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USCA1 Opinion

United States Court of Appeals

For the First Circuit


____________________

Nos. 96-1021 & 1022

UNITED STATES OF AMERICA,


Appellee,

v.

ANTHONY G. OLBRES and SHIRLEY A. OLBRES,


Appellants.

____________________

ERRATA SHEET
ERRATA SHEET

The

opinion of

this Court

issued on

November 1,

1996 is

corrected as follows:

On page 5, line 20: end the paragraph after "appeal."

Begin

new paragraph on line 21, with "Three"

On page 17, line 6: change "appears" to "appeared"

On page 17, line 10: delete apostrophe after "Guidelines"

United States Court of Appeals


For the First Circuit

____________________

Nos. 96-1021
96-1022

UNITED STATES OF AMERICA,

Appellee,

v.

ANTHONY G. OLBRES and SHIRLEY A. OLBRES,

Appellants.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
NEW HAMPSHIRE

[Hon. Steven J. McAuliffe, U.S.District Judge]


__________________

____________________

Before

Selya, Cyr and Lynch, Circuit Judges,


______________

____________________

Gregory G. Katsas, with whom John B. Nalbandian, Jones, Day,


_________________
__________________ ___________
Reavis & Pogue, Scott P. Lopez,
________________ _______________
Feinberg,
________

Steven M. Gordon, and


________________

Terry Philip Segal,


___________________
Shaheen & Gordon
________________

Segal &
_______

were on brief

for appellants.
Karen
Quesnel,
_______________
Justice,
General, and

with

whom

Attorney,

Tax

Division,

Loretta C. Argrett,
___________________

Department

Assistant

of

Attorney

Robert E. Lindsay and Alan Hechtkopf, Attorneys,


__________________
_______________

Tax Division, Department of Justice, were on brief for appellee.

____________________

November 1, 1996
____________________

LYNCH, Circuit Judge.


LYNCH, Circuit Judge
_____________

This tax evasion case raises

two sentencing

issues, one of import to tax cases and one of

larger import.

We hold that a sentence in a tax evasion case

must

be

predicated

government has

on

findings

as

proven were willfully

to

amounts

evaded and that

unlikely the requisite findings were made here.

that there is no

that the

it is

We also hold

categorical imperative prohibiting the very

consideration of whether a case is so unusual as to warrant a

downward departure

employees

occasioned by

owner of a

United

based on

the

small business.

States

third parties.

of

jobs to

imprisonment of

We reject the

Sentencing Commission's

departures based on the

categorically

the loss

innocent

the defendant

argument that the

comment discouraging

"vocational skills" of the defendant

prohibits consideration

Accordingly, we

of such

job loss

to

vacate defendants' sentences

and remand.

Anthony and Shirley Olbres, husband and wife, run a

business,

Design Consultants

booths for trade shows.

("DC"), which

creates exhibit

Design Consultants currently employs

twelve people in addition to Anthony Olbres, who is president

of

the company, and Shirley Olbres, who serves as DC's part-

time bookkeeper.

income of $837,480.

Royce

In 1987,

In

Mr. and Mrs. Olbres

June 1987, they

Corniche convertible

for

-22

$158,000.

had a total

purchased a

They drove

Rolls

the

Rolls

to a

local restaurant

in Exeter,

New Hampshire.

passing IRS employee saw the luxury car parked outside of the

restaurant.

His curiosity engaged, he wrote down the license

plate

number with

the

owner

and examining

intention of

his

or

her

identifying the

tax

returns.

car's

The

IRS

employee's

curiosity led to a 1989 audit of the Olbres' 1987

joint

returns and

tax

investigation.

conclude that

The

eventually

resulted

investigation

led the

in a

criminal

government

to

Mr. and Mrs. Olbres had committed criminal tax

evasion.

Mr.

and Mrs. Olbres were indicted on three counts of

criminal tax evasion

filed for

7201.

related to the income

the years 1986, 1987,

The returns

and 1988.

understated the couple's

tax returns they

See
___

26 U.S.C.

taxable income

for

those

$175,000,

years by

approximately

respectively.

from three

from business

Mrs. Olbres failed to

sources: 1) payments,

savings

account

receipts

journal

provided

and

not

to the

shipping

owned;

and 3)

rebates,

companies utilized

conceded all

by

the understatements

-33

in

the

cash

accountant;

2)

various properties the

totaling

DC.

directly into a

recorded

Olbres'

rental income, totaling $22,000, from

report

totaling $630,000,

customers that were deposited

business

couple

$749,000, and

For 1987, the year with the bulk of

the unreported income, Mr. and

income

$153,000,

Mr.

$97,000, paid

and Mrs.

but defended on

by

Olbres

the basis

that

none were willful.

relied on

since

couple

The couple insisted

their accountant,

1977.

That accountant

attributed

who had prepared

died before

other errors,

including

that they had

their returns

the trial.

the failure

The

to

report the shipping rebates, to Mrs. Olbres, who was depicted

as a well-meaning but untrained bookkeeper.

The jury acquitted Mr. and Mrs. Olbres on the charges

relating

charge

to the 1986 and

related to

1988 returns and

the 1987

return.

convicted on the

The jury

verdict was

general; the district judge instructed the jury that it could

convict on a count if

it found that Mr. and Mrs.

willfully attempted to evade

for the relevant year.

Olbres had

a "substantial" amount of taxes

There was no specific jury finding as

to the amounts willfully evaded, or as to whether the willful

evasion

encompassed some or all of

the categories of income

involved.

The

judgment of

tax return on

prove

district court

granted

the Olbres'

motion for

acquittal on the conviction relating to the 1987

the basis

that the government

willfulness beyond a reasonable doubt.

had failed

to

United States
_____________

v. Olbres,
______

881

F.

Supp. 703,

government appealed, and

there was

conviction.

evidence of

706

this court

(D. N.H.

1994).

reversed, holding

willfulness sufficient to

United States v.
_____________

(1st Cir.), cert. denied, 116 S.


_____ ______

-44

Olbres, 61
______

that

uphold the

F.3d 967,

Ct. 522 (1995).

The

970-73

This court

did

not

parse

the

evidence

as to

the

willfully underreported for the year 1987.

specific

amounts

See id.
___ ___

On remand, the district court determined that the tax

loss caused by Mr. and Mrs. Olbres totalled $632,158,

which,

according to the Sentencing Guidelines' Tax Table, places the

Olbres' base offense level at 15.

$632,158

well

See U.S.S.G.
___

amount included the $470,236

as the

tax

losses from

defendants' challenge

to

1986

2T4.1.

The

tax loss from 1987 as

and 1988,

the inclusion

despite

of certain

the

amounts

from 1987 and of the entire 1986 and 1988 amounts.

The district

Olbres to 18

court

judge

months in prison, the

sentenced

Mr.

and

Mrs.

lowest possible sentence

within

the

History

level 15

sentencing

Category of I.

willfulness requirement

underreported

sums

for 1987.

to

having been

met for the

do so, the court

that there should

Criminal

entire sum

It is also predicated on the entire

1988, as the

to consider those amounts

despite the acquittals.

for their

That sentence is predicated upon the

underreported for 1986 and

was required

range

court felt it

as relevant conduct,

Stating that it was legally required

rejected Mr. and

Mrs. Olbres' argument

be a downward departure

from the sentence

because sending them to prison would mean the demise of their

small business

employees.

and loss of

employment for a

dozen innocent

It is from these determinations that Mr. and Mrs.

Olbres appeal.

-55

Three issues are argued.

Mr. and Mrs.

Olbres argue

that the district court erred in failing to determine whether

they

willfully

sentence was

of

evaded

based.

all

of the

They also argue

taxes

on

which

their

that the consideration

the acquitted conduct stemming from the 1986 and 1988 tax

years

violated

the Sentencing

Jeopardy

and

Due

Finally,

Mr. and Mrs.

erred

as a matter

trial

court

may

Process

Clauses

Act

of

Olbres argue that

of law in

never

Reform

the

Double

Constitution.

the district court

adopting a per

consider a

and the

se rule that a

downward

departure

to

prevent termination of an ongoing business enterprise and the

loss

of

employment to

vacate

the

sentence and remand for further proceedings on the first

and

third grounds and do not

innocent

persons.

We

reach the Olbres' acquitted conduct

argument.

II

The United States and defendants agree on this appeal

that for

sentencing purposes the trial judge was required by

Rule 32(c)(1), Fed. R.

Crim. P., to find

that Mr. and

Mrs.

Olbres

willfully attempted to evade all of the taxes used in

determining their

whether the

base offense level.

court adequately,

The dispute

or ever, made

is over

such findings.

The government contends that although the trial court made no

specific findings, the trial judge, by expressly adopting the

findings

of

the Presentence

Investigation

-66

Report ("PSR"),

implicitly

evaded

found

taxes

that Mr.

on

income

encompassing the tax

of

the

such findings

general jury

Olbres had

approximately

willfully

$1.1

million,

1987, and 1988.

Mr.

and

the trial court improperly declined

and instead erroneously

verdict

sufficiency review

Mrs.

years 1986,

Mrs. Olbres contend that

to make

and

and this

established that

million was willfully evaded.

assumed that

court's opinion

in its

the entire sum

of $1.1

Because the

record is unclear

as to what the district court actually found, and in light of

our disposition

the Olbres'

of the

downward departure issue,

sentences and

See United States


___ _____________

remand

v. Garafano,
________

for further

36 F.3d 133,

we vacate

proceedings.

135 (1st

Cir.

1994).

In order

the

court

Sentencing

to determine

the base offense

Guideline for

must

determine

government.

U.S.S.G.

the

tax

amount

evasion,

the sentencing

of

loss"

"tax

2T1.1(a)(1987).

1987 Guidelines Manual, "tax

level under

In

to

the

the pertinent

loss" is defined as "the

total

amount of tax that the taxpayer evaded or attempted to evade,

including interest to

the date of filing of

an indictment."

Id.
___

The primary difficulty presented by this case is that

the

total

jury, in order to convict,

amount

attempted to

of

the

evade.

tax

was not required to find the

that

Indeed, the

the

taxpayers

evaded

jury was instructed

or

that

-77

"[t]he government does not have to prove the exact amount the

defendants owed, nor

does the government have to

all the tax charged in the indictment was evaded."

prove that

Thus, the

sentencing judge is required to make a determination which is

not necessarily made by the jury

and, in this case, was

not

made.

Further

Guidelines also

enlarging the

state

sentencing judge's

that "[w]hen

more than

involved, the tax losses are to be added."

The

Guidelines

Commentary

explains

this

task, the

one year

U.S.S.G.

is

2T1.1.

instruction

as

follows:

While the definition

of tax loss corresponds

to "criminal deficiency," its amount is to be


determined

by the

same rules

determining any other


accordance
approach

with
adopted

the
by

applicable in

sentencing factor.
"relevant
the

In

conduct"

guidelines,

tax

losses resulting from more than

one year are

to

whether

be

added

regardless

of

the

defendant is convicted of multiple counts.

U.S.S.G. Pt. T, comment. 1 (1987).

It is against this background that the district court

stated

the

task

it

thought

it

faced

in

light

government's position at that time:

With

regard to

that

the

the amounts

proper

means

of

evaded, I

find

calculating the

amount of tax loss or the amount evaded under


the Sentencing Guidelines requires

the Court

to look to the amounts not included as income


on the return that

should have been included

as income

and then to compute

the tax based

upon that

income plus interest based

on the

statutory rate from the date of return to the


date of indictment.

-88

of

the

This

is a

correct

analysis.

statement

of

the

first

step

of

the

The next step, as the government now concedes, is

to identify the

amount of

taxes willfully evaded.

We

are

left with uncertainty as to whether that step was taken.

In

determining what the

at

district court

sentencing, "[w]e are guided . .

that

flavors the

insights

judge's

not do

. by the record -- a record

words

into his thinking."

did and did

and concomitantly,

United States v.
______________

offers

Tavano, 12
______

F.3d 301, 304 (1st Cir. 1995).

In the

the

judge

court's most express

stated

that

he

statement of

adopted

the

findings,

findings

and

recommendations

that

not

set forth in the

PSR.

The

court then held

Mr. and Mrs. Olbres could be sentenced for all "amounts

included as

income."

income that

should have

been included

as

Other than the adoption of the PSR's findings, the

judge made

no explicit finding regarding

the willfulness of

evasion on specific amounts.

In many instances, a general statement that the judge

has adopted all the

satisfies

factual statements contained in

the requirements of

United States v.
______________

Skrodzki, 9
________

1993) (express

adoption of

United States
______________

v.

Cir.)(checking a

Barnett,
_______

Rule 32(c), Fed.

F.3d 198,

202 n.7

PSR defeats Rule

989

F.2d

box on judgment form

546,

the PSR

R. Crim. P.

(1st Cir.

32 challenge);

551

n.5

(1st

indicating that court

adopted all findings from PSR constituted specific finding as

-99

to

the

quantity of

responsible),

cert.
_____

drugs

for which

denied,
______

510

U.S.

defendants

were held

850 (1993);

States v. Wells Metal Finishing, Inc., 922 F.2d 54,


______
____________________________

Cir.

1991)(judge briefly

explained sentence at

United
______

58 (1st

hearing and

then

completed

factual

statements in

disputed).

all

memorandum

Here,

indicating that

PSR,

noting that

however, because the

he

adopted all

one fact

had been

PSR did not

resolve

of the disputed factual issues, simple reliance on it is

not enough.1

The original PSR made no reference to willfulness and

did

not consider the defendants' acquitted conduct.

government objection, the PSR was

loss amounts attributed

addendum

noted

that,

1987

amended to include the tax

to the acquitted

in

the district

Acquittal

on the

different

result would obtain

After a

charge, the

conduct.

court's

judge

The

PSR

Order

for

conceded that

under the civil preponderance

____________________

1.

This Circuit has also repeatedly held that an implicit

resolution of disputed facts is sufficient "when the court's


statements and the sentence imposed showed that the facts
were decided in a particular way."

United States v. Van, 87


_____________
___

F.3d 1, 3 (1st Cir. 1996)(citing cases).

"As a general rule,

a trial court lawfully may make implicit findings with regard


to sentencing matters, incorporating by reference suitably
detailed suggestions limned in the PSI Report or advanced by
a party."

Tavano, 12 F.3d at 307; see also United States v.


______
___ ____ _____________

Ovalle-Marquez, 36 F.3d 212, 227-28 (1st Cir. 1994)(finding


______________
that trial court's statement that offense level was "based .
. . on the amount of cocaine involved in the offense" showed
that the court adopted the PSR's recommendations and
implicitly made the necessary findings as to drug quantity),
cert. denied, 115 S. Ct 1322 (1995).
_____ ______
the PSR was not "suitably detailed."

-1010

In this case, however,

standard.

See Olbres, 881 F. Supp. at 717.


___ ______

The PSR addendum

concluded:

Although the Court's


[1987],
the

there

remarks only

is little

evidence submitted

conduct. . . .

addressed

difference between
as to

the acquitted

The question regarding their

intent is the same, regardless of whether one


is

focusing

on

[1987]

or

the

acquitted

conduct.

This reference back to

ineffective;

whether

the district court's order is

defendants

willfully

evaded

all, or

specific portions of, the tax on their 1987 unreported income

is

not clearly

statement made

points out,

amounts

year

established in

by the

that order

district court.

a willfulness finding

stemming from

in question

each of

any other

As defense

for each of

factually distinct

(as to

or in

counsel

the disputed

sources for

which different

each

lack-of-

willfulness arguments are made) is necessary here in order to

determine the correct base offense level.2

Lastly, at sentencing the district court also

that "willfulness isn't an issue . . . as to [19]87"

this court, in its

sufficiency opinion, "found a

find

beyond a

reasonable

That

appellate opinion

did

doubt that

not, and

intent was

could

stated

because

jury could

present."

not, make

any

____________________

2.

It is the defendants' position, for example, that the

guilty verdict could have been based on as little as $22,000


of unreported rental income in 1987.

-1111

findings of willful evasion of any specific amount of taxes.3

Rather,

the

opinion

addressed

whether

there was

legally

sufficient evidence

Olbres willfully

to support a

evaded a

their 1987 income.

As

findings

judge's

and Mrs.

"substantial" amount of

taxes on

See generally Olbres, 61 F.3d 967.


___ _________ ______

we are unable to settle

based

on the

statements,

reference,

verdict that Mr.

the issue of willfulness

jury's

general

the

documents he

or

verdict, the

trial

incorporates

by

see United States v. Tavares, 93 F.3d 10, 16 (1st


___ _____________
_______

Cir.), cert. denied, No. 96-6067 (Oct. 21, 1996), we leave it


_____ ______

to the

sentencing court

on remand to

on which

amounts

as to which payment of taxes was willfully evaded as

by

the government

evidence standard.

under

is based

the

-- that

specific

amounts

proven

the sentence

clarify the

is, those

preponderance of

See Garafano, 36 F.3d at 136.

the

We express

___ ________

no opinion on the

imposed.

appropriateness of the sentence previously

United States v.
_____________

Quinones, 26 F.3d
________

213, 220 (1st

Cir. 1994).

III

The defendants

departure motion

appeal the

based on their

denial of

their downward

argument that, if

imprisoned, their business will fail.

they are

Should this occur, the

____________________

3.

Such factual determinations are either for the jury at

trial, see, e.g., United States v. Gaudin, 115 S. Ct. 2310,


___ ____ _____________
______
2313-14 (1995), or for the district court at sentencing, see,
___
e.g., 18 U.S.C.
____

3742(d).

-12-

12

Olbres allege, twelve innocent employees will lose their jobs

and suffer severe

Guidelines

hardship.

discuss

The government argues

"vocational

factor, not "ordinarily relevant,"

there is no room for

skills"

as

U.S.S.G.

that the

discouraged

5H1.2,4 and so

the Olbres' "business failure" argument

-- an argument that, it contends, is not unusual.

The

Olbres' argument

is based

on the

premise that

their circumstances take their case out of the "heartland" of

the

Tax Guidelines.

courts to depart

given

case

"U.S.S.G.

from the

if the

court

circumstances that render

of

the 'heartland'

designed."

5K2.0 allows

guideline sentencing

finds

for which

range in

aggravating or

the case atypical and

the applicable

sentencing

mitigating

take it out

guideline was

United States v. Carrion-Cruz, 92 F.3d 5, 6 (1st


_____________
____________

Cir. 1996).

The

district

court found

that

jailed, DC would become defunct and its

their jobs.

Mr. Olbres

was

employees would lose

The district court ruled, nonetheless, that the

Sentencing Commission must

small

if

businesses will

have necessarily understood

often

fail if

their principals

that

are

incarcerated and that job loss

to innocent third parties was

____________________

4.

Discouraged factors are those "not ordinarily relevant

in determining whether a sentence should be outside the


guidelines . . . ."

U.S.S.G.

5H1.2.

-1313

therefore "not an

In so

doing,

unusual situation" under the

the district

court

Third Circuit

Guidelines.5

expressly stated

opinion

in

it

United States
_____________

was

following

the

v.

Sharapan,
________

13 F.3d 781 (3d Cir. 1995), and declined to follow

the Second Circuit opinion in United States v. Milikowsky, 65


_____________
__________

F.3d

(2d

Cir.

1995).

The

district court

understood

Sharapan to hold that "as a matter of law this is not a basis


________

for

departing

because

the

Sentencing

considered the failure of business in

Commission

has

constructing heartland

guidelines."6

Apparently

believing

that,

business failure and third party

as

matter

of

law,

job loss, regardless of the

magnitude

or the

severity

of the

consequences, could

not

serve as the basis for a downward departure motion, the trial

judge stated at the end of the sentencing hearing:

I also want
the

the record to

fact that

your

be clear that

business

were to

could serve legally as a basis for

if
fail

departing

under the Sentencing Guidelines, then I would


depart,

and

would

depart

sufficient to keep the business

in

manner

from failing

and putting those people out of work.

But as

I say, I can't as I sit here find a principal


[sic] basis for departing from the guidelines
on those factual assumptions.

____________________

5.

The issue is not moot because the district court granted

defendants' motion for bail pending resolution of this


appeal.

The government agreed that Mr. and Mrs. Olbres do

not present a danger to the community or a flight risk.

6.

It is not necessary to resolve whether this is a correct

reading of Sharapan.
________

-1414

In Sharapan, the Third Circuit


________

court's grant

of a downward departure.

trial

court had

found that

would

cause his business to

reversed the district

13 F.3d at 786.

incarceration of

fail, resulting in

The

the defendant

the loss of

approximately

departed

from the

defendant

Third

thirty

jobs.

Guidelines'

to probation

Circuit

Id. at
___

782.

sentence

holding

inconsistent with U.S.S.G.

that

therefore

and sentenced

with conditions.

reversed,

It

Id.
___

the

at

the

783. The

departure

was

5H1.2, p.s., which provides that

departures based on a defendant's "vocational skills" are not

ordinarily

viewed

appropriate.

the

Id.
___

Commission's

at 784-85.

policy

statement

The Third Circuit

on

"vocational

skills" as being based on an underlying "principle . . . that

sentencing

judge

defendant's ability to

society only

may

grant

make a

in extraordinary

departure

based

on

work-related contribution

circumstances."

Id.
___

to

at 785;

see also United States v. Reilly, 33 F.3d 1396, 1424 (3d Cir.

___ ____ _____________

______

1994); United States v.


______________

Mogel, 956
_____

denied, 506
______

U.S.

F.2d

857

1555, 1564

(1992); accord
______

(11th

Cir.),

cert.
_____

States
______

v. Rutana, 932 F.2d 1155 (6th Cir.) ("[E]ven assuming


______

that [defendant's] imprisonment would

his business and the

does not

distinguish

United
______

lead to the failure of

loss of his employees' jobs,

[defendant] from

other

this fact

offenders."),

cert. denied, 502 U.S. 907 (1991).


_____ ______

In

contrast,

the

Second

-1515

Circuit

in

Milikowsky
__________

affirmed

a downward

departure taken

because

of the effect

have on

his employees.

by the

that Milikowsky's

65 F.3d at

6.

district court

imprisonment would

The

Second Circuit

noted "that business ownership alone, or even ownership of

vulnerable small business, does

appropriate,"

nonetheless

not make downward

departure

id. at 9, but held that the district court was


___

free to,

possibility of

and indeed

required to,

downward or upward departure

consider the

"when there are

compelling

heartland

considerations

that take

the

case

out of

factors upon which the Guidelines rest."

the

Id. at 7
___

(citations omitted).

Milikowsky
__________

U.S.S.G.

here.

arose

under

the

2R1.1 (1990), and not the

Contrary

to

distinction

without

considered

the same

antitrust

tax guideline involved

the government's

argument,

difference.

argument the

that "the Commission could

guideline,

The

this is

Second

Circuit

government makes

here --

hardly have overlooked the effect

that imprisonment of offenders would have on small businesses

that

are

likely

to

be

heavily dependent

offenders for their continuing success."

at 8.

That may be so, reasoned the

on

those

very

Milikowsky, 65 F.3d
__________

Second Circuit, but "in

considering,

and

taking

imprisonment

on antitrust

into

account,

the

offenders' businesses

Commission did not thereby take into account the

imprisonment

would

have in

. .

of

. the

effect such

'extraordinary circumstances.'"

-1616

Id.

effect

___

The

sentencing

decision

The

structure of analysis

departures is

governed

by the

in Koon v. United States, 116 S.


____
______________

Supreme

adopted

we follow

Court

agreed

with

the

in considering

Supreme

Court's

Ct. 2035 (1996).

analytical

structure

by this Circuit in United States v. Rivera, 994 F.2d


_____________
______

942, 949 (1st Cir. 1993):

The

Commission's treatment of

then-Chief Judge
court

departure factors led

Breyer to explain that a sentencing

considering

departure

should

following questions:

"1) What features of this case,


potentially,

take

it

outside

the Guidelines' 'heartland' and


make

of

it

special,

or

unusual, case?
2) Has the Commission forbidden
departures

based

on

those

ask

the

features?
3) If not,

has the

Commission

encouraged departures

based on

those features?
4) If not,

has the

Commission

discouraged departures based on


those features?"

We agree with this summary.

Koon, 116 S. Ct.


____

2035, 2045 (quoting Rivera, 994


______

F.2d 942).

The Supreme Court continued:

If

the

special

factor

is

discouraged

factor, or an encouraged factor already taken


into account by the applicable Guideline, the
court

should depart

present

only if

to an exceptional

other way
ordinary

the

factor is

degree or in some

makes the case different


case where

the factor

from the

is present.

If a factor is unmentioned in the Guidelines,


the

court

"structure

must,
and

after

theory

-17-

considering
of

both

the

relevant

17

guidelines
whole,"
take

and the

Guidelines

decide whether
the

case

heartland.
Commission's
based

on

out

it is
of

taken

as

sufficient to

the

Guideline's

The court must bear

in mind the

expectation
grounds

not

that

departures

mentioned

in

the

Guidelines will be "highly infrequent."

Id.
___

To adopt

the categorical

approach to job

loss from

business failures

that the

district court appeared

would run afoul of one of the

in

Koon.
____

should

The Supreme

not

to take

important concerns articulated

Court has held

categorically reject

that generally courts

factor as

basis for

departure from a Guidelines sentence because:

Congress

did

not

grant

federal

authority to decide what sorts


considerations

are

circumstance.

Rather,

instructs
whether

a
there

mitigating
degree

Commission,

in

18 U.S.C.

that,

exists

an

circumstance

not

of sentencing

inappropriate

court

in

every
3553(b)

determining

aggravating

of a

kind or

adequately

considered

it

consider

should

courts

or
to a

by

the

"only

the

sentencing guidelines, policy statements, and


official

commentary

Commission."
forth factors
any

. .

of

the

The Commission

courts may not

circumstances but

those

exceptions, it

limit

the kinds of

Sentencing

consider under

made clear
"does

set

not

that with
intend

factors, whether

to

or not

mentioned

anywhere

else in

that could constitute


in an
pt. A,

unusual case."

the guidelines,

grounds for

departure

1995 U.S.S.G.

intro. comment. 4(b).

ch. I,

Thus, for the


_____________

courts to conclude a factor must not be


_____________________________________________
considered under any circumstances would be
_____________________________________________
to transgress
the policymaking authority
_____________________________________________
vested in the Commission.
_________________________

Id. (emphasis
___

nullify

added).

the Commission's

Categorical

interpretations

treatment of

-1818

"would

particular departure

factors

and

departure

basis."

its determination

factors should not

that,

with

be ruled out

few exceptions,

on a categorical

Id. at 2051.7
___

The

presents a

district

court's

question of

constitutes an

categorical

law, which, if

abuse of discretion.

approach

incorrectly decided,

As

the Supreme

noted:

The Government is quite correct

that whether

a factor is a permissible basis for departure


under any circumstances is a question of law,
and the

court of

appeals need not

defer to

the district court's resolution of the point.


. . .

A district court by

also

definition abuses

its discretion when it makes an error of law.

Court

Id. at 2047.
___

Koon, we believe, reinforces this Circuit's view that


____

"[p]lenary review is appropriate where the question in review

is simply whether the allegedly

special circumstances (i.e.,

____________________

7.

The Government's argument here relies on a general

distinction between harm to society, which, it says, may be


an extraordinary factor, and business failure, which, it
says, may not.

The Supreme Court rejected this type of

argument in Koon:
____

The Government seeks to avoid the factual


nature of the departure inquiry by describing
it at a higher level of generality linked
closely to questions of law.

The relevant

question, however, is not, as the Government


says, "whether a particular factor is within
the 'heartland'" as a general proposition,
but whether the particular factor is within

the heartland given all the facts of the


case. . . .

These considerations are factual

matters.

Koon, 116 S. Ct. at 2047 (citations omitted).


____

-1919

the reasons for

Guidelines, in

consider

the departure)

principle,

at all."

Rivera,
______

are of the

permit the

994 F.2d

'kind' that

sentencing

at 951.

the

court

This

to

is so

because

this

court,

"in

deciding

whether

the

allegedly

special circumstances are of a 'kind' that permits departure,

will have

to perform the 'quintessentially

of interpreting

set

of words,

those

legal' function

of

an

guideline, in light of their intention or purpose."

It

list

is clear

the factor at

discouraged

that the

issue here among

factors.

Commission's

Guidelines do

The

"vocational

discourages consideration of job

We note first

not explicitly

is

whether

comment8

that "vocational skills" themselves

(race,

sex,

national

the

the

implicitly

loss to innocent employees.

forbidden factor, but a discouraged factor.

5H1.10

Id.
___

the forbidden or

question

skills"

individual

origin

are not a

Compare U.S.S.G.
_______

et

al.

"are

not

relevant" in determination of sentence) with U.S.S.G.


____

("vocational

Therefore,

skills

even

if

vocational skills,

are

the

not

present

a per se approach

ordinarily

case

5H1.2

relevant").

merely

concerned

would be inappropriate

____________________

8.

The Commission statement results from the instructions of

Congress that the Commission's guidelines and policy


statements "reflect the general inappropriateness of
considering the . . . vocational skills, employment record, .
. . and community ties of the defendant."
994(e); see Mogel, 956 F.2d at 1564.
___ _____

-2020

28 U.S.C.

and the district court

the

case was in some

where the

factor is

would still have to

way "different from

present."

Koon, 116
____

consider whether

the ordinary case

S. Ct.

at 2045.

"[A] federal court's examination of whether a factor can ever

be

an

appropriate

basis

determining

whether

categorical

matter, consideration

answer to

the

for

departure

Commission has

of

is

limited

proscribed,

the factor.

as

If

to

the

the question is no . . . the sentencing court must

determine whether the factor,

circumstances, takes

as occurring in the particular

the case

applicable Guideline."

outside the heartland

of the

Id. at 2051.
___

We do not agree with the Government's contention that

the

loss of

employment

to

innocent employees

falls within the term "vocational skills."9

may

necessarily

That a defendant

have vocational skills of great value or rarity does not

necessarily tell one whether incarceration of

will entail

job

loss to

defendant's crimes.

others totally

Vocational

that defendant

uninvolved in

the

skills may

or

may not

be

that courts

should

be

careful not

to

categories covered

by the

Guidelines' factors

related to job loss to others.

Our

construe the

belief

too

broadly finds support in Koon.


____

There, the Supreme Court

____________________

9.

The dictionary definitions of "vocational skills" do not

import notions of business failures.

See Sharapan, 13 F.3d


___ ________

at 784 (describing a dictionary definition of "vocational


skills").

-2121

recognized

that

defendant

while

is an

impermissible ground

defendant's career

status,

. .

categorical

career.

"socio-economic

may relate

the

link

exclusion

of

the

so

of

for departure

to his or

is not

status"

the

and "a

her socio-economic

close

effect of

as to

justify

conviction

on

Although an impermissible factor need not be invoked

by name to

be rejected, socio-economic

status and job

loss

are not the semantic or practical equivalents of each other."

Koon, 116 S. Ct. at 2051.10


____

As

resulting

excluded

Koon
____

from

holds

his

that

job

incarceration

from consideration,

loss to innocent employees

loss

by

cannot

we think

the

defendant

be categorically

it follows

that job

resulting from incarceration of a

defendant

may

consideration.

not

be

categorically

excluded

from

Further, the rejected link between the socio-

economic status of a defendant and a defendant's personal job

loss is,

we

think, stronger

than the

link the

Government

posits between "vocational skills" of a defendant and certain

loss

gloss

of employment to innocent employees.

equating

job

"vocational skills"

judicial

trespass on

loss

by innocent

is to run

To add a judicial

third

parties

headlong into the

legislative prerogative

with

problem of

against which

____________________

10.

Koon similarly rejected the government's argument that


____

because "physical appearance" is a discouraged factor, the


broader category of physical abuse in prison, including that
resulting from physical appearance, could not be considered.
116 S. Ct. at 2051.

-2222

the Supreme

Court warned in

Koon.
____

We do

not travel

this

path.

Because we

are remanding on

the tax loss

issue and

the district court will make further findings on that

we believe the

well.

In

wisest course is to

addition,

it

is

remand on this

unclear

to

us

point,

issue as

whether

the

government and defendants

the

evidence they

approach

been

have had the opportunity to put on

would have

taken.11

In

wished had

a non-categorical

rejecting

the

government's

categorical imperative approach,12 we do not suggest that the

defendants'

argument establishes

the heartland.

As

courts

inevitably

employed in

will

It is

have

means

that they fall

a rare case which

does fall outside.

recognized, incarceration

that

his previous

have consequences.

("[T]he Commission

____________________

the

defendant

outside of

will

position and that

of

no

defendant

longer

be

fact inevitably

See, e.g., Milikowsky, 65 F.3d at 8


___ ____ __________

could hardly have

overlooked the

effect

11.

Though the defense treated Mr. and Mrs. Olbres

identically for sentencing purposes, evidence was presented


only on Mr. Olbres' importance to DC.
considered individually.

Each defendant must be

We note that there was no evidence

to suggest that the business would fail were Mrs. Olbres


incarcerated.

12.

We note that the opinions from our sister circuits on

which the government has relied, Sharapan, Rutana, and Mogel,


________ ______
_____
were all decided without the benefit of Koon.
____

In

distinguishing those cases, we decide only that there is no


categorical barrier to the district court's consideration of
a departure -- not that a departure would be proper on these
facts.

-2323

that imprisonment of offenders would have on small businesses

that are

offenders

likely

to

for their

be

heavily

continuing success.").

that innocent others will

of the heartland.

involving qualitative

Selya &

Matthew Kipp,

on

those

The

mere fact

not alone enough to

These issues are

take a case

matters of degree,

and quantitative judgments.

Bruce M.

An Examination of Emerging Departure


_____________________________________

Jurisprudence Under the Federal Sentencing Guidelines,


________________________________________________________

Notre

Rivera:
______

Dame L.

very

themselves be disadvantaged by the

defendants' imprisonment is

out

dependant

Rev. 1, 7-8

(1991).

As this

67

court said in

It may
that

not be unusual, for


a convicted drug

example, to find

offender is

a single

mother with family responsibilities,


some

point,

the

nature

family responsibilities

and

but, at

magnitude

of

(many children? with

handicaps? no money? no place for children to


go?)

may transform

the

"ordinary case"

of

such circumstances into a case that is not at


all ordinary.

United States
_____________

Rivera, 994
______

F.2d

States v. Sclamo,
________
______

997 F.2d

970 (1st

Koon,
____

at 2051

116

officials

v.

S. Ct.

convicted

(it

of violating

at 948;

is not

18

accord
______

Cir. 1993);

unusual

U.S.C.

United
______

see also
___ ____

for public

242 to

be

subject to career related consequences, so these consequences

alone do not make a case unusual).

Given our decision to

vacate the sentence and remand

for

further proceedings,

consideration

of the

defendants'

acquitted conduct arguments would be premature.

-2424

We close with

words from

Koon on which
____

all of

Justices agreed:

The goal of the Sentencing Guidelines is,

of

the

course, to reduce unjustified disparities and


so

reach

towards

the

evenhandedness

neutrality that are the

distinguishing marks

of any principled system of justice.


respect,

the Guidelines

predictability,

and

and

In this

provide uniformity,

a degree

of detachment

lacking in our earlier system.

This too must

be remembered, however.
and

constant

tradition

for

consider

every

individual
in

the

mitigate,
the

in

It has been uniform

the

the

federal

sentencing

convicted

and every case


human

to

that

to

as

an

sometimes

magnify, the
ensue.

understand it to have been

judge

as a unique study

failings

sometimes

punishment

person

judicial

We

crime and
do

not

the congressional

purpose to withdraw all sentencing discretion


from

the

United

States

District

Discretion is reserved within

Judge.

the Sentencing

Guidelines.

Id. at 2053.
___

Even were we not obliged to agree, we would.

We vacate the sentence and remand.

Carvell, 74 F.3d 8 (1st Cir.


_______

1996).

United States v.
______________

-2525