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USCA1 Opinion

UNITED STATES COURT OF APPEALS


UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT

_________________________

No. 96-1394

UNITED STATES OF AMERICA,

Appellee,

v.

MOSHE VAKNIN,

Defendant, Appellant.

_________________________

No. 96-1393

UNITED STATES OF AMERICA,

Appellee,

v.

E. ERIC YEGHIAN,

Defendant, Appellant.

_________________________

No. 96-1373

UNITED STATES OF AMERICA,

Appellee,

v.

MICHAEL J. FONSECA,

Defendant, Appellant.

_________________________

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Francis J. Boyle, Senior U.S. District Judge]


__________________________

_________________________

Before

Selya, Circuit Judge,


_____________

Bownes, Senior Circuit Judge,


____________________

and Stahl, Circuit Judge.


_____________

_________________________

Mark J. Gillis,
______________

by appointment of the

court, for appellant

Vaknin.
C. Leonard O'Brien for appellant Yeghian.
__________________
John A. MacFadyen for appellant Fonseca.
_________________
Ira Belkin,
__________

Assistant

Sheldon Whitehouse, United


___________________

United States
States

Attorney,

Attorney, and

with

Margaret E.
____________

Curran, Assistant United States Attorney, were on brief,


______
United States.

________________________

whom

for the

May 6, 1997
_________________________

SELYA,
SELYA,

Circuit Judge.
Circuit Judge.
______________

raise, inter alia, an interesting


_____ ____

causation

that

orders under

U.S.C.

courts must

the Victim

same bank official in

consolidated

appeals

question anent the standard of

apply in

and Witness

3663(a), 3664(a) (1994).

multi-count indictment:

These

fashioning restitutionary

Protection Act (VWPA),

The appeals arise out

18

of a

each of the three appellants bribed the

connection with the making of

loans; some

of the loans soured; the bank failed; and the Federal Deposit and

Insurance Corporation (FDIC) was left holding an empty bag.

the

appellants pled

court imposed

guilty

to criminal

charges, the

sentences which included orders

When

district

of restitution to

cover what the court considered to be the attributable losses.

The appellants now challenge these impositions, and, in

addition,

one

prosecution,

appellant,

assails

downward from the

the

court's

the

citing

his

cooperation

district court's

of

downward

restitutionary order (albeit with a modest

to

depart

(GSR).

We

affirm

departure,

AN HISTORICAL PERSPECTIVE
AN HISTORICAL PERSPECTIVE

uphold

one

modification), vacate

the other two, and remand for further findings.

I.
I.

the

refusal

guideline sentencing range

eschewal

with

Compulsory

criminal

restitution

as

wrongdoing dates back over

Hammurabi and the Old Testament.

societal

4,000 years to

response

to

the Code of

See, e.g., Exodus 22:1-3 ("If a


___ ____ ______

man shall steal . . . he should make full restitution.").

In its

earliest iterations, the practice was designed to forfend against

the high social costs of blood feuds and the wreaking of personal

vengeance by compensating victims

in a more civilized way.

generally Thomas
_________

Where Offenders Pay for Their


______________________________

M. Kelly, Note,

See
___

Crimes:
Victim Restitution and Its Constitutionality, 59 Notre
_______________________________________________________

Dame

L. Rev. 685, 686-88

(1984).

By

the Middle Ages, however,

the sovereign had begun to administer the

and

criminal

restitution fell

device remained moribund

States, for

example,

into desuetude.

for several centuries.

federal judges

criminal restitution as a condition

Congress

passed

(repealed 1984).

See
___

Peggy M.

the Federal

Even

criminal law directly,

In the

not able

to

The

United

impose

of probation until 1925 when

Probation

then, judges

Tobolowsky,

were

See id.
___ ___

Act, 18

used the

U.S.C.

3651

power sparingly.

Restitution in the Federal Criminal


_____________________________________

Justice System, 77 Judicature 90, 90-91 (1993).


______________

The

tectonic plates

shifted

in

1982

when

Congress

enacted

the VWPA in response to a growing cognizance of victims'

rights.

Notable for the speed of its election-year passage

legislation was introduced in

signed into

the Senate on April 22,

the

1982, and

law by President Reagan less than six months later

the VWPA transmogrified criminal restitution from a

imposed condition of probation into

sporadically

the sentencing norm in cases

involving quantifiable economic loss.

The congressional purpose that

secret:

"the court

in devising just

offenders, should insure that

animated the VWPA is no

sanctions for adjudicated

the wrongdoer make good[], to

degree possible, the harm he has caused his victim."

the

S. Rep. No.

532, at 31 (1982), reprinted in 1982 U.S.C.C.A.N. 2515, 2536.


_________ __

To

accomplish

this

sentence, "may

authorized by

victim

whether

purpose,

order, in

a district

addition to

law, that the

of such offense."

court,

. .

to award restitution (and,

pronouncing

. any other

defendant make

18 U.S.C.

when

restitution to

3663(a).

if so, in

penalty

any

In determining

what amount), the

sentencing court "shall consider the amount of the loss sustained

by any victim as a result of the offense, the financial resources

of

the defendant, the financial needs and earning ability of the

defendant and the defendant's

dependents, and such other factors

as the court deems appropriate."

In general,

Id. at
___

restitution under

3664(a).

the VWPA is

limited to

"the loss caused by the specific conduct that is the basis of the

offense of conviction."

413 (1990).1

When the

Hughey v. United States, 495


______
_____________

fact, cause,

or amount of

U.S. 411,

the loss

is

____________________

1The

defendant

unauthorized

in

manner, and

loss attributable to the


(as opposed to the

Hughey
______

had used

the Court

credit

cards

limited restitution

lone count on which he had

total loss from all his

in

an

to the

pled guilty

fraudulent conduct).

Congress reacted by amending the VWPA in November of 1990, adding

3663(a)(2) [the former


substance

remained

3663(a) became

essentially

3663(a)(1),

unchanged].

This

but its

amendment

provides that "a victim of an offense that involves as an element


a scheme, a conspiracy,

or a pattern of criminal

activity means

any person directly harmed by the defendant's criminal conduct in


the

course

of

the scheme,

explained in United States


_____________
Cir.

1996), restitution

course

conspiracy,

for all

criminal

As

we

276-77 (1st

conduct done

in the

of a single scheme, conspiracy, or pattern of activity is

(or even

offense

pattern."

v. Hensley, 91 F.3d 274,


_______

now appropriate, whether or not


of

or

of

charged with)

the

conviction has

as

the defendant has been convicted


specific acts,
an element

the

as long

as the

broader scheme,

conspiracy, or pattern.
There
here.

are two reasons why the 1990 amendment has no bearing

In the

appellants

stand convicted

amendment.
inquiry.

first place,

the criminal
occurred

Thus, the pre-1990


See
___

conduct of

prior to

version of the

United States v. Royal,


_____________
_____

which the

the date

of the

VWPA governs our

100 F.3d 1019,

1032 (1st

disputed, the government must establish it by a preponderance

the evidence.

(9th

See
___

Cir. 1994);

United States v. Baker, 25 F.3d 1452, 1454-55


_____________
_____

United States
_____________

v. Diamond,
_______

(10th Cir. 1992); see also 18 U.S.C.


___ ____

II.
II.

969 F.2d

961, 967

3664(d).

THE FACTUAL PREDICATE


THE FACTUAL PREDICATE

We present

they

of

have

presented

the facts relevant to these appeals as best

themselves,

mindful that

the

record

is

noticeably underdeveloped.

Kenneth

Annarummo was a bad apple.

While working as a

loan officer

for Attleboro-Pawtucket

Bank), he solicited and

Annarummo's

the

In

estate

due course,

and several complicit

Moshe Vaknin, Michael J.

developers).2

or the

accepted bribes from numerous customers.

skulduggery came to light after

FDIC intervened.

Annarummo

Savings Bank (APSB

the

the Bank failed and

government indicted

borrowers, including appellants

Fonseca, and E. Eric Yeghian

We

recount the

(all real

circumstances

of

each

appellant's involvement.

A.
A.

Vaknin

refinance

request

first

Vaknin's Troubles.
Vaknin's Troubles.
_________________

approached

several properties.

APSB

Informed

in

1987,

seeking

by Annarummo

to

that his

for funds would be facilitated if he greased the wheels,

____________________

Cir. 1996); United States v. Gilberg, 75 F.3d 15, 20-21 (1st Cir.
_____________
_______
1996).
not

In the second

have as

an

place, the offenses of conviction

element

any

broader

scheme,

here do

conspiracy,

or

pattern.

2Annarummo eventually
bribery,

18 U.S.C.

pled guilty

to three counts

of bank

215 (1994), and one count of subscribing to

a false tax return, 26 U.S.C.

7206(1) (1994).

Vaknin paid

Annarummo $17,500 and thereafter

In 1988, Vaknin sought

received the loan.

to borrow more money and

Annarummo again

asked for a bribe in

loan underwritten.

loan

approval.

exchange for his assistance in getting

Vaknin

This

(which was

machinations in

the

credit

approved by

committee).

itself later

securing

that same

Annarummo another bribe and secured

which Annarummo

refinancing in full,

$12,500 prior to

sequence repeated

year, when Vaknin slipped

third loan

paid him

the bank after

presented false

Although Vaknin

the

a series

of

information to

repaid

the

initial

he defaulted on both the 1988 loans and the

Bank sustained losses in excess of $900,000.

When indicted, Vaknin pled guilty to a single

bank

bribery.

See 18
___

Investigation Report

U.S.C.

215 (1994).

count of

The Presentence

(PSI Report) did not recommend restitution.

In response to the prosecution's objection, the probation officer

explained:

[I]t
losses

is

not clear

incurred by

result of a

as

the bank

to

whether the

were

a direct

fraudulent loan being negotiated

as a

result of

the

losses

factors, such

the bank bribery


were

attributable

as a

downturn in

or whether
to

other

the economy

which affected the real estate market.

At

the

disposition

hearing,

Judge

Boyle

sentenced

Vaknin to an incarcerative term of twelve months and one day, two

years'

supervised release, and a $50 special assessment.

restitution

concluding

bribes

issue,

the

judge

sided

that there would have

had not been paid,

with

been no funds

the judge held

the

On the

prosecution;

advanced if the

Vaknin liable for the

losses resulting from the defaulted loans, rejected the probation

officer's

"downturn

in

the economy"

hypothesis,

and

ordered

Vaknin to pay restitution to the FDIC in the sum of $1,000,000.

B.
B.

Fonseca's Troubles.
Fonseca's Troubles.
__________________

By the time Annarummo arrived on the scene, Fonseca was

valued customer

outstanding loans.

channels

and

of

the

Bank,

This debt had

without

subterfuge,

having

roughly

$750,000

been incurred through

mostly

in

connection

in

normal

with

single-family residential properties in

made no immediate

demands on Fonseca,

Rhode Island.

Annarummo

and Fonseca succeeded

in

securing additional financing through APSB.

In 1987, Fonseca

became fearful that he

encountered business difficulties and

would not be able

schedule on an outstanding APSB note.

Annarummo,

off

the banker demanded a

trouble

should a

default

to meet the

When

he voiced concern to

bribe for his

ensue.

repayment

Fonseca

help in warding

paid Annarummo

$3,000 but proved able to meet his payment obligation on time and

in full.

In 1988, Fonseca applied for a $4,250,000 loan to cover

the development of a much larger project than he had ever tackled

a subdivision

of more than 50

The record suggests

(though it

lots in Bristol,

does not pin

Rhode Island.

down) that,

after

approval of

Annarummo

the

loan request

demanded

one

of

but

the

prior to

lots

as

its

acquiesced and transferred title to Annarummo's

disbursement,

bribe.

Fonseca

nominee, leaving

one less lot as security for APSB's loan.

The

1990.

Bank

Fonseca's

terminated Annarummo's

subdivision

loan

employment

(which

had

in March

remaining

principal balance of $611,500)

Annarummo's

negotiated

successor

was then 30 days in

recommended

arrears, and

foreclosure.

Fonseca

with APSB (which knew nothing of the bribes), and the

parties agreed to enter

into a forbearance agreement (FA)

which Fonseca would make

a lump-sum payment of $450,000

satisfaction of

the funds within

the outstanding indebtedness.

the agreed 35-day

period.

under

in full

Fonseca tendered

In

time, the

failed, the FDIC intervened, the bribes were discovered, and

Bank

the

indictment materialized.

Fonseca pled guilty to a single count of

The district court sentenced

day in prison and a

court

bank bribery.

him to serve twelve months

and one

three-year term of supervised release.

also imposed a $5,000

fine and a

The

$50 special assessment.

The matter of

The

probation

impost;

the

restitution proceeded

officer

recommended

prosecution

in Vaknin's

against

objected;

sustained the objection, ordering

the

much as

and

the

case.

restitutionary

district

judge

Fonseca to make restitution in

sum of $161,500 (the difference between the loan balance and

the amount that Fonseca paid pursuant to the FA).

C.
C.

Yeghian, a

$2,930,000

in

newcomer

to APSB,

applied for

a loan

of

in 1988 to fund the purchase of real property located

Providence,

$20,000

Yeghian's Troubles.
Yeghian's Troubles.
__________________

Rhode Island.

(although

the

record

Annarummo demanded

is

whether

tenebrous

as

bribe of

he

approached Yeghian

In

before or after the loan

had been approved).

any event, Yeghian, using a corrupt lawyer as an internuncio,

paid the bribe out of the loan proceeds.

Later

$1,400,000

that

same

to acquire

received $22,909.52.3

demise, the FDIC's entry

Yeghian

and develop

Seekonk, Massachusetts.

and

year,

sought

a parcel

Once again, Annarummo

Both

of real

loan

of

estate in

demanded a bribe

loans turned sour.

The Bank's

onto the scene, the deterration

of the

bribes, and the indictment followed.

Yeghian pled guilty to

sentencing, Judge

one count of bank bribery.

Boyle imposed

three-year supervised

special assessment.

a ten-month prison

release term, a

Rejecting

PSI Report, the judge

$10,000 fine,

At

sentence, a

and a

$50

a recommendation contained in the

ordered Yeghian to pay restitution

in the

sum of $2,213,654.74.

III.
III.

THE DEPARTURE DECISION


THE DEPARTURE DECISION

Vaknin

sentence.

Vaknin

the

incarcerative

The salient facts are as follows.

under

guidelines.

offense

challenges

the

1988

The court

level

11;

edition

of

the

history

of his

The court sentenced

federal

figured the GSR as 8-14

criminal

portion

category

sentencing

months (adjusted

I),

and

this

calculation is not

in dispute.

At

the time of sentencing,

government asked the court to depart downward

made a good faith

the

because Vaknin had

effort to render substantial assistance.

See
___

____________________

3The odd amount stems from the fact that the bribe
form of a

payment by

Yeghian to liquidate

took the

an outstanding

loan

encumbering Annarummo's Porsche.

10

USSG

5K1.1

("Upon motion

of

the government

stating that

the

defendant has

made a

good faith

assistance in the investigation

who

has

committed an

guidelines.").

generous

entrusted

For

effort to

or prosecution of another person

offense, the

his part,

departure.

court

Vaknin

Nevertheless,

primarily to

provide substantial

the courts,

may depart

solicited an

departure

and the

from the

even

decisions

more

are

sentencing judge's

role cannot be

usurped by agreements between the

the defendant.

See United States v. Mariano, 983 F.2d 1150, 1154


___ _____________
_______

n.3,

1155-56 (1st

Cir. 1993).

prosecutor and

Exercising this

authority, the

court refused to impose a sentence below the GSR.

Vaknin assigns

error.

Vaknin's

entirely

claim of error is

dispositive

answer to

it is

doubly flawed.

that

The short,

he stakes

out his

position

in a perfunctory manner.

is deemed waived.

See, e.g.,
___ ____

For that reason, the argument

United States v. Tardiff, 969 F.2d


_____________
_______

1283, 1287 (1st Cir. 1992); United States v. Zannino, 895 F.2d 1,
_____________
_______

17 (1st Cir. 1990).

The slightly

that,

in the

longer but equally

main, departure

appellate review of refusals

dispositive answer is

decisions are

discretionary, and

to depart is tightly circumscribed.

See Koon v. United States, 116 S. Ct. 2035, 2046-47 (1996); Bruce
___ ____
_____________

M.

Selya & Matthew

Kipp, An Examination of Emerging Departure


______________________________________

Jurisprudence Under the Federal Sentencing Guidelines, 67


______________________________________________________

Dame

"when

L. Rev.

1, 13-14

it appears

(1991).

that the

Jurisdiction will

failure to

Notre

only attach

depart stemmed

from the

11

sentencing court's

authority

to

mistaken impression that it

depart

or,

misapprehension of the rules

F.2d at 1153.

relatedly,

lacked the legal

from

governing departure."

the

court's

Mariano, 983
_______

No such bevue occurred here.

To be sure, Vaknin labors

to find a cognizable

error.

In this vein, he contends that the district court believed itself

unable

to

depart

information about

downward

because

Vaknin

had

not

provided

his fellow borrowers' criminal

activities but

only about the bribe-taker's criminal activities.

He builds this

contention on scraps drawn from counsel's colloquy with the judge

at the disposition hearing.

ascertain

the

seeking to

a sense of what transpired at sentencing, must look to

whole of the record

from it.

(1st

But an appellate court,

rather than isolated snippets extracted

See, e.g., United States v. Santiago, 83


___ ____ ______________
________

F.3d 20, 25

Cir. 1996); United States v. Rostoff, 53 F.3d 398, 407 (1st


_____________
_______

Cir. 1995);

Cir. 1993).

cf. United States v.


___ _____________

Applying this

Tavano, 12 F.3d 301,


______

tenet here,

the record,

304 (1st

read as

seamless whole, belies Vaknin's contention.

We

need not

tarry.

The sentencing

transcript shows

with

pristine clarity that Judge Boyle knew he could depart once

the government invoked USSG

sentence within the GSR.

demurring

were clear

5K1.1, but chose instead to impose a

As we read the record,

and

his reasons for

entirely permissible.

In his view,

Vaknin's cooperation had been adequately rewarded because (a) the

government had prosecuted only

fact that Vaknin

one count of bribery

despite the

had paid multiple bribes referable

to separate

12

borrowings, and (b) Vaknin's offense level (and, hence, the

already had

USSG

been reduced for acceptance

quintet of

be

factors under

evaluated:

provided; its

the nature

extent of

utility to the

the assistance

prosecution; its

and

the information

to, or risk exposure of,

from his cooperation.

(enumerating factors

with

and

assistance motion

truthfulness and reliability of

conveyed; and the injury

resulting

that the court weighed the

which a substantial

significance and

timeliness; the

faced

of responsibility under

3E1.1.

The transcript also reveals

must

GSR)

See Mariano, 983


___ _______

explaining that

section 5K1.1

the defendant

motion,

must

F.2d at 1156

"[a] district

at

a bare

court,

minimum

indicate its cognizance

and

other relevant

under the

Such a decision

call, and, thus,

authority

considerations, the

determined that,

case, no departure

is quintessentially a

judgment

within the sentencing court's discretion.

969 F.2d

to

After mulling these

court

specific circumstances of Vaknin's

was warranted.

Tardiff,
_______

of these factors").

at

1290.

second-guess

Consequently,

the

departure

See
___

we lack

both

the

decision

and

the

inclination to do so.

IV.
IV.

THE CAUSATION QUANDARY


THE CAUSATION QUANDARY

All three appellants

restitutionary orders.

they implicate

challenge the district

Those challenges are

the standard of

causation.

them in the ensemble to that extent.

court's

similar insofar as

Therefore,

we treat

A.
A.

Standard of Review.
Standard of Review.
__________________

13

Restitution

abuse of discretion

orders customarily

rubric.

F.3d 274, 277 (1st Cir. 1996).

sentencing

are reviewed

See United States


___ _____________

under an

v. Hensley,
_______

91

In the course of this review, the

court's subsidiary factual

findings must be credited

unless they are clearly erroneous.

challenge to

however,

the

a restitution

sentencing

reviewed de novo.

See
___

See id.
___ ___

order hinges

court's

To the extent that a

on

answer to

a legal

that

question,

question

United States v. Gilberg, 75 F.3d


_____________
_______

(1st Cir. 1996); United States v. Savoie, 985 F.2d 612,


_____________
______

Cir. 1993).

The appellants' allegation that

employed an improper legal standard

is

15, 20

619 (1st

the district judge

of causation presents such a

question.

B.
B.

The Legal Landscape.


The Legal Landscape.
___________________

The level of causation required

immediately apparent, and the

sharply divergent.

The

under the VWPA is

not

parties' views on the subject

are

appellants advance a theory

of "direct"

causation, exhorting us

only if the victim's

to rule that restitution can

be imposed

losses result directly from the

offense of

conviction and therefore that

restitution cannot be imposed when

an intervening phenomenon (e.g., a collapsing real estate market)

is the more

m tier

of

immediate cause of the

this case,

the

loss.4

appellants'

Transposed

into the

theory seemingly

would

require the government to eliminate the possibility of concurrent


____________________

4While the appellants profess


they

see

it,

comprehensive

they

have

definition of

limiting principle.

to know direct causation when

been

unable

the

term or

either
to

to

muster

suggest a

viable

The government's arguments in support of but

for causation, see infra, suffer from much the same vice.
___ _____

14

causes

and prove

result

of the bribes that Annarummo solicited and received.

government cannot

unrelated

to

that the

do so,

FDIC's losses

occurred as

the appellants posit,

the bribes,

such

as

a direct

The

because stimuli

intervening market

forces,

caused the ultimate losses.

The

government's counter-argument

causation suffices; it urges

is

that "but

us to rule that restitution

for"

can be

imposed

as long as the victim's losses would not have eventuated

but for

the criminal activity.

But

for the bribes, this thesis

runs, there would have

been no loans, without which

have been no

In this

caused

losses.

the losses

and

that,

very general

to

the

there would

sense, the

government's

bribes

way

of

thinking, is enough.

The

appellants'

rejoinder

is twofold.

First, they

debunk the legal standard articulated by the government.

they say that even

state

of the

law,

if this articulation accurately

it does

restitutionary orders.

loans

would

have

justify the

reflects the

district

court's

On the appellants' shared hypothesis, the

issued

forthcoming; thus, the

not

Second,

whether

or

not

Bank would have incurred

the

bribes

were

the losses even

if the appellants had played it straight.

The

continuum.

parties' positions

Our effort to

stand

at opposite

determine where on

ends of

the continuum the

correct

VWPA

legal standard is housed starts with the language of the

itself.

victim"

Section

3663(a) authorizes

for a covered offense.

restitution to

This provision

"any

must be read in

15

tandem with

section 3664(a), which directs

to consider

"the amount of the loss sustained by any victim as a

result

of the offense."

For purposes

the sentencing court

of this

case, see supra


___ _____

note 1, restitution is

the

specific conduct

conviction."

appropriate only for "the loss

that

is

the

basis

of

the

caused by

offense

of

Hughey, 495 U.S. at 413.


______

Since the text of the VWPA does not speak explicitly to

the dimensions of

the requisite standard of causation,5

consult other sources

list

is legislative

itself,

does not

in our quest to discover it.

history.

This

specifically limn

Next on the

material, like

the standard

we must

the statute

of causation.

Nonetheless, it offers some important insights.

In

greater

supra,
_____

enacting

use of a

the VWPA,

Congress

restitutionary remedy.

1982 U.S.C.C.A.N.

____________________

at

2536-37.

strove to

See S.
___

At

encourage

Rep. No. 532,

the same

time,

it

5Though

the amended version of

this case, see supra


___ _____

the VWPA does

not apply to

note 1, the appellants asseverate

that the

amendment's use of the adverb "directly" heralds Congress' intent


vis- -vis the
agree.

type of causation that

The legislative

history of

indicates that the language

it envisioned.
the 1990

We do not

amendment plainly

employed, albeit containing the word

"directly," does not support the appellants' theory of causation.


As Congress explained:

The use of "directly" precludes, for example,


an argument that a

person has been harmed by

a financial institution offense

that results

in a payment from the insurance fund because,


as a taxpayer, a part of a

person's taxes go

to the insurance fund.

H.R.

Rep. No.

681(I),

at 177

U.S.C.C.A.N. 6472, 6583 n.8.

n.8

(1990), reprinted
_________

This definition ranges

from the definition of direct that the appellants tout.


conclude

that the 1990 amendment

causation applicable to VWPA cases.

16

did not alter

in
__

1990

far afield

Thus, we

the standard of

disclaimed

any intent to convert the main event

hearing

over

into a time-consuming sideshow

restitution-related

manifest

in a

requiring

an

restitution

of

great precision

due, Congress

reach

variety

issues.

This

ways.

For

in fixing

the sentencing

prolonged litigation

disclaimer

example,

the amount

was

made

rather

than

of restitution

visualized the VWPA as "authoriz[ing] the court to

expeditious, reasonable

by

resolving

determination

uncertainties

with

of appropriate

view

towards

achieving fairness to the victim."

In

short,

Id. at 2537.
___

the legislative

history clearly

congressional preference for rough remedial

victims'

rights.

importing a

In our view,

stringent standard

signals a

justice, emphasizing

this preference counsels against

of causation

(such as might

be

appropriate in a tort context) into the VWPA.

Of course, rough remedial justice does not mean leaving

matters to the whim of the sentencing judge, and Congress did not

conceive

of

proposition.

the

loss, 18

restitution

as

being

an

entirely

standardless

The government must bear the burden of establishing

U.S.C.

3664(d), and

an award

cannot be

woven

solely from the gossamer strands of speculation and surmise.

See
___

United States v. Neal, 36 F.3d 1190, 1200-01 (1st Cir. 1994).


_____________
____

By

like token, just as insisting upon a modicum of reliable evidence

reinforces the specific advantages

of the restitutionary remedy,

so

too does insisting upon a certain degree of causal precision.

As

the

between

Supreme Court

the harm

has noted,

and the

demanding a

punishment

"direct relation

gives restitution

a more

17

precise deterrent

effect than

traditional fine."

Kelly
_____

v.

Robinson, 479 U.S. 36, 49 n.10 (1986).


________

Finding the legislative

compelling, we examine

court

has

remarked

concluded that

victim loss

See
___

the caselaw.

the broad

difficulty in

should not

Savoie, 985
______

F.2d

history suggestive rather than

In previous decisions, this

policy

goals

the VWPA

achieving an exact

preclude the imposition

at 617.

of

On

the

and

measurement of

of restitution.

subject of

causation,

however, our

decisions have tended to

in which the

closeness of the causal link could not seriously be

questioned, see, e.g.,


___ ____

(1st Cir. 1996),

United States
_____________

or those in which we

involve either situations

v. Lilly, 80
_____

F.3d 24,

28

found restitution to have

been ordered in contravention of Hughey, see, e.g., United States


______ ___ ____ _____________

v. Newman,
______

brings

49 F.3d 1, 11 (1st Cir. 1995).

much light

to

the

vexing

Neither polar extreme

issue

which

these

appeals

present.

Neal is
____

That case

being

the only

notable exception to

this taxonomy.

featured a defendant who had been found guilty both of

an accessory

laundering funds.

after

The

the fact

to a

bank

district court imposed

robbery and

a restitutionary

award that equalled the bank's entire loss from the thievery.

vacated the award, noting that it could

sparse record

to

of

We

not be determined on the

available "whether the court

calculated, pursuant

Hughey, the portion of [the bank's] losses that were actually


______

caused by the

Neal's

specific criminal

convictions."

36 F.3d

conduct forming

at 1200

the basis

for

(italics omitted).

We

18

instructed

the

the district court, on

remand, to hold

causation issue and modify the award

portion of

conduct.

the loss was

Id. at
___

some varietal

1201.

of but for

not "attributable

In dictum, we

a hearing on

to the extent that any

to" Neal's

criminal

cautiously suggested that

causation might

suffice.

See
___

id. at
___

1201

n.10 ("If . . .

evidence is presented indicating that Neal

played a significant role in helping

and

the other defendants escape

that but for his actions, there was a substantial likelihood

that the full proceeds would have been recovered, the court could

well

be

within its

statutory

[restitutionary amount].").

weak

indication that

but

authority in

imposing

Thus, circuit precedent

for causation

can suffice

the full

furnishes a

under the

VWPA.

Reading the

out-of-circuit cases

bar association meeting in

cases,

standard

a small town; one can

like friendly faces in

of causation

which appear at

is like attending

for the

the crowd, to

VWPA.

in favor of a "direct result" standard.

find congenial

support almost any

We have

least superficially to reject

found decisions

but for causation

See, e.g., United States


___ ____ _____________

v.

Silkowski, 32
_________

F.3d 682,

United States, 999


______________

contrast,

we

have

F.2d

689-90 (2d

Cir. 1994);

1023, 1026-27

found

decisions

(6th

which

Ratliff v.
_______

Cir. 1993).

seem

to

unqualified but for causation as sufficient under the VWPA.

e.g.,
____

United States v.
______________

1985); United States


_____________

Cir. 1984).

Keith, 754
_____

v. Richard,
_______

F.2d

738 F.2d

1388, 1393

By

accept

See,
___

(9th Cir.

1120, 1122-23

(10th

We have found decisions which straddle the question,

19

see Government of the Virgin Islands v. Davis, 43 F.3d 41, 46 (3d


___ ________________________________
_____

Cir. 1994) (seemingly endorsing, in

for

a single paragraph, both but

and direct causation), and those

the issue,

see United States


___ _____________

(9th

1989)

Cir.

regarding

v. Cloud, 872
_____

(acknowledging

the nexus

which confess confusion on

"a conflict

the government

F.2d 846, 856

in

must establish

this

n.13

circuit

between the

defendant's criminal conduct and the victim's losses to support a

VWPA restitution order").

C.
C.

Choosing a Standard.
Choosing a Standard.
___________________

Upon

advocated by

close

perscrutation,

the parties

do not hold

the

extreme

out much

positions

promise in

our

quest for a serviceable standard of causation.

On the one hand, the sort of

that the appellants

theory

of

propose is

intervening

restitution even

if the

cause of a loss, unless

court

could

defendant's conduct were

it were the last cause.

the basic purpose

Congress did

not contemplate

expand the

simply too rigid.

forces,

would flout

moved to

direct causation standard

of the

VWPA.6

Under

their

not

impose

a substantial

Such a standard

In

our judgment,

such adamantine formalism

availability of restitutionary

when it

remedies by

____________________

6Imagine
carrying

a situation in which

D, a convicted

felon who is

a handgun, is speeding down a highway, fleeing from the

authorities.

D's car slams into an unregistered automobile, with

defective brakes, owned and


to swerve

and hit V,

operated by Stranger (S), causing

who suffers

prosecuted

for

miscreancy

should not preclude a

severe injuries.

reckless endangerment

and

found

D is

then

guilty.

S's

court from ordering

restitution for V's medical expenses.

D to make

Yet the appellants' theory

would erect just such a barrier.

20

enacting the VWPA.

See S. Rep. No. 532, supra, 1982 U.S.C.C.A.N.


___
_____

at 2537.

On

the other hand, concerns of

fairness require us to

reject

the

unbridled

government propounds.

but

for

causation

Franklin,

been

blacksmith

if

the kingdom reputedly was lost,

intent

the

to

nail

calculus of concurrent

place

was

causes.

an

the

it could

entire

hardly have

burden

insignificant

Such a

cf. Benjamin
___

factor

odds with the majority of reported

States v. Holley,
______
______

23 F.3d

on

the

in the

result would countervail

principles of fundamental fairness and, in the bargain,

at

the

While it is true that

Poor Richard's Almanac (1758),


_______________________

Congress'

that

Under it, a court could impose restitution

based on the most tenuous of connections.7

for want of a nail

standard

cases.

902, 914-15 (5th

would be

See, e.g., United


___ ____ ______

Cir. 1994);

States v. Tyler, 767 F.2d 1350, 1351-53 (9th Cir. 1985).


______
_____

United
______

Having rejected the parties'

to fashion the appropriate

the statute

the

legal standard.

and in its legislative

contradictions that

possible to

proposals, it falls to us

permeate

Despite the

gaps in

history, and notwithstanding

the

cases,

distill certain bedrock principles

we think

it

is

from the sources

____________________

7Imagine

a situation similar

supra; but, instead


_____

to that described

in note 6,

of being prosecuted for a vehicular offense,

D is charged with and convicted of being a felon in possession of


a handgun.

While but

for causation may be present

but for his unlawful possession of a weapon, D would


occasion
been

after all,

have had no

to flee from the authorities, and, thus, would not have

careening down the road and would not have precipitated the

accident

it is

hard to

make a

(felon in

principled argument

that the

possession) supports

an order

offense

of conviction

against

D to make restitution for V's medical expenses.

government's theory ordains just such a result.

21

Yet the

that we have consulted.

First:
First:
_____

a loss

conduct.

Restitution should not be ordered in respect to

which would have

A good

occurred regardless of

illustration of this principle in

found in United States v. Blackburn,


_____________
_________

There,

the

the defendant's

sentencing court

calculating the amount

9 F.3d 353 (5th Cir. 1993).

included

of restitution

operation is

foreclosure expenses

due.

The Fifth

in

Circuit

reversed, citing

even if

the defendant had not

359; see also


___ ____

Cir. 1990)

defrauded

proof that the foreclosure

would have happened

committed the crime.

See id. at
___ ___

United States v. Walker, 896 F.2d 295, 305-06 (8th


_____________
______

(holding that when

the United

States,

defendants, who owned

restitution to

a company,

laid-off

company

employees was improper because the record failed to show that the

fraud caused the company to cease operations).

Second:
Second
______

Even

theory, limitless but for

not

lie if the conduct

too far removed,

if but

for causation is

causation is not.

Restitution should

underlying the offense

either factually or temporally,

We offer two examples of remoteness in fact.

acceptable in

of conviction is

from the loss.

The first arises in

a case that bears some similarity to the instant case.

In

Diamond, 969
_______

F.2d

at 963-64,

the defendant

guilty to filing false financial reports with a lender.

had

already been made

the

reports apparently

loan

before Diamond authored

helped in

proved uncollectible.

defendant to

make restitution,

the reports, but

court ordered

reasoning that the

22

The loan

obtaining an extension.

The sentencing

pled

The

the

loss stemmed

from the false

the

reports.

The court of

appeals refused to equate

extension of an existing loan with

the granting of the loan

in the first place, and negated the restitutionary

there

was

position.

no proof

that

the extension

district court

92 F.3d 865

remoteness is

(9th Cir. 1996).

been convicted of computer fraud.

ordered restitution for expenses

in meeting with investigators

Ninth Circuit

struck these amounts

See id. at 870; see

The

incurred by the

to discuss the

from the award,

the expenses were not connected closely enough to

conduct.

the lender's

example of factual

United States v. Sablan,


_____________
______

There, the defendant had

victim

worsened

See id. at 966.


___ ___

A somewhat different

found in

order because

case.

The

ruling that

the fraudulent

also United States v. Kenney, 789

___ ___

F.2d 783, 784

___

(9th Cir.

restitution order

victim

for the

defendant's

____ _____________

1986) (invalidating that

which was designed to

cost

trial,

encompassing the

______

of having

but

its

reimburse the corporate

employees testify

upholding

cost of

portion of

that

part

of

removing film chronicling

at

the

the

order

the robbery

from the bank's surveillance cameras).

Typical of

existed

were

but restitution

temporally

activity,

interval

was denied

remote is

restitution improper

property

the situations

from the

when the

defendant

unnecessarily held

after

the

Holley,
______

crime

in which but

for causation

because the

claimed losses

in which

victim, who

in

the

onto

was

the

received foreclosure

course

of

the property

discovered,

court deemed

and

the

criminal

for a

lengthy

the

property

23

declined

in

value

during that

Similarly, in Tyler, the


_____

forest and

lumber

767 F.2d

lumber, needlessly,

23

F.3d at

914-15.

defendant cut down a tree in a national

was apprehended as

mill.

period.

he tried to

at 1351.

take it to

The government

a nearby

retained the

for a long period of time, then sold it in a

fallen market for considerably less than it would have fetched if

sold

promptly.

pegging

See id.
___ ___

the loss

appellate court

by

The district court ordered restitution,

reference

dictum in Neal, 36
____

under

price.

The

although abstract

it was too attenuated to

for standard

the VWPA.

with

these

two

principles

F.3d at 1201 & n.10, we

of

causation is

support the

and

with our

hold that a modified

appropriate for

restitution

This means, in effect, that the government must

show not only that a particular

for

reduced

See id. at 1351-53.


___ ___

Consistent

but

the

disagreed, pointing out that,

but for causation existed,

award.

to

the conduct underlying

loss would not have occurred but

the offense of

conviction, but also

that the causal nexus between the conduct and the loss is not too

attenuated (either

factually or

reasonableness.

temporally).

sentencing

court

The

should

watchword is

undertake

an

individualized inquiry; what constitutes sufficient causation can

only be determined case by case, in a fact-specific probe.

D.
D.

Having

elucidated the

turn finally to the

that

Applying the Standard.


Applying the Standard.
_____________________

are before us.

appropriate legal

causation questions embedded in

standard, we

the appeals

These appeals, like the decisions canvassed

24

above, provide some insights into the standard's operation.

1.
1.

In Vaknin's case,

district court

paid

loans.

specifically found

were a but for cause of

that the bribes

The

which Vaknin

the Bank's losses on the defaulted

The record contains no basis on which to mount a credible

challenge to this finding.

bribes

restitution is appropriate.

preceded the

admittedly

paid

in

After all, the arrangements

making of

the loans,

exchange

for

and the

Annarummo's

for the

bribes were

assistance

in

procuring the loans.

Moreover,

restitution under the

common

VWPA.

sense

must

See
___

S. Rep.

inform

inquiries

into

No. 532, supra,


_____

1982

U.S.C.C.A.N. at 2536-37.

shows

In Vaknin's case, the

not only that the loans were

evidence clearly

procured by bribery but also

that the bribe-taker connived to bend the rules;

instance

Annarummo

committee

to

shaded

the presentation

increase the

forthcoming.

We

likelihood

believe that

establishes that arrangements

the

making

subsequent

of

loan,

losses referable

where,

to

in at least one

APSB's

credit

that the

loan

as here,

the government

for a bribe precede

commonsense

and relate to

inference

to the loan's

would be

arises that

uncollectibility are

causally linked in reasonable proximity to the bribe.

Cf., e.g.,
___ ____

Blinzler v. Marriott Int'l, Inc., 81 F.3d 1148, 1158-59 (1st Cir.


________
____________________

1996) (discussing

that a

commonsense inference

relevant document has

that arises

been destroyed); United

from proof

States v.

______________

Olbres, 61
______

F.3d 967,

inference

that

971-72 (1st Cir.)

arises

in

tax

(discussing commonsense

evasion

case

from

proof

of

25

expenditures in excess of declared income and disposable assets),

cert. denied, 116 S.


_____ ______

can be

Ct. 522 (1995).

rebutted if the

Of course, the

defendant produces specific

inference

evidence of

factual or temporal

such

showing.

remoteness.

To the

Here,

however, Vaknin made

contrary, there

is no

no

compelling proof

either of an unforeseeable intervening cause or of any cognizable

remoteness, factual or temporal.

That ends

the matter.

Because the

record adequately

supports Judge Boyle's finding of but for causation, and contains

no

sufficient

suggestion

restitution for

of

factual or

the losses resulting

temporal

remoteness,

from the tainted

loans is

altogether appropriate.

2.
2.

In

We treat Fonseca's and Yeghian's appeals in tandem.

both instances,

the

record is

so

exiguous that

existence of but for causation seems problematic.

the

very

As to Fonseca,

the single loan in respect to which the court ordered restitution

may

time

have been approved by the

Bank independent of, and prior in

to, Annarummo's solicitation of

record,

we simply

specific

cannot tell

finding on

the

important because, if

loan prior to

would

and, in

the

the lower

The

On the present

court made

question is

out that the

any arrangements for a

the circumstances

causation;

and

point.

it turns

a bribe.8

potentially

Bank approved

bribe, then in such

not support

an

absence of

such

no

inference of

an inference,

the

event

but

it

for

is

____________________

8Fonseca's past lending relationship


support this inference.

with the Bank tends to

It suggests, at the least, that the Bank

considered him creditworthy well before Annarummo hove into view.

26

difficult (although not impossible)

to conceive how a sufficient

causal link between bribe and loss could be forged.

Moreover,

causation

Fonseca

the record

suggests

exists, the requisite

argues

with some

that even

if but

for

connectedness might be lacking.

force that

the

Bank's loss,

if one

occurred at all, was occasioned by its need for an immediate cash

infusion; that this exigency gave birth to the FA; and therefore,

no cognizable loss occurred.9

facts which

But this argument, too, depends on

the record does not contain,

and on which the lower

court

made

no

Fonseca's loan

the

loan.

particularized

It

is

clear

that

was overdue and that the Bank had a right to call

From

Bank entered

findings.

that point forward,

into the

FA

merely as

it is unclear

a quick

whether the

fix

for its

own

problems or because it wanted to mitigate an inevitable loss.

As to Yeghian, the record is similarly inexplicit about

the

timing

of his

arrangements

Bank's approval of the

that one

(if not both)

have been approved

the sentencing

record

is

too

Annarummo vis- -vis

subject loans.

There is

of the loans

on which he

independent of any

court made

sparse to

questions with confidence.


____________________

with

no detailed

permit

us

some indication

defaulted may

deal with Annarummo,

findings and

to

the

answer the

but

the extant

causation

9In

substance,

Fonseca

accelerated $450,000

asserts

that

by

accepting

an

payment under a consensual pact (the FA) in

satisfaction of the outstanding loan balance ($611,500), APSB did


no more than make a
failing loan
given time

business judgment designed not to salvage

Fonseca says he
but to shore up

could have paid it

a failing bank.

off in full,

On that basis,

he

reasons that APSB (and ultimately the FDIC) suffered no loss.

27

It

these

record,

would be

matters.

We

embellished

unprofitable

are

confronted

with few

to delve

by a

specific

more deeply

largely

findings.

into

undeveloped

Given

that

enigmatic

district

reality, remand

is required.

We

envision

that the

court, the next time around, will direct the parties to

augment the record with respect to (a) the presence or absence of

a causal

link between

Fonseca's and Yeghian's

criminal conduct

and the FDIC's losses,

(b) if that causal link

is demonstrated,

the

closeness

of

the

connection,

factually

and

temporally,

between

that conduct and the ultimate losses, and (c) such other

matters

as the court may

deem suitable.

We anticipate further

that the court will make particularized findings on each disputed

issue. Weintimateno viewastothe properoutcomeof thoseproceedings.

V.
V.

MISCELLANEOUS
MISCELLANEOUS

Three final matters require brief attention.

is a

matter raised by

Fonseca and

Yeghian.

The

The first

others relate

solely to Vaknin's obligations.

A.
A.

Picking up the Tab.


Picking up the Tab.
__________________

It is apodictic that restitution only can be ordered to

redress

F.3d

a loss to

28, 33

a victim.

(1st Cir.

See United States


___ _____________

1994).

Using this

v. Gibbens, 25
_______

truism as

a lever,

Fonseca and Yeghian question whether the VWPA allows the court to

order restitution to the FDIC for losses

the (now failed) Bank.

originally sustained by

The question is easily answered.

Following existing circuit precedent, we hold

that the

benefit of the VWPA's remedial provisions extends to a government

28

agency

into

if

which, in

the exercise of

duly delegated

the shoes of the original victim.

failed

bank was

victim

of

powers, steps

See id. at 32-35.


___ ___

the defendant's

Thus,

criminal

activity, the FDIC, as its insurer and receiver, itself qualifies

as

a victim

VWPA.

See
___

for purposes

of a

restitutionary order

United States v. Phaneuf, 91 F.3d


_____________
_______

1996).

B.
B.

Ability to Pay.
Ability to Pay.
______________

under the

255, 265 (1st Cir.

Vaknin

discretion

by

argues

that

ordering

considering his ability to

that judicial

statutorily

restitution.

with

the

See
___

as

to

pay.

We agree with

make

court

him

consideration of a

mandated

district

restitution

3664(a).

to

its

without

Vaknin's premise

defendant's ability to

prerequisite

18 U.S.C.

abused

an

We disagree,

pay is

order

for

however,

his conclusion that the lower court neglected to touch this

base.

We

have

stated with

monotonous that the consideration

regularity

bordering on

the

requirement does not mean that

a judge must decide the question in a particular way or even that

he must make express findings on the record as to the defendant's

ability to

pay.

See, e.g.,
___ ____

Newman, 49 F.3d at
______

10; Savoie, 985


______

F.2d at 618.

It is enough

the judge made implicit

if "the record on appeal reveals that

findings or otherwise adequately evinced

his consideration" of this factor.

Savoie, 985 F.2d at 618.


______

Here, the PSI Report spelled out Vaknin's past earnings

history and

current financial condition

29

in appreciable

detail.

The sentencing transcript indicates

information,

voiced his

comply

the

with

eventual

repayment

supportable.

skepticism

restitution

nonetheless impliedly

that the judge absorbed this

found

order

that a

existed.

A defendant's

about

as

Vaknin's ability

matters

sufficient

We think

that

stood,10

but

possibility

of

this

finding is

impoverishment today is no assurance

of future poverty, and,

hence, present impecuniousness is

bar

of restitution.

to

Brandon,
_______

the imposition

17

F.3d 409,

Lombardi, 5 F.3d
________

461 (1st

Cir.

568, 573 (1st Cir.

permissibly may take into

to

not a

See United States v.


___ ______________

1994); United States v.


______________

1993).

sentencing court

account a defendant's earning capacity

and the prospect that his fortunes will improve.

F.3d at 573; Savoie, 985 F.2d at 619.


______

See Lombardi, 5
___ ________

Here, the judge apparently

as a

hedge against his

individual

been

founded belief that

of demonstrated

acquire assets in the

less

entrepreneurial

future.

controversial

reference to

issued a restitution

had

Vaknin's past accomplishments

prognosis, we cannot say that

the defendant

bent

might

While this conclusion

the judge

order

made

an

well

would have

more

pointed

and future financial

an abuse of discretion transpired.

See Lombardi, 5 F.3d at 572-73.


___ ________

C.
C.

The Government's Concessions.


The Government's Concessions.
____________________________

The district

in the amount of

court ordered Vaknin to

$1,000,000.

This figure

make restitution

is vulnerable on

two

____________________

10Indeed,

the

judge explicitly

declined

to

levy a

fine

against Vaknin, noting on the judgment form that no fine would be


imposed due to an inability to pay.

30

fronts.

First, the

government has brought

to light on its

own

initiative a mathematical error that, when corrected, will reduce

the

amount of restitution owed.11

premised the

loss

calculation

Second, the sentencing court

on the

amount

which

the

Bank

received when it resold the property Vaknin had pledged to secure

the defaulted loans, rather than on its fair market

time of foreclosure.

value as of the

Because the district court used fair market

foreclosure date when determining the

restitution that

Yeghian owed,

would be fair to employ the

(a similarly

concessions

value at the

the government concedes

that it

same barometer in respect to

situated codefendant).

at face

amount of

value,

We

Vaknin

accept the government's

without passing

substantively upon

them, and direct the district court to make these two adjustments

to the restitutionary award.

The resultant

obligation thus will

be reduced to $902,000.

VI.
VI.

CONCLUSION
CONCLUSION

We

need

herein, we affirm

go no

further.

For

the convictions of all

the reasons

set forth

the defendants; modify

the restitution

order imposed against Vaknin,

affirm it; vacate

and, as modified,

the restitution orders imposed

Yeghian, respectively;

and remand for further

on Fonseca and

proceedings as to

them.

Affirmed in part; vacated in part; remanded.


Affirmed in part; vacated in part; remanded.
___________________________________________

____________________

11This

is very

professional behavior,

prosecutors for it.

31

and we

commend the