each $700 addition, involved the thefts. Robert Recently, defendant. v. United States (4th Walker, Roberts, 286, investigator an from the New Jer- 262 F.3d 292-94 Cir. 2001), Justice, sey Division of Criminal testified the court held that concurrent sen 1994, special spent that from 1991 to tences and small assessments were insufficient to show the defendants’ excess of documented income. Dale, 819, 1983) (finding sentencing 3. See United States v. 991 F.2d Cir. no double be (D.C.Cir.1993) (§ filing § § 858-59 7206 and 7201 cause the 7201 count was based on income, merge premised convictions where both were false tax returns which understated deductions); improper § on the same tax United and the 7206 count was based on tax re Sturman, 1466, misrepresented States v. F.2d 1487-88 951 turns that information on for (6th 1991) (simultaneous accounts); Pulawa, eign Cir. convictions for United States v. 532 1301, Cir.1976) (§ (9th may only § § 7201 and 7206 stand where F.2d 1301 7206 and proof necessarily merge § of tax 7201 was "ac evasion does where the tax evasion means, alia, prove preparation filing complished perjured of a fraudu inter return); returns”); Helmsley, lent United States v. 941 see also United States v. Hum Cir.1992) 71, (2d Cir.1991) (§ 254, (8th (s phreys, § F.2d 99 7201 and 7206 982 F.2d 262 tati 7207, merge premised ng filing § counts where both were on the misdemeanor of 7201); § included Unit omission of the same item of income from the false return is within 1333, returns); Hooks, Stone, (11th same tax United States v. 848 ed States v. 702 F.2d 1340 (7th Cir.1988) 1983) ("The (noting government agrees that F.2d 791 n. 3 Cir. 7201); 7206(1) particular § § § 7206 is included within United this case the offenses are Franks, (10th 7201]."). [offenses States v. 723 F.2d lesser-included within (1959); v. United States App. agent at 998. IRS Frank Bucci took 3 L.Ed.2d 684 Lanza, testimony 377, 382, figures from Million’s about the 260 U.S. 43 S.Ct. (which year (1922). proceeds that he received each L.Ed. 314 Since different sover- pro- should be the same as McCardell’s eigns permitted prosecute are the same they equal portions) ceeds since received crime, defendant for the same would “[i]t compared figures these the sums sovereign be anomalous indeed if a were reported that McCardell had on his tax greater power reprosecuting allowed the App. Agent returns. at 1065-66. Bucci individuals for offenses for which had discrepancy concluded that between acquitted been but were the lesser denied gave the two sets of numbers rise to an power proving underlying facts of liability additional tax of for the Tirrell, States v. United such offenses.” 1993, 1992, year’s App. and 1994. at 1059. (7th Cir.1997). 670, 120 F.3d 677 dispute not signed McCardell does that he Second, the appellants argue returns, the tax which contain declarations that the district in refusing court erred signatures pen- that the made were under admit evidence of acquittals. their state alty perjury. App. of at 1140. Taken established, however, It is well that evi together, this evidence is sufficient to es- prior acquittals of in generally dence is attempted tablish that McCardell to evade See, e.g., States v. De United admissible. taxes and made false returns. There is Rosa, (5th La 215, 171 F.3d 219 Cir. substantial evidence from which a rational Marrero-Ortiz, 1999); United States v. beyond factfinder could find a reasonable (1st 768, Cir.1998); United 160 F.3d 775 § doubt that the elements of both 7201 Thomas, v. 228, States 114 F.3d 249-50 7206(1) § proven. were Lockhart, (D.C.Cir.1997); Prince v. 971 V. (8th 118, Cir.1992); 122 United F.2d Jones, (7th States v. 561, 808 F.2d 566 appellants Both claim that the Irvin, Cir.1986); United States v. 787 evidentiary district court made erroneous (11th 1506, Cir.1986); Unit F.2d 1516-17 rulings relating prior prosecu to the state Sutton, ed States v. 1483, 732 F.2d 1492 First, they argue tion. the federal (10th Cir.1984); McKinney Galvin, v. 701 government collaterally estopped from (6th 584, Cir.1983); United F.2d 586 n. 5 introducing evidence of the thefts because Viserto, (2d v. 531, States 596 F.2d 537 appellants already acquitted had been Cir.1979). judgment acquittal “A of is charges reject of court. theft state We legal question relevant to the of whether argument estoppel this because collateral prosecution by is barred the constitu apply prosecutions does not successive jeopardy tional doctrine of double or of United States v. by sovereigns. different estoppel. it Bell, (3d collateral But once is deter 1345, 1351 Cir.1997); 113 F.3d n. 6 pleas mined that these bar have been 1084, Pungitore, United States v. 910 F.2d well, rejected, (3d Cir.1990). judgment acquittal of is not n. 1106 18 It is settled usually admissible to rebut inferences there is no violation of the Double may be drawn from the evidence Jeopardy Clause or the Due Process that was admitted.” United States v. Clause in prosecutions successive for the Viserto, (2d Cir.1979). 596 F.2d 537 government same offense the federal See, e.g., Abbate judgment acquittal hearsay. of government. “[A]lso and a state States, v. 187, 194, United except The Federal Rules of Evidence 359 U.S. 79 (1959); Bartkus hearsay operation S.Ct. 3 L.Ed.2d 729 from the rule Illinois, v. 121, 137, conviction, only judgments 359 U.S. 79 S.Ct. of Rule scheme, 803(22), judgments acquittal.” knowledge.” not Id. and his intent and trial, also, Evidence, Id. at A20. At on cashiers who had e.g., McCormick See (John ed.1999). ed., participated the earlier theft testified 5th Strong W. however, concerning plot. Gricco’s role in that still Judgments acquittal, are government testimony offered this to show part in large inadmissible because that, prior to the commencement of the may present a determination of inno- case, scheme involved in this al- Gricco cence, only but rather a decision that the ready money knew that he could steal prosecution has not met its burden of parking using from the facilities counter- proof beyond a reasonable doubt. Final- feit tickets and that he that he knew could ly, judgments acquittal even if the rely participated on the cashiers who had admissible, exclusion under Fed. were in the earlier scheme. The justified high- 403 would be R.Evid. —and probative stated that the value of this evi- ly danger recommended —because the outweighed any prejudicial dence unfair jury greatly outweigh confusion would effect because the evidence “does not sug- See, probative value.4 evidence’s limited gest jury that the should reach a decision Rosa, 171 e.g., De La F.3d at 219-20. basis; rather, improper

based on an integral evidence is to establish VI. scheme.” Id. at A19. argues Gricco that the district The district court that ordered the evi- in admitting court erred evidence of his prior only dence of the theft could be used earlier, separate role in an scheme to em relationship to establish “the between money airport. bezzle from the Gricco steal, Gricco and the he hired to cashiers contends that the district court should steal, opportunity his to run the scheme to have excluded this evidence under Federal knowledge and his intent and about the 404(b) gov Rule of Evidence because the Order, scheme.” District Court’s Pretrial solely to ernment offered the evidence reproduced in Gricco Br. at A6.2. The dis- criminal ac propensity show Gricco’s jury trict court also cautioned the on the tivity. limited use of the evidence and instructed memorandum, pre-trial govern- In a any it not to draw inferences of char- bad ment revealed that it intended to introduce 218-19, App. acter from it. 1402-04. employed evidence that in 1988 Gricco had evidentiary rulings A money three cashiers to embezzle from trial court’s 404(b) airport parking using “may only facilities counterfeit under reversed Rule be replacement provided clearly contrary tickets that he to when are to reason Memorandum, justified by them. Trial and not the evidence.” Government’s United (3d Murray, reproduced gov- Gricco Br. at A18. The States v. 103 F.3d omitted). Cir.1997) (citation quotation ernment that this argued evidence 404(b) standard, it admissible under Rule because Even under this we are doubtful plan propriety admitting of “help[ed] establish Gricco’s to steal about the evidence money Airport, opportunity prior from the his to of Gricco’s involvement in the so, relationship do his with members of the scheme. beyond frequently judgments proof that a reasonable doubt as to at least It has been stated " acquittal McKinney are not even relevant on the issue v. one of the crime.’ element " necessarily guilt 'they Galvin, (6th Cir.1983) because do not 701 F.2d 586 n. 5 may only prove innocence but indicate (citation omitted). prosecution failed to meet its burden of order to admit evidence under VII. 404(b), proponent clearly Rule “the must argues that the district articulate how that evidence fits into a in admitting court erred out-of-court state inferences, logical chain of no link of which co-conspirator exception ments under the may be the that the inference defendant hearsay rule.5 See Fed.R.Evid. propensity has the to commit the crime 801(d)(2)(E). In making argument, this charged.” Himelwright, United States v. passage McCardell’s brief cites a in the (3d Cir.1994). Here, 42 F.3d transcript trial which coun McCardell’s offenses, Gricco was on trial for tax objected began sel when cashier to relate prior

theft. While the evidence of the certain statements made to her Gricco. may thefts have an been relevant show McCardell Br. at 34. McCardell’s attor thefts, ques intent to commit further it is ney objected ground on the had there tionable whether this evidence was rele participation been no evidence of Gricco’s vant to show an intent to commit conspiracy in a and that Gricco’s out-of- (“In offenses. id. See order admit court statements were therefore inadmissi component evidence thefintent’ under hearsay. App. ble at 92. The district 404(b), Rule intent must be an element of objection court overruled the after the charged the crime and the evidence offered government assured the court it upon cast light must the defendant’s intent crime.”) added). would (emphasis conspira to commit the establish the existence of a cy. App. Nor was at 92. evidence the earlier scheme particularly op relevant to show Gricco’s

portunity carry We hold that Gricco’s out his tax or statements offenses knowledge properly against the were needed to do so. admitted 801(d)(2)(E), Rule governs under which however, unnecessary, findWe it to de- by coconspirator statements “a party of a cide whether the district court erred during the course and in furtherance of the evidence, admitting “high- it because is conspiracy.” To admit statements under ly probable that the ... evidence did not rule, this by prepon it must be shown a jury’s judgment contribute to the of con- “(1) derance of the conspir evidence that a viction,” Murray, 103 F.3d at (quoting 319 (2) existed; acy par the declarant and the previous precedent), Third Circuit and its ty against whom the statement is offered admission was therefore harmless. Be- (3) conspiracy; were members of the overwhelming cause there was evidence in statement was made in the course of the co-conspirators’ the form of testimony (4) conspiracy; and the statement was to establish the 1990-1994 scheme steal conspiracy.” made furtherance of the Parking from Authority, we are con- Ellis, United States v. 156 F.3d jury vinced would have found that (3d Cir.1998). case, In this as we have gains Gricco derived unlawful from this held, the evidence sufficed any scheme even without evidence that to show that McCardell and participated Gricco had the earlier Gricco both were members a Accordingly, conspiracy having objec scheme. the admission of the as one of its 404(b) addition, ground impeding Rule evidence is not a tives the for the IRS. very reversal. clearly they the evidence showed that by adopts by 5. Gricco's brief reference all of the Out-of-court statements Gricco were ad- McCardell, applicable arguments by by party opponent made but missions a and are thus not 801(d)(2)(A). argument applicable hearsay this is not to Gricco. under Fed.R.Evid. v. conspiracy Electrodyne Sys. Corp., members of a to United States were both (3d Cir.1998). 147 F.3d airport. This latter money from the steal for conspiracy provided an additional basis court, Before the district admitting co-conspirator statements even appellants disputed almost all of the factu though conspiracy this theft was not al sentencing, including bases for See id. at 497 charged the indictment. loss, amount of tax which dictated their (statements pursuant are admissible base offense level. The PSRs did not de 801(d)(2)(E) if even the basis for ad- Rule calculated, tail how tax loss was conspiracy is a different from the mission the district court’s it brief statement Thus, charged). the district court did one adopting inadequate the PSRs was in admitting not err Gricco’s statements. 32(c)(l)’s satisfy requirements.6 Rule Al

though defense counsel stated the sen VIII. tencing hearing rely would on objections orally their written rather than appellants raise numerous chal- The present arguments, their the district court vacate the lenges to their sentences. We specific findings should regard have made a calcula- sentences and remand for new ing disputed facts that were relevant remand, tion of the tax loss. On the dis- sentencing. findings of specific trict court should make merely adopting fact rather than the Pre- A. (PSRs), Reports sentence as it did at the offenses, For tax a defendant’s base of- hearing. sentencing tax fense level determined loss. 2Tl.l(a)(l), §§ If Federal Rule of Criminal Proce U.S.S.G. 2T1.9.7 the of- 32(b)(6) permits sentencing underreporting gross court to fenses involved dure return, accept presentence report findings personal as its income on a the tax fact, exception “any equal there is an loss is treated as to 28% of the but income, objection” presentence unreported unless a more accurate unresolved to the controverted, report. matter of the tax loss can be made. “For each determination 2Tl.l(e)(l)(A). of- finding the court must make either a on U.S.S.G. base is 18 a tax loss of more than allegation or determination no fense level for $550,000 $950,000. necessary contro than The base finding is because the but less ac 19 for a tax loss of more verted matter will not be taken into offense level is in, affect, $1,500,000. than sentencing.” count or than but less will 32(c)(1). ap- Fed.R.Crim.P. We have stated The PSRs for Gricco 19, finding disputed plied on a fact or a a base offense level of based on a “[a] $952,000. disputed amount upon disclaimer of reliance fact tax loss of This was million, expressly by taking is calculated must be made.... This Rule 28% $3.4 strictly comply money govern- enforced failure to with the total sum of that the vacating airport. it ment asserted was stolen from the grounds is the sentence.” fact, sentencing hearing, are accurate 6. At the the District Court that this is—that these facts stated: respects I therefore and correct in all and will carefully, your arguments adopt reports. I have I these read government's response have read the careful- App. at 1495. ly. probation I have also read the officer’s response Sentencing apply. likewise. 7. The 1998 Guidelines report I am satisfied this is correct in all respects. going I am therefore to find as a 356 adopted figure activities,”

The PSRs this million taken within scope $3.4 of the government’s from the sentencing agreement, “reasonably memo- foreseeable” below, randum. As we detail the sentenc- connection with the embezzlement ing memorandum inadequate and in- scheme. Consequently, Id. the tax loss accurate.8 arising money from the total amount of airport

stolen from by partic- all of the 1. ipants properly appel- attributed to both lants. Sentencing provide Guidelines the base offense level shall be determined conduct, on relevant

based which includes and, the defendant’s own “in conduct A sentencing permitted court is jointly case of a undertaken criminal activi- make “a reasonable estimate based on the (a scheme, endeavor, ty plan, criminal or facts” available where the exact amount of enterprise undertaken may the defendant in tax loss Application be uncertain. others, 2T1.1; concert § with whether or not Note 1 to U.S.S.G. see also Unit charged conspiracy), as a reasonably all ed v. Spencer, States 178 F.3d 1368 (10th Cir.1999); foreseeable acts and omissions of others in Bryant, United States v. (2d jointly Cir.1997). furtherance of the undertaken crim- 128 F.3d Since the activity, inal during that occurred com- cashiers who testified admitted that conviction, mission of the offense of report any did not gains of their illicit on offense, preparation returns, for that or their tax assumption that the attempting course of to avoid detection or entire amount airport stolen from the con responsibility for that offense.” U.S.S.G. tributed to tax loss is valid. The dis lB1.3(a)(l)(B). In order to be included trict court obligated was not to pore in determining the defendant’s through offense lev- the tax partic returns of all of the el, the resulting loss from the ipants airport acts or in the theft to determine the “(1) omissions others must be: in fur- unreported exact amount of income. See jointly of the activity; Spencer, therance undertaken 178 F.3d at (refusing (2) scope within the require defendant’s a court to all employee scrutinize (3) agreement; reasonably foreseeable returns over employ the course of an in connection with activity the criminal er’s fraudulent gener scheme order to agreed defendant precise undertake.” United ate a more computation). tax loss (3d Duliga, States v. 204 F.3d loss, however, The estimate of the tax Cir.2000). still must be reasonable and based on Here, the total tax loss government’s associated with available facts. The brief on airport by the funds stolen from the appeal all of offers one method for arriving at participants properly is attributed the million that it alleges was the total $3.4 both Gricco and Any partici- trial, McCardell. amount airport. stolen from the At pant’s failure report proceeds unlawful government expert Jeffrey Gemunder tes- “in jointly was furtherance of the airport under- tified that records that revealed arguments 8. appeal, Just before oral in govern- this for a base offense level of 19. The government advising the submitted a letter us ment stated that it continued to believe its agree that it would ato remand for reconsid- permissible persuasive. calculations to be government eration of the tax loss. The stat- govern- We have found several errors in the calculations, ed that it would advocate a base offense level ment's and we therefore find it of 18 necessary because its estimated tax complete loss of to remand for a recalcula- only $2000 was above the threshold tion. money that of mated the amounts September $1,396,960 stolen between was year, from the scheme each App. at 855. derived 1994. September 1998 and not consistent with the figures these are as follows: brief reasons government’s The ranges given by govern- the proceeds percentage (1) that his Flannery testified Second, if percentages even these year ment.9 each between by 10-20% increased government pro- has not accepted, are the testified and Million 1990 and explanation for choos- vided a reasonable by 20-50% each increased proceeds his growth an rate of 30%. The (2) ing overall appellants “the bene- give the year; says gave appel- it the government doubt,” picked government the fit of the doubt, but if it had lants the of the benefit growth rate as the annual 30% so, it would have chosen the (3) really done scheme; grew by 30% the scheme since Third, ranges. highest percentage the $1,396,960 during was stolen year each govern- scheme, accepting figure, the 30% even four-year year of the the last calculating income ment’s of year third was method during the stolen amount (4) mathematically incorrect.10 (or $977,872); prior years $1,396,960 70% of Fourth, was method year government’s was during the stolen second amount by or the district court. year used the PSRs in the third amount stolen 70% of the (5) fact, present- was not even this method forth; stolen the amounts and so government’s court. The to the district roughly million. ed up 20 to per year add $3.4 only post-hoc this appeal on offers brief 78-9. Br. at Gov’t explain fails to how the justification and ap- this errors in are several There court arrived or the district PSRs Flannery First, testimony of proach. million.11 $3.4 support percent- does not and Million sentencing a did file The govern- which figures on age growth and, court with the district esti- memorandum Flannery and Million relies. ment Flannery testified: illegal Million income to which shows the chart below 9.The Million], leaving $1.8 million equal to of calculating the income of 70% Instead year, a theft the income earned thieves to reach loss in the later for the obtained other Plainly, been divided 1.3. later should have there figure $3.4 million. in the record for court sufficient evidence government’s appeal on offers brief 11. $3.4 million and loss of to find theft calculating the loss of one other method $952,000.” Br. at Gov’t loss resultant tax how Million asked $3.4 million: "When was circular rea- to see how this 78-79. We fail total, he testi- believed he made much he finding the theft soning that loss leads to $400,000. That he made at least fied that $3.4 was million. top level made that the four thieves means cuts $1.6 [since million received least presumably, § this is what district the court 3B1.1 for aggravating U.S.S.G. his role. upon. and the PSRs relied The memoran- provide The Guidelines for such a four- dum arrived at a total theft loss of $3.4 level “[i]f increase the defendant an (a) by million adding together the unlawful organizer or activity leader of a criminal proceeds testifying the cashiers ad- that involved five or participants more or (b) earning, mitted to the amounts earned was otherwise extensive.” U.S.S.G. by cashiers, nontestifying based on the 3Bl.l(a). § provide The Guidelines for a assumption that each cashier earned $600 if three-level increase the defendant was a for each participated week he or she manager or supervisor, but not an organiz- (c) theft, $297,000 in the the that Million leader, er or in an extensive criminal activ- (d) $352,000 receiving, testified to the ity, and a two-level increase if the defen- (e) Flannery receiving, testified to leadership dant had a role in less extensive $352,000 attributed to each of Gricco and 3Bl.l(b) activity. §§ criminal U.S.S.G. McCardell, based on the inference that (c). Factors to consider include: each received the same amount as Flan- (1) the exercise of making decision au- nery’s cut. The memorandum resolved all (2) thority; the of participation nature ambiguities in the defendants’ favor and (3) offense; the commission of the the up summed figures these at a arrive (4) recruitment of accomplices; $2,559,600.”12 total theft of lost “at least right claimed to a larger share of the App. at 1483-84. sentencing The memo- (5) crime; fruits of the degree randum then concluded that “[gjiven the participation in planning or organizing case, expert testimony in the the loss easi- (6) offense; scope the nature and ly reached million for a tax loss of $3.4 (7) illegal activity; degree $952,000, establishing a base offense level authority control and exercised over oth- of 19.” App. government at 1484. The ers. any explanation has not offered for the $2,559,600 leap from million and $3.4 Hunter, United States v. 52 F.3d pointed any has not expert testimony (3d Cir.1995). The determination of a de- supporting leap. such a govern- Since the fendant’s role is based on all conduct with- memorandum, court, ment’s the district scope in the of the relevant guide- conduct provide the PSRs all fail to a coherent line, 1B1.3, § solely U.S.S.G. and not on factual basis for the calculation of a $3.4 the acts in the counts of conviction. Intro- loss, million theft the corresponding ductory Commentary to U.S.S.G. Ch. 3 Pt.

loss of is not a “reasonable esti- B. mate.” Accordingly, we remand for a new calculation of the amount of tax loss. The district court did not err in applying leadership role enhancement

B. to McCardell. McCardell’s role appeals theft four-level relevant conduct under U.S.S.G. 1B1.3, increase his base offense level under and the scheme involved four appear It does not that the by omission of the amounts received the non- up added correctly. its own numbers cashiers, testifying improper limitation of 1992, years the tax loss to the and 1994. appellants' sentencing 13. memorandum provisions Under the relevant conduct $1,668,500. up comes with a total theft loss of Guidelines, Sentencing arising the tax loss App. at 1454. We see several errors in this scheme, from the entire from 1990 to figure, including miscalculation should be appellants. attributed to the cashiers, testifying amounts received 1993; 1992; $22,955 in and $30,195 in Flan- 15 cashiers. and at least leaders 111a, 118a, 126a. $27,643 App. at 1994. in Million, cashiers testified the and nery, figures from reported Subtracting these the four leaders one of was McCardell the theft from 281, 309, gained he 81, 192, the amounts at App. scheme. of the more had than shows that he scheme the McCardell as described 364. Million year. each Gricco, $10,000 unreported in income under inman command” “second Bucci also testified Agent IRS McCardell cashier testified one unreported income the pres- not McCardell’s was charge when Gricco inwas 1992 and 1994 three-year period between 364, 93, 112, Although at App. ent. sen- $239,5000. App. at 1066. The ticket-swap- was the up with Flannery came proper. was tencing enhancement initially approached Million plan and ping Flannery testi- participate, to and Gricco D. in discus- was involved that McCardell

fied ex- development and the regarding sions of and Gricco’s McCardell’s 211, 225. at App. of the scheme. pansion by two levels fense were increased levels in the involved enlist- also was McCardell court believed that the district because was of cashiers and training ment con sophisticated “involved their offenses cashier at one when least present 2Tl.l(b)(2). Ap § U.S.S.G. cealment.” to helped 382. He App. at recruited. 2Tl.l(b)(2) § 4 to plication Note U.S.S.G. tickets to the counterfeit distribute concealment as sophisticated describes money and often collected cashiers complex especially or intricate “especially 220- day. App. at of the the end steps in which deliberate conduct offense the same amount 21. McCardell received offense, or its ex make the to are taken Million, Gricco, as proceeds of unlawful as such tent, to detect. Conduct difficult This evidence App. at 225. Flannery. both, transactions, or or hiding assets in McCar- increase the four-level supports entities, cor use of fictitious through the offense level. dell’s accounts shells, bank or offshore porate conceal sophisticated ordinarily indicates C. supports The ment.” with evi this enhancement of application contests two-level McCardell engaged in appellants to dence that because he “failed received increase he hide their transactions tricate financial of correctly identify the source toor report the IRS also from unlawful income $10,000 from any year exceeding income as a so 2Tl.l(b)(l). tickets parking used counterfeit activity.” U.S.S.G. criminal concealing their means phisticated government did argues that McCardell airport. money from the theft of ex unreported income prove that his the use argue that appellants any of the relevant ceeded complexity tickets counterfeit years. not demon do scheme the embezzlement Million testified to Flannery and because concealment sophisticated strate years each they received amounts must be in concealment sophisticated 1994, and these annual 1990 to from evasion, not the theft the tax relation $10,000. See greatly exceeded amounts scheme. apply amounts note 9. These supra Cianci, F.3d 106 v. States three United well, and the since he as pled guilty to (3d Cir.1998), the defendant cuts. equal McCar- leaders received other his failure stemming from evasion taxable income a total reported dell report income through obtained embezzle- for purposes.” deterrence (emphasis add- ment and kickbacks. plea ed). His agreement This statement supports the inter- stipulated that the offense level should be pretation that efforts to conceal must be increased under sophisticated the conceal- efforts to conceal the tax offense in order provision. ment He later challenged this to be considered under this Guideline. increase, contending that while his embez- Although appellants the interpret zlement scheme was sophisticated, his Guideline properly, the findings that means of hiding income from the IRS was appellants engaged sophisticated in con- not. This court’s ultimate holding was cealment of them tax offenses are well- that the defendant could not challenge the supported by the evidence. Gricco loaned increase because he was by bound cash to others and asked repayment stipulation in plea his agreement. Id. at the form of money orders and checks 110. The court did note that if even it made out to him or to a title company. to beyond were look stipulation, there App. 451, 535, 571. purchased He would be adequate support for finding real estate his name and in the names of that the “employed defendant sophisticat- family gave members. He to family cash ed means conceal his tax evasion from members and received checks in return the IRS.” Id. at added). (emphasis He buy more property. App. at 403-04. Be- used corporations, shell falsified docu- tween 1991 spent Gricco over ments, and failed to record cash payments. $1,365 million on real purchases. estate The court also observed: “Admittedly, the amount, Of this cash, was in methods devised impeded Cianci discov- $121,000 was from relatives. App. at 989. ery by [his employer] of embezzlement, his Capozzi, Grieco’s real estate agent, testi- but also concealment facilitated fied that Gricco used large amounts of income derived the embezzlement from cash purchases for his and instructed Ca- and thereby the necessity report it to the pozzi to “keep a profile.” low App. at 628- pay taxes on it.” Id. Capozzi converted cash into added). mon- (emphasis Such methods included ey orders and then deposited it into an accepting benefits in the form of a car and escrow account used for purchasing money prop- orders instead of cash and falsify- erties. In order to ing filing avoid the company’s currency records order to im- transaction reports IRS, with pede discovery Capozzi of his unlawful income. purchased the money orders small It is clear that the panel Cianci viewed amounts and occasionally went to several the complexity of the embezzlement and different branches of the same bank to kickback schemes as inadequate in them- purchase the money orders. App. at 629- selves to support a sophisticated-conceal- 32. An investigator with the New Jersey ment Instead, enhancement. panel Division of Criminal Justice testified that looked to the complexity of the measures Gricco had deposited $372,000 cash into taken to conceal the tax evasion in order to banks between 1991 and 1994 but that not justify application of the sophisticated con- a single deposit was for $10,000. more than cealment Moreover, enhancement. App. at 974. Gricco would have had to file Background Commentary to U.S.S.G. report with the if IRS deposits his had § 2T1.1 states: “Although tax offenses al- exceeded that amount. ways involve planning, some unusually so- phisticated efforts to conceal the This evidence supports a finding of offense so- decrease the likelihood of detection phisticated through concealment currency therefore warrant an additional sanction structuring, use of cash to avoid reporting E. family mem- the use requirements, See, e.g., hide assets. bers’ names received and McCardell Gricco Middlemiss, 217 F.3d v. States United offense levels in their increase two-level a Cir.2000) by (2d (hiding assets 112, 124 position public of a each “abused because family members’ them under placing skill, in trust, a special used or a private or business, in a names, concealing interests the facilitated significantly that manner trail of paper false an extensive creating of the offense.” or concealment commission only documents, accepting corporate argue appellants The § 3B1.3. U.S.S.G. they com- extortion for the payments cash position a of trust held they never conceal- sophisticated mitted established case, which, in this to the victim relation F.3d Guidry, 199 ment); v. States United did argue they They further IRS. the Cir.1999) (10th (structuring 1150, 1158-59 the trust position a of at hold not even Currency Transac- to avoid transactions employed. were airport at which purpose of main serves “the Reports tion argument is direct- first appellants’ Internal from the transaction the shielding Cianci, v. by States ly United foreclosed Service,” served as properly Revenue Cianci, con- was supra. defendant enhancement). for the a basis fading report for evasion of tax victed not err also did court The district from embez- that he had received income to McCardell. the enhancement applying The defendant’s kickbacks. zlement and Capozzi testified agent Real estate in cor- official a high-ranking as a position purchase cash to wife used McCardell’s money to embezzle enabled him poration name and her under both properties but, the defendant kickbacks and receive 661, 673- App. at name. McCardell’s trust of position hold he not argued, did McCardell Between 76. IRS, was and the IRS to the respect with purchases. $341,000 estate on real spent of conviction. his offense the victim cash, and amount, $33,000 inwas thisOf argu- rejected the defendant’s court This family $80,000 accounts came from the ment, that consideration reasoning at 1001-02. McCardell App. members. corpo- his relationship to trust defendant’s mother- from cash flow his explained the of “rele- consideration proper was ration received his asserting that wife in-law for 1B1.3 under U.S.S.G. conduct” vant App. at her bills. money pay her from Cianci, at 154 F.3d sentencing purposes. support an However, may conduct 1129. reject Gricco’s we must Accordingly, 112. if a motive even tax evasion of a inference argument. legal rationale an innocent proffers defendant error for clear review We F.3d at Voigt, 89 his her conduct. for or held and Gricco McCardell findings that McCardell 1090. Between airport. trust vis-a-vis positions into $169,000 of cash deposited about for the manager regional was the Gricco involved deposits banks, none but 1117. App. at airport. at the lots parking This any one time. at more than lots, re parking supervised He struc- showed that evidence operated staffing, and transactions, sponsible laundered currency tured his at 1177. App. the lots. at petty cash fund purchases, real estate money through supervisor as a employed McCardell was names. family members’ under hid assets He watched facilities. parking clearly err court The district did receipts from plazas, toll collected constituted these activities finding that complaints, cashiers, customer handled tax evasion. more run-of-the-mill than “just and did about everything.” App. at otherwise than that he testified falsely on 1114. Both Grieco and MeCardell had suf- the stand.” Id. at Although the sen- ficient managerial and discretionary au- tencing court did express not make find- thority warrant sentencing enhance- ings as to the elements of perjury, our ments for an abuse of position of trust. court reviewed the record and found that the district court’s application of the en-

F. hancement necessarily findings included on Gricco and MeCardell each re the elements and that the findings were a ceived two-level increase under U.S.S.G. supported by the record. The reference to § 3C1.1 for justice. obstruction of The denials,” “flat concluded, we was a finding appellants’ PSRs indicated that the en that Boggi willfully provide intended to hancement was applied appel because the testimony false and that the untruths were lants falsely “testified regarding mate [a] material because Boggi would not have rial matter trial.” during at App. 1492. been jury convicted had the believed him. appellants The claim that they did nothing we Accordingly, refused to remand “mere- testify but in their own defense at trial ly because the district court failed to en- and that this cannot be the for basis an gage in a ritualistic exercise and state the justice obstruction of enhancement. This obvious for the record.” Id. at 479. argument squarely rejected was by the The district court here likewise failed to Dunnigan, Supreme Court United v. States specific make findings as to which state- 87, 07 1111, U.S. 113 S.Ct. 122 5 ments perjury. constituted The district (1993) L.Ed.2d 445 (holding that the en court only stated that Grieco had “testified hancement does not violate a defendant’s falsely regarding material matter during right testify and properly applied trial” that and MeCardell receiving was where the defendant perjury). commits upward “[t]wo levels adjustment for ob- appellants The argue further that justice.” struction of App. 1492, at the district court erred failing to make Nevertheless, as in Boggi, we will not re- findings as to which of their statements mand simply for the district court to make perjurious. were Supreme The Court has findings of fact that are implicit in the required sentencing courts to “review the record. It is obvious that Gricco and evidence and independent make findings MeCardell —both of whom any par- denied necessary to establish a willful impediment ticipation in embezzling the money from to, or of, justice” obstruction under the airport and in underreporting their definition of perjury.14 Dunnigan, 507 income—committed perjury. 95, U.S. at 113 S.Ct. 1111. court, Our has

held, however, express that findings on the G. elements of perjury, although preferable, are required. not See United States v. appellants The argue that the Boggi, (3d Cir.1996). 74 470, F.3d 479 district court failed to comply with 18 Boggi, the sentencing court stated: 3553(c)(1), “I U.S.C. which requires a sen how, don’t see in view of his flat denials tencing court to open state court its jury’s conviction, that you can find reasons imposing par- sentence aat 14. A testifying witness under oath or affirma- confusion, mistake, er than aas result of or tion perjury "gives commits if she false faulty testi- memory.” Dunnigan, 507 U.S. mony concerning a material matter with the 113 S.Ct. 1111. provide willful intent to testimony, false rath-

363 ¶¶58, 59, sentencing, 64. At range if PSR a Guideline within point ticular had that McCardell noted court district 24 months. than more spans range and decided assets by the rather substantial range determined Guideline The his standard trim down months, and McCardell could 108-135 District Court his assets. fine out of pay a living to 108 sentenced court finding court’s The district at 1501. App. and Gricco imprisonment months erroneous, uphold we sentence, clearly is not pronouncing months. Before imposed. that was com- fine preliminary made some court district ments: I. of offense the kind

One, [sic] is this community in this too often sen- challenge much their occurs also appellants And, of life. Jersey, way v. New almost becomes Apprendi tences under impor- very were defendants these two 147 L.Ed.2d 120 S.Ct. U.S. carrying organizing However, do people (2000). tant their sentences just extent that to the thing, appel- Apprendi this the out because afoul of run at Authority Parking statutory entire the about the below were sentenced lants it, through corrupted airport the of count conviction. for each maximum Williams, of recruitments extent v. to the 235 F.3d States even See United reason, it seems Cir.2000). For that it. engage (3d in 858 matter very serious is a this me that appro- dealt with should be one that J. and message the get to somehow priately District agrees the government kind community, that this to this across of 18 wrong the version applied Court be tolerated. simply cannot action of as- the imposing special in § 3013 U.S.C. did district court Since the offenses, at 1513. App. the felony For sessments. sen- choice of its reasons for concrete give per special $50 assessment of amount of 18 requirements tences, the 1996, it satisfied 24, April prior to if count committed v. States 3553(c)(1).15 See United § U.S.C. if after count committed per and $100 Cir.1993) (“[I]t (2d 315, Rosa, 344 11 F.3d 3013; Note Application date. 18 U.S.C. to a to advert for the court is sufficient conspiracy The tax § 5E1.3. 2 to U.S.S.G. point selecting in factors or factor given were convicted appellants the for which range.”). the within filed Gricco 1990 1997. occurred from in year 1992 calendar for the his return

H. as- been Thus, have should Gricco 1993. conviction, conspiracy for the sessed $100 district challenges the by 1997 in evasion committed for tax ability to $100 had the finding that he court’s return, for $100 1994 tax filing the false contest did not a fine. McCardell pay 1997, return 1994 tax filing the false he had showing that the PSR of portions by 1997 evasion committed for tax outstanding $100 no assets return, for $100 1993 tax filing the false net negative have a debts, although he did 1997, $50 return 1993 tax filing the false .41. McCardell flow of monthly cash $960 Although range. by the Guideline lowed court by given the district explanation 15. The explanation an provide did not District Court why sentence it did not explains sufficiently sentence, is harm- this error McCardell’s for less, imprisonment with- to lower term Gricco lightest sen- received as McCardell court The district range. in the Guidelines possible. tence al- term the shortest McCardell to sentenced for tax evasion committed in filing “of an agreement by all for each to evade return, false tax taxes,” for his filing $50 income government can rely the false 1992 tax on return. McCardell circumstantial proof. Id. filed his tax returns for the 1992,1993, and 1994 However, “[t]he failure to in- disclose years calendar is, come more, without generally insuffi- respectively. Accordingly, he cient to should establish a have Klein conspiracy.” Id. been assessed for “To sufficient, be $50 evasion based on the evidence must estab- each of lish an agreement these tax returns among for filing conspirators $50 each with the intent these returns, obstruct as govern- well as for $100 ment’s knowledge conspiracy. collection We rev- remand the dis- enue due.” Id. “When the trict court to impose the correct assess- upon relies circumstantial evidence ments. to es- tablish a tax conspiracy, the circumstances must be such as to warrant a jury’s finding IX. the alleged conspirators had some sum, we affirm appellants’ convic- common design unity with of purpose to tions, but we vacate their sentences and impede the IRS.” Id. A Klein conspiracy is remand for new sentencing proceedings not established if the evidence implies only and re-sentencing. separate purposes to evade taxes. Id. Rather, the evidence must “support McKEE, Circuit Judge, concurring in an inference that each alleged tax evader part and dissenting in part: ... knew of the others’ tax evasion” and I concur with the majority in all aspects that “they agreed to [evade taxes].” Id. of its opinion except for my colleagues’ “Although each defendant does not have to conclusion that there was know every sufficient evi- act taken in furtherance of the dence to convict conspiracy, McCardell each of a Klein con- defendant ... must know spiracy. that there is a United States v. Alston, conspiracy and 77 demonstrate specific a (3d F.3d Cir.1995) join 713 intent to Id. it.” we held: A Klein conspiracy comprised is McCardell argues of three that the government (1) produced elements: the never any existence of an agree- evidence that he spoke to, (2)

ment, or agreed with, an anyone overt act by about one of evading the federal conspirators income taxes. Significantly, furtherance of the the agree- government appears to ment’s concede objectives, (3) that point. and an intent on Its of recitation the part evidence that the of the McCar- conspirators to agree, as dell was a Klein conspirator to well amounts as to defraud the United States. (1) the following: he told Million that he Id. at 720 n. (citation, internal quota- was concerned about alerting the IRS tions omitted). and brackets Although a exchanging large quantities of old $100 defendant’s to report failure income can be bills for (2) new ones bank; at a he did not an overt act in of furtherance a Klein report the stolen money on his federal tax conspiracy, must “still returns; (3) he deposited small sums of prove there was an agreement pur- whose cash to avoid generating a currency trans- pose was impede to (the the IRS conspira- action report (“CTR”); (4) purchased he cy), and that each defendant knowingly (5) estate; real he used Capozzi to pur- participated in that conspiracy.” United real chase estate and to launder the stolen States v. Adkinson, F.3d 1154 money, Government’s Br. 14; at 58 n. and (11th Cir.1998) (emphasis added). (6) Of purchased he at safe Gricco’s di- course, where there is no direct evidence rection. Id. at 42 n. 8. of best, evidence government’s At sufficient is evidence that the agree I conspiracy was of a Klein guilt that McCardell’s to conclude jury a rational allow specula- worst, pure it was At “slight.” avoid things to of these all did McCardell resting upon substantial detection; Far from tion. and taxes, to avoid paying against case evidence, government’s the theft. of proceeds hide the just to the bare-bones down boils re- McCardell noted, conspiracy a Klein However, as Gricco, Flannery, that because contention is not estab- crime That more. quires con- Klein cashiers were and the Million only separate implies if the evidence lished also have been must Adkinson, McCardell spirators; at taxes. evade purposes at- than an nothing more is That must one. evidence contrary, the 1155. On conduct strap McCardell’s tempt to boot tax alleged that each an inference “support conspiracy a Klein into scheme the theft tax eva- others’ ... knew evader con- paralleled it that by suggesting so.” Id. to do they agreed “that sion” and conspir- Klein the other of reason- duct Gricco jury could that believe I do not correctly However, majority proves ators. this evidence that ably conclude not, by conduct parallel that concedes anyone else’s knew that McCardell conspiracy. a Klein itself, prove enough agreed with evasion, he much less only Yet, is the Majority Op. in- payment to evade anyone else of- guilt “proof’ McCardell’s come taxes. fense. ease government’s Essentially, from dissent respectfully Accordingly, I jury could “the is that against itas affirms insofar majority’s decision McCardell, his spoke to Gricco infer that conspir- a Klein conviction McCardell’s assistant, at least chief brother-in-law acy. thieves, level his lower spoke to that he impeding Flannery, about

and Million paralleled IRS,” his conduct because co- Klein the other conduct

Gricco’s Br. Government’s

conspirators’ conduct. Therefore, govern- claims

58at n. sup- to evidence

ment, there is sufficient Klein as a con- conviction

port McCardell’s

spirator. prop- authority for

Although there ato connection defendant’s

osition “slight,” only be need conspiracy

Klein omitted), (citation

Adkinson, at 1152 the “extent refers “slight”

reference con- connection defendant’s of evidence quantum not to the

spiracy, Id., at prove connection.”

required omitted). Obviously, (citation

1152 n. its consti- still meet must a reason- proof beyond burden of

tutional a defen- doubt, “slight” proof

able can not simply crime committed

dant Id. at 1152. conviction. a criminal

support notes occasion persuade jury a rational a make such “put any large Gricco told Million never A finding. jury rational could conclude bank, money sums be careful that, participants if in the embezzlement that, especially anything over with income, reported scheme had their illicit generate report that would because sparked an might investigation this have bank would send to the IRS.” Gov’t Brief ultimately might have led to Gricco. proof probative sig- at 40. This has some Thus, only strong did have Gricco present purposes nificance for because grounds participants to foresee that the he filing Gricco’s desire avoid the of cur- in- report illegal would not their advised rency reports transaction could have come, jury but a rational could conclude reports stemmed from a fear such that he had also a reason to desire this plan would interfere with his to evade the something result and that the result was payment of taxes on the illicit income. We specifically Viewing that he intended. all however, recognize, that the value of this together, we against of the evidence Gricco appellants is limited. were evidence his support hold that it is sufficient to conspiring not convicted of to violate the conspiracy conviction. statutes, see 31 U.S.C. anti-structuring 5322-23, conspiring §§ but with to ob- conclusion re We reach the same specting struct the in the assessment and col- McCardell. McCardell admitted IRS 5313(a) gage § in a cash transaction in excess of 2. Under 31 U.S.C. and 31 C.F.R. 103.22(b)(1), $10,000. financial institutions must file currency report transaction when en-

Case Details

Case Name: United States v. Anthony J. Gricco, William T. McCardell in 00-2179

Court Name: Court of Appeals for the Third Circuit

Date Published: Jan 9, 2002

Citation: 277 F.3d 339

Docket Number: 00-2149, 00-2179

Court Abbreviation: 3rd Cir.