USCA1 Opinion

March 2, 1995
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 91-1963
UNITED STATES,
Appellee,
v.
THOMAS E. NEWMAN,
Defendant, Appellant.
____________________
ERRATA SHEET
ERRATA SHEET
The opinion of this Court
amended as follows:
Page 1:

issued on February

28, 1995, is

change "Ronald R. Lagueux, U.S. District Judge" to

____________________
"Francis J. Boyle, Senior U.S. District Judge".
__________________________

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 91-1963
UNITED STATES,
Appellee,
v.
THOMAS E. NEWMAN,
Defendant, Appellant.
____________________
APPEAL 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,
_____________
Campbell, Senior Circuit Judge,
____________________
and Stahl, Circuit Judge.
_____________
____________________

John A. Macfadyen for appellant.

_________________
Margaret E. Curran, Assistant United States Attorney, with w
___________________
Sheldon Whitehouse, United States Attorney, and Edwin J. Ga
___________________
_____________
Assistant United States Attorney, were on brief for appellee.
____________________
February 28, 1995
____________________

CAMPBELL, Senior Circuit Judge.

_____________________
Newman appeals

from final

the district court

Defendant

judgment and sentence

Thomas

entered by

after a three-week criminal trial.

The

jury convicted Newman of five counts of wire fraud (18 U.S.C.

1343

(1988))

property in

and

four

counts

interstate commerce

of

transporting

(18 U.S.C.

stolen

2314 (1988)),

all arising out of his allegedly fraudulent acquisition of an

insurance company and the diversion of almost $400,000 of its
funds for his personal use.
court

committed

sentencing.

Newman alleges that the district

variety

We affirm

of

errors

at

trial

and

the judgment, and most, but

at

not all,

aspects of the sentence.

I.
I.
In late 1989, Newman, a self-described businessman,
met

with the

owner

and officers

of

Rumford Property

and

Liability Insurance Company ("RPLIC") to discuss his possible

purchase of the Rhode
a

series of

Island-based insurance company.

discussions and negotiations,

RPLIC for $200,000 on

December 11, 1989.

After

Newman purchased
RPLIC's

immediately transferred to the newly-created

stock was

Rumford Holding

Company ("RHC"), which was wholly owned by Newman.

Prior
financial

the

purchase,

difficulties.

difficulties,
Island's

to

RPLIC had

Department of

In
been

RPLIC

part

had

been

facing

of

these

because

under investigation

Business Regulation ("DBR")

by Rhode
and had

-33

entered

into

operations.

several

inter alia,
___________

its

uses

of RPLIC's

and restricted,

assets

without

DBR

At the time of purchase, these assets consisted of

$1.2 million

stock, $200,000 in

in

cash, $1

of an insurance company
R.I. Gen. Laws

possibility

million in

bonds, and various other assets.

liabilities exceeded its assets.

DBR.

concerning

at the time of purchase

certain

approximately

sale

orders

The most recent of these orders, dated May 1989,

was still in effect

approval.

consent

RPLIC's

Under Rhode Island law,

is subject to

27-35-2.

common

approval by the

When first notified of the

that RPLIC might be sold, the DBR indicated that

it would not approve the sale unless the purchaser added $2.5
to $5 million in capital.
At the
these facts.
drafts
which

of the

time of the

purchase, Newman was

During the course of the

purchase

agreement were

referred to the consent

aware of

negotiations, various
circulated, all

order and the

of

need to obtain

approval from the

DBR.

Newman had also

documenting RPLIC's financial

its

liabilities exceeded

been given a letter

condition and indicating

its assets.

The

that

final agreement

required Newman to seek DBR approval of the sale immediately.

Furthermore, at

the closing on December 11,

most recent consent

order, dated May 1989.

Newman read the

Although Newman

first expressed surprise and concern over the content

consent

order,

he was

assured that

it

of the

would not

bar the

business, although it would

bar any

-44

normal operation of the

extraordinary transfers of funds.

Newman went
$200,000

ahead and purchased

($100,000

in

cash,

After a lengthy discussion

RPLIC, as noted

which he

had

above, for

borrowed,

and

$100,000 in a promissory note).1

The next day, December 12, Newman met with a number
of RPLIC

officers

disbursements
accounts.

Over

of

and

announced that

approximately
their objections,

he

$400,000

needed
from

Newman directed

to

make

RPLIC's
them to

transfer from

RPLIC's accounts (and the

subsidiaries) the following

RPLIC

subsidiary's checking

money

market

brokerage

accounts.

personally,
checking
Newman

accounts;

and

the

funds:

sole

$79,100 from

$184,3002

The

check

other

funds

account in the name

was the

a $120,000 check

account;

and

accounts of RPLIC's

from

was
were

given

from a
various

number
to

of

Newman

transferred

to

of Rumford Holdings, for which

signatory.

Altogether, $380,400

was

removed from RPLIC's accounts.

Newman subsequently
back

the loan

needed at

that he

the closing.

used the $120,000 check to pay

had taken

out for

From the Rumford

the cash

he had

Holdings checking

____________________
1.
Under Rhode Island law, the signing of a purchase
agreement without prior DBR approval is permitted. However,
final legal control over the company does not change hands
until the purchase has been approved.
2.
This sum consisted of four separate transfers, which
formed the basis of counts I through IV (wire fraud).
-55

account, Newman made

to

the brokerage

$21,0003 in a
himself;

helped him

acquire RPLIC;

to himself; $7,000

$50,0005 in a wire
that of his

funds from

this

bills,

Included in

in cash

wife at

including

the above

four counts

to

were

mortgage

immediately,

payments on

pay
a

his

house.

wire fraud and

property set

Newman subsequently made additional

from

RPLIC,6

Newman to seek

he did

Bank.

and transfers

transport of stolen

although these

were not a part of the indictment.

agreement required

used to

for the five counts of

forth in the indictment.

account in

the First Virginia

were the disbursements

of interstate

of funds

transfer to an

last transfer

that formed the basis

transfers

had

$150,000

$15,0004 in three checks, one to himself and two to

his name and

personal

firm that

check payable

his wife; and

The

the following disbursements:

not notify

Although

transfers

the

purchase

DBR approval of

the sale

the DBR

of the

sale until

____________________
3.
This sum
transport).

count

VI

(interstate

4.
These three checks formed the basis
through IX (interstate transport).

of

counts

5.

formed

the

basis of

VII

This sum formed the basis of count V (wire fraud).

6.
In January of 1990, Newman leased office space in
Washington D.C., for which Rumford Holdings paid the rent.
In February, Newman appointed himself the president, chief
executive officer, and chairman of the board of Rumford
Holdings, and began to draw an annual salary of $100,000.
Between February and July, Newman charged approximately
$50,000 in personal expenses on the Rumford Holdings credit
card.

-66

March of 1990.
demanding

In April,

that he

the DBR sent

formally seek

filing a "Form A" by mid-April.

that Newman
The

had diverted

a letter to

approval

Newman

from the

DBR by

Then in May, the DBR learned

nearly $490,000 of

RPLIC's funds.

DBR wrote Newman, notifying him that he had no authority

to divert the funds and demanding that he return the funds to

RPLIC immediately.

After

receiving no response from Newman,

the DBR in June of 1990 petitioned for an order placing RPLIC

in receivership.
Newman
government argued
no intent of

was

indicted in

that Newman had acquired

revitalizing it,

divert its assets for

contended
trouble

attempt

Newman

and that

the

infusion.

to

knew

that RPLIC

consent order

the

company with

1991.

The

the company with

but with the

was

sole intent

to

The government
in

financial

precluded transfer

yet removed those assets

provide

of

his own personal use.

that

RPLIC's assets,

February

of

without making any

the

needed

capital

Newman's
innocent

victim

defense
who

participants involved

at

had

trial

been

was that

deceived

in the purchase of

he

by

was

the

an

other

RPLIC, namely, the

former owner, various RPLIC executives, and the broker of the

purchase.

Newman claimed that he was unaware of RPLIC's dire

financial position and that his counsel had advised

the

consent

order did

not apply

to

him.

him that

Newman further

-77

claimed

that,

desperately
capital,

after the

to

find

and that

investors

of RPLIC,

he

had tried

provide

the

necessary

to

the transferred

that he intended to repay.

to seek DBR

purchase

funds were

simply loans

Newman also argued that he failed

approval because

he believed he

had more

time

under the contract before he was required to do so.

The

jury convicted Newman of

September

of 1991,

concurrent

terms

the district
of

71

months

all nine counts.

judge sentenced
for

the

four

In

Newman to
counts

of

interstate transport of stolen property and 60 months for the

five counts of wire fraud.

The judge also imposed concurrent

three-year terms of supervised

Newman

pay

$489,779 in

release on the condition that

restitution

and the

costs

of his

supervised release.7
II.
II.
Newman

argues that the

at the trial and at sentencing.

into

four

categories:

(1)

district court made errors

These errors can be grouped

the

district

court

excluded

____________________
7.
The government in its brief acknowledges that, although
Newman has not raised this point, the district court appears
to have erred in imposing the costs of supervised release.
Such costs constitute an additional fine that can only be
imposed in conjunction with a punitive fine.
See United
___ ______
States v. Brandon, 17 F.3d 409, 461 (1st Cir.), cert. denied,
______
_______
____________
115 S. Ct. 80 (1994).
Because the district court did not
impose a fine, the government asks this court to vacate that
part of the judgment. United States v. Pineda, 981 F.2d 569,
_____________
______
576 (1st Cir. 1992). As requested, we accordingly vacate the
part of the sentence imposing the costs of supervised
release.
-88

evidence

that should

have

been allowed;

court allowed

evidence that

the

court

district

Newman unfairly;

should have been

permitted

and

(4)

(2) the

the

the

applied the sentencing guidelines.

excluded; (3)

prosecutor

district

district

to question

court

erroneously

Only in the last category

do we find any claim of merit.

A.

Improperly Excluded Evidence

____________________________
Newman argues that

discretion

in refusing

the district

to admit

court abused

into evidence a

its

series of

letters exchanged in May of 1990 between Newman and Daniel K.

Jackson & Associates, an investment firm.
included

information

form

filled

out

about RPLIC

by

The correspondence

Newman

and requesting

containing

basic

investment capital.

The correspondence also included

a response from the company

indicating it was interested in

perhaps arranging financing.

According to Newman, the correspondence was

clearly relevant

in that it corroborated his testimony at trial that he was in

fact actively seeking
operation of RPLIC.

capital investment for

It would

government's contention

the continuing

supposedly have rebutted

that Newman

had bought

the

the company

with the sole intent of diverting its assets.

We

agree

with the

court did not abuse its

as irrelevant.
1990,

four

government

the district

discretion in excluding the evidence

The correspondence

months

that

after

was exchanged in

Newman had

purchased

May of

RPLIC

and

-99

diverted its assets.

the district court
nothing
the

could reasonably have found that

about the relevant issue:

time of

the

correspondence,
arguendo

Given the timing of the correspondence,

its

purchase and
moreover,

relevance,

since Newman had already

Newman's state of mind at

diversion

was

it said

of assets.

cumulative.

its exclusion

The

Even assuming

was

unprejudicial,

testified that he sought investment

financing

from Daniel K. Jackson

number of

other

& Associates as

investment companies,

and

the

well as a
government

never disputed this assertion.

Newman next argues
its discretion when it
by the director

of the

court abused

excluded certain proffered

DBR.

circumstances that led up to

with

that the district

RPLIC prior to Newman's

This

testimony

testimony concerned

the

the consent orders entered into

purchase of the

company.

The

district court concluded that this testimony was not relevant

to

whether Newman had known

of the consent

orders.

Newman

argues, however, that the testimony would have indicated that

the

consent

orders

had

been

entered into

prior

to

his

involvement with RPLIC and were directed primarily at RPLIC's

former owner.

This,

his claim that his

orders

did

not

Newman suggests, would

have bolstered

lawyers had advised him that

apply

to

him,

thereby

the consent

countering

the

government's argument that Newman's flagrant violation of the

consent orders was evidence of his intent to defraud.

-1010

Again, we think
not

constitute an abuse

that this

evidentiary ruling

of discretion.

did

The district court

could reasonably have concluded that the specific events that

led up to

the consent

Newman was aware

at

the time

orders were not

relevant to

of the restrictions imposed

he purchased

RPLIC.

whether

by the decrees

The testimony

sought by

Newman concerned the events that led up to the consent order;

it did not suggest

that Newman was unaware

of the order

or

the limits
Indeed,

it imposed

the

consent order

restrictions imposed
Newman

had read

company.

on the

transfer

clearly stated

upon RPLIC,

the

of RPLIC's

order prior

on its

and it is
to

assets.
face the

undisputed that

his purchase

of

the

Newman, moreover, could not have been prejudiced by

exclusion

of

considerable

this

testimony

testimony from

since

there

other witnesses

was

already

concerning the

history of the consent orders.

Finally,
abused

Newman

argues

its discretion when it

1987 investigation of RPLIC.

was in
such

financial trouble
disarray that

RPLIC was

solvent.

it

that

the

district court

excluded a DBR

The report indicated that RPLIC

and that RPLIC's

was difficult

records were

to determine

Newman contends that

company).

show it to Newman
Newman

argues

(who by then
that

-1111

the

in

whether

an RPLIC executive

first received a copy of this report in January

failed to

report from a

of 1990, but

had purchased the

report

is

therefore

relevant

in that the failure to

show it to him supports his

claim that the same executives withheld information about the

financial status

of RPLIC

from him

before his
______

decision to

purchase RPLIC.
The district court did

not abuse its discretion in

excluding the report as irrelevant.

by
thus

RPLIC after Newman had

says nothing

The report

already purchased the company and

about

what information

withheld from him before the purchase.

was cumulative of other evidence and
have prejudiced
repeatedly

Newman.

been

the

$200,000

RPLIC's

might have

its exclusion could not

of RPLIC's

that Newman

precarious

purchase of the company.

purchase price

liabilities

and

exceeded

its

been

The report, moreover,

The record shows

informed

state prior to his

was received

the

had

financial

In particular,

letter stating

assets would

have

that
told

Newman of RPLIC's situation.

B.

Improperly Included Evidence

____________________________
Newman

allowing

argues

testimony by

that the
the

district

government's

court erred

witnesses

effect that Newman's actions violated the law.

to

in
the

Specifically,

Newman points to the following three pieces of evidence:

1.
a letter from the DBR director to
Newman dated May 16, 1990, stating: "It
has come to our attention . . . that
certain funds have been diverted from
these Companies in violation of the laws
of the State of Rhode Island . . . . The
transactions
referred
to are
grave
violations of the insurance laws of the

-1212

State of Rhode Island and subject both

the
Companies
and
the
individuals
involved to criminal penalties."
2.
DBR legal counsel's testimony that
she told the broker of the sale of the
company "that I believed that he should
return [the broker's fee], because it had
been illegally appropriated."
3.
RPLIC counsel's testimony that he
told RPLIC's
comptroller that Newman
should return "the monies which had been
wrongfully taken immediately."
Newman

argues

that

opinions about
and extremely

and were

prejudicial in that they

to reach.

359, 363 (2d Cir.

758 F.2d

statements

Newman's guilt,

jury what result

F.2d

these

147, 150 (6th

See,
___

amounted

to

legal

hence inadmissible
effectively told the

e.g., Hygh v. Jacobs,

____ ____
______

961

1992); Torres v.
______

County of Oakland,
_________________

Cir. 1985); see

___

also Marx & Co. v.

____ ___________

Diners' Club, Inc., 550 F.2d

__________________

505, 512 (2d Cir.) ("It is

not

for

witnesses

to

principles of

instruct

law, but for

the

jury

as

to

applicable

the judge."), cert. denied, 434

_____________

U.S. 861 (1977).

We
issue

agree that

of guilt

opinions as

or innocence

See, e.g., United States v.

___ ____ ______________

to the

are generally
Espino, 32 F.3d
______

ultimate legal
not admissible.
253, 257

(7th

Cir. 1994); Hogan v. American Telephone & Telegraph Co., 812

_____
___________________________________
F.2d

409, 411-12 (8th Cir. 1987); Fed. R. Evid. 704 advisory

-1313

committee's notes.8
first

two

However, Newman failed

statements,

and,

absent

any

to object to the
objections,

the

district court had little reason to exclude the statements on

its own accord.

The

above statements were

opinion testimony per se;

not offered

as

rather, the DBR director's opinion

was

part

of

letter

diverted assets, and

demanding

that

discovery

Without objection
could

well have

helpful to

the

the second statement was offered in the

ordinary course of describing certain

surrounding the

Newman return

events and discussions

of Newman's

to the specific items,

concluded that

the jury in

diversion of

funds.

the district court

the evidence,

overall, was

understanding the course

of events.

Admission of the first two statements clearly did not rise to

the level of plain error.
F.2d

75,

82 (1st

See United States v. Williams, 809

___ _____________
________

Cir. 1986),

cert. denied, 482

_____________

U.S. 906

(1987).
Newman did object to the third statement, and while
its

admission was

erroneous, the

error was harmless.

The

____________________
8.
Although Newman
couches his argument in terms of
improper expert opinion (which he apparently argues is
______
inadmissible under Fed. R. Evid. 702), we construe his
argument as objecting to improper lay opinion (subject to
___
Fed. R. Evid. 701), since the above statements were not
offered as expert testimony.
This does not significantly
alter Newman's argument, however, as ultimate legal opinion
may be equally inadmissible under both Fed. R. Evid. 701 and
702.
See Fed. R. Evid. 704 advisory committee's notes
___
("Rules 701 and 702 . . . afford ample assurances against the
admission of opinions which would merely tell the jury what
result to reach . . . .").
-1414

general concern with statements of ultimate legal opinions is

that juries

may

opinions in

lieu of the legal

Jack

Weinstein

be

& Margaret

704[02] (1994).
risk.
of

and

may

accept

the

discussions

did not

present this

363 (finding

as authoritative or

that

made in passing
expert opinion on

on trial.
erroneous

the course

surrounding Newman's

The statement was

guilt for the charges

See 3
___

Weinstein's Evidence
____________________

third statement

of the funds.

offered

rulings of the judge.

Berger,

events and

was not held out

F.2d

or

second statement, it was made in

describing

Newman's
961

The

Like the

diversion

confused

See, e.g., Hygh,

___ ____ ____
admission of

legal

opinion was harmless error).

C.

Prosecutorial Misconduct
________________________
Newman

allowing

the

argues that

government to

the
ask

district
him

grossly improper

argumentative questions

during

the opening

examination.

points

to

questions.

Newman
In the

two

court erred

of

the

specific

in
and

crosssets

first, the prosecutor asked Newman

of

if he

knew
We

the meaning of the

find these

Newman

does

terms "intent" or

questions to
not

indicate

be

"state of mind."

clearly harmless.

that this

line

of

Indeed,

questioning

unfairly prejudiced him in any way.

The second set of questions is more troublesome:
PROSECUTOR:
NEWMAN:
P:

Do you know what a con man

is, sir?
What a what, I'm sorry?
A con man, C-O-N?
-1515

N:
P:
N:
P:
N:
P:
N:
P:
N:
P:
N:
P:

I've
seen
it
on
television.
Is that the only place?
Yes.
Con
man
stands
for
confidence man, is that
correct?
I don't know that.
You don't know that?
No.
Con
game
stands
for
confidence game, doesn't
it?
If you say so, I don't
know that.
You don't know that?
No.
Are you telling this jury
you don't know what a con

N:

P:
N:
P:
N:
P:

N:

man is?
I
said
I saw
it on
television,
I
didn't
really know what the word
meant in the sense of what
it wasan abbreviation for.
And you don't know what
confidence game is?
I've heard of confidence
games, yes.
But you don't know what
they are?
Well,
purely from
the
superficial point of view.
Well,
superficially
a
confidence game is a game,
is it not, conducted by a
con
man
where through
certain representations or
through
an absence
of
providing
certain
information, the victims
of the con game will do
something or refrain from
doing something that they
would otherwise do without
those misrepresentations,
correct?
Are
you asking
me if
that's the definition of a
con man?
-1616

P:

Is
that
an
definition?

accurate

N:
P:

I don't know.
You were blessed with a
good education, is that
correct, sir?
I was
blessed with an
education,
yes,
God
allowed
me to
get an
education,
a
good
education.

N:

Newman argues that these questions had nothing to do with his

guilt or innocence, but were designed solely to discredit him
by

insinuation.

Newman

argues

that

this

constituted

prosecutorial misconduct and that the district court erred in

allowing it to occur.
powers to
such

reverse his

misconduct.

585-86

(1st Cir.

Newman urges us to use our supervisory

conviction in

order to

deter future

See United States v. Capone, 683 F.2d 582,

___ _____________
______
1982).

We

agree

with Newman

that

prosecutor's questions

were extremely inappropriate.

seems

justifiable purpose for

to have been no

the
There

that line of

questioning, other than, as Newman suggests, to discredit him

by insinuation.

Not

directed at ascertaining

any relevant

fact, the questions should not have been allowed.

Newman did not, however, object to the questioning.
Our review is therefore limited to determining if the judge's
failure
plain

to cut
error.

off the questioning

See United States
___ _____________

(1st Cir. 1993).

We conclude

sua sponte
__________

amounted to

v. Smith, 982 F.2d 681, 682

_____

that they did not.

See United
___ ______

States v. Sgro, 816 F.2d 30, 34 (1st Cir. 1987), cert. denied
______
____
____________

-1717

484 U.S. 1063 (1988).

of

the lengthy

cross-examination; it

characteristic of
judge,

The questioning was only

was isolated

other questioning by the

on several

occasions during

a small part
and not

prosecutor.

the trial,

The

advised the

jury that questions asked by the attorneys were not evidence.

The evidence of

Newman's guilt

circumstances,

the prosecutor's

"so

poison[] the well" that

new trial is required.

was extensive.

In all

improper questions

the verdict was

the

did not

affected and a

See Smith, 982 F.2d at 682; Sgro, 816

___ _____
____

F.2d at 34.
D.

Sentencing Guidelines Errors

____________________________
Newman

applied

the

argues

sentencing

that

the

district

guidelines.

court

wrongly

Specifically,

the

district court allegedly erred: (1) in enhancing the sentence

for "abuse of a private trust"; (2) in enhancing the sentence
for

violation

of a

consent

order;

and

(3)

in

imposing

restitution in the amount of $489,779.

1.

Abuse of Private Trust

______________________
Newman

enhancing

argues

that

the district

his sentence under U.S.S.G.

position of

private trust.9

court

erred in

3B1.3 for abuse of a

The district court

found that

____________________
9.

U.S.S.G.

3B1.3 provides in relevant part:

If the defendant abused a position of

public or private trust . . . in a manner
that
significantly
facilitated
the
commission or concealment of the offense,
increase by two levels.
-1818

the insurance industry is

in

heavily regulated and that persons

control of insurance companies occupy a position of trust

which

obligates

them

to

act in

policyholders and employees.

by diverting
this position

RPLIC's funds
of trust.

enhancement does not

the

interests

of

their

The district court found that,

for his

own use,

Newman argues,

Newman abused

however, that

the

apply since he never legally occupied a

"position of trust."
obtained

Newman argues that he technically never

legal control

of

RPLIC, having

failed to

obtain

approval of the purchase from the DBR as required under Rhode

Island

law.

At

most, Newman argues,

the evidence suggests

an ordinary fraud.

Never having occupied

that he committed

the position legally, Newman argues, he cannot be subject

to

the enhancement.10
While Newman may
position,

he

indisputably had

company and thus in

application note
the
trust

time of
must

never have

de facto
_________

control over

fact occupied a position of trust.

to the

sentencing
have

legally occupied

sentencing guidelines in
provides that:

contributed

in some

the
The

effect at

"[t]he position
substantial

the

way

of
to

____________________
10. The government argues that, although Newman objected to
this enhancement at sentencing, he did not object on this
precise ground and this argument is therefore not properly
preserved on appeal. See United States v. Ortiz, 966 F.2d
___ _____________
_____
707, 717 (1st Cir. 1992), cert. denied, 113 S. Ct. 1005
_____________
(1993). Since it is not entirely clear to us that Newman
failed to object on this ground, we choose instead to dispose
of the claim on its merits.
-1919

facilitating
opportunity
persons."

the

and

not merely

have

provided

an

that could as easily have been afforded to other

U.S.S.G.

position and
company

crime

3B1.3

his effective

comment. (n.1) (1991).

discretionary

enabled him to transfer

Newman's

control over

the funds for

the

his own use.

This is exactly the type of behavior that the enhancement was

aimed at.

It would be perverse to allow the

lack of formal,

legal control, for which Newman was responsible by failing to

file

the

appropriate

consequences

forms,

of his breach of

Innamorati, 996
__________

F.2d 456,

registry police

officer subject

position of

to

insulate

trust.

Cf.
___

him

from

United States v.
_____________

489-90 (1st Cir.),

(former state

to enhancement where

trust facilitated his crime),

the

prior

cert. denied, 114

____________

S. Ct. 409 (1993).

Newman

also

apply to him since

was itself

argues

that the

enhancement

his acquisition of the position

a part of the crime.

dealing with enhancements under

skills", see United States
___ _____________

cannot
of trust

Drawing an analogy to cases

3B1.3 for abuse of "special

v. Young, 932 F.2d

_____

1510, 1513-14

(D.C. Cir. 1991), he argues that the enhancement applies only

to

the

abuse

of

preexisting
___________

position

of

trust,

and

therefore
arguendo

cannot

apply

that this theory

the crimes of which he

of

the

to

fraudulent

him.

However,

even

assuming

has validity, Newman misconstrues

was convicted.

acquisition

of

He was
an

not convicted

insurance

company.

-2020

Rather,

he

was

convicted

of

wire

fraud

and

interstate

transport of stolen property, crimes which were substantially

facilitated

by his

insurance company.

prior

acquisition of

His abuse of the

the behavior targeted by

control over

the

position was precisely

the enhancement.

We find

no error

in the application of this sentence enhancement.

2.

Violation of Consent Order

__________________________
Newman further argues that the district court erred

in

imposing

2F1.1(b)(3)(B)
order.11

two-level
for

Newman

increase

knowing

argues that

when a defendant violates an

under

violation

of

the enhancement

U.S.S.G.
the

consent

applies only

order directed at the defendant

personally

or

defendant.

an

entity

that

is

controlled

by

the

Newman argues that the order was not directed at

him personally
entered

at

nor was he

a party to

into prior to his

further argues,

purchase of the

as above,

RPLIC, since the DBR

the order, as

that he never

company.

it was
Newman

legally controlled

never approved the sale.

Accordingly,

Newman argues, the enhancement could not apply to him.

We
application

find
of

no

error

in

this enhancement.

the

district

court's

The

commentary to

the

____________________
11.

U.S.S.G.

2F1.1(b)(3)(B) provides in relevant part:

If the offense involved . . . violation

of any judicial or administrative order,
injunction, decree or process, increase
by two levels.
-2121

guidelines provides: "If it is established that an entity the

defendant controlled was a party to the prior proceeding, and
the defendant

had knowledge

of the

prior decree

or order,

this

provision applies

specifically-named

even

party in

if

the

defendant was

that prior

2F1.1, comment. (n.5) (1991).

case."

not

U.S.S.G.

Even though not a party to the

order, Newman was subject to the enhancement if he controlled

the company and knew

of the prior order.

As already

Newman had de facto control of the company.

________
aware of the consent

order

was

thus

Moreover, he was

order and could be found

in deliberate contravention of it.

subject

to

said,

to have acted

Newman's violation of the

enhancement

under

2F1.1.(b)(3)(B).12
3.

Restitution
___________
Newman

ordering,

as

restitution

argues
a

that the

condition

in the amount

of

his

court

erred in

supervised

release,

of $489,179 under

Witness Protection Act, 18 U.S.C.

first

district

the Victim and

3663-3664 (1988).

Newman

argues that the court erred when it failed to consider

Newman's

inability

restitution order, a

to pay

restitution.

In fashioning

court must consider "the

amount of the

____________________
12. Newman additionally argues that the enhancement does not
apply since it requires that the defendant have controlled
the entity at the time the order was entered into.
The
__________________________________________
guideline,
however, contains
no
such requirement
of
contemporaneousness, and Newman cites no cases imposing such
a requirement.
-2222

loss sustained by any victim as a result of

the offense, the

financial resources of the defendant, the financial needs and

earning

ability

dependents,

of

and

appropriate."

the

such

defendant

other

18 U.S.C.

factors
3664(a)

and
as

the
the

(1988).

defendant's
court

deems

Newman argues

that nothing in the district court opinion indicates that the

court considered Newman's financial resources.
to

his

presentence

report

which

indicates

Newman points
that

he

is

currently indigent, has a negative net worth, and "has little

current
that

ability

a fine."13

Newman

further argues

he has no reasonable prospect of paying the restitution

in the future.
imposition of
to

to pay

pay

Accordingly,

restitution despite evidence of

evinced a

statutory factors
United States
_____________

lack

of

v. McIlvain,
________

his inability

adequate consideration

and constituted abuse of

1992); United States v.

_____________
1993).

he argues, the district court's

967 F.2d

of

the

discretion.

See
___

1479, 1481 (10th

Ramilo, 986 F.2d 333, 336

______

Cir.

(9th Cir.

____________________
13. The presentence investigation report detailed Newman's
employment history and then stated: that Newman's only asset
is $50,000 in equity in his former residence; that Newman has
$68,000 in outstanding liabilities; that Newman has no
current income; and that Newman's monthly expenses are
currently $1,476.
The report concluded:
"Based upon the
defendant's financial profile, it would appear that he has
little current ability to pay a fine; however, once his legal
matters are resolved, he would be in a position to secure
gainful employment."
-2323

Although

the district

court

consider Newman's

ability to pay the

was

to make

not required

United States v. Savoie,

_____________
______
Rather, it

is sufficient

did

not

restitution, the court

specific findings

of fact.

985 F.2d 612, 618 (1st

if "the

explicitly

record on

See
___

Cir. 1992).

appeal reveals

that the judge made implicit findings or otherwise adequately

evinced

his consideration of those factors."

Id.
___

Here, the

record

is sufficient

considered

the

restitution

amount.

explicitly
which

to

indicate that

requisite
The

adopted the

included

the district

factors

in

district

court

findings in the

information

arriving

at

the

considered

and

presentence report,

about

Newman's

condition, earning ability, and ability to pay.

agree

court

financial
Although

we

that the evidence in the presentence report may not be

able to support a finding that Newman has the ability

to pay

restitution in that amount, the statute does not require such

a finding; it requires only that the

district court consider

________

the defendant's financial resource as a factor in arriving at

the

figure.

See United States v.

___ _____________

(1st Cir. 1993).

also

(imposing
had no

Newman's possible future ability to pay may

be sufficient

United States
______________

Lombardi, 5 F.3d 568, 573

________

v.

to

support a

Brandon,
_______

17

restitution
F.3d

$500,000 restitution order,

current ability to

409,

461

order.

See
___

(1st Cir.)

even though defendant

pay, based on

defendant's future

prospects of employment), cert. denied, 115 S. Ct. 80 (1994);

____________

-2424

Lombardi, 5 F.3d at 573.

________

Here, the presentence report stated

that "once [Newman's] legal matters are resolved, he would be

in a position to secure gainful employment."

Thus, we cannot

say that it was an abuse of discretion for the district court

to impose restitution.
the judgment
also

be

See Lombardi, 5 F.3d at

___ ________

requiring restitution may be

of some

assets .

. . .

the court

to

use if

[the

573 ("While

fruitless, it may

defendant] ever

In all events, the

secures new

statute merely requires

'consider' financial

condition,

factors; there is no requirement that

among

other

the defendant be found

able to pay now.") (citations omitted).

Newman further
court

adequately considered

erred in
that
was

argues that,

fixing the

his ability

amount of

Newman

notes

restitution under the pre-November

is limited only

F.2d 663,
all of

666 (1st

the sums paid

fraudulent scheme.

out by RPLIC
However, the

the court

$489,179, as

that,

in

this

circuit,

1990 version of

3663(a)

conduct for which the

United States v.
_____________

Cir. 1993).14

district

transfers for which he

to loss caused by the

defendant has been convicted.

to pay,

restitution at

amount far exceeds the unlawful

convicted.

even if the

Cronin, 990
______

The $489,179

represents

as a result

of Newman's

indictment charges

Newman

____________________
14. As the offenses occurred in 1989 and early 1990, Newman
is subject to the restitution statute as it stood prior to
amendment in November of 1990 by Pub. L. No. 101-647,
2509,
104 Stat. 4789, 4863 (1990).
-2525

only with the

diversion of $184,300.

Thus, Newman

argues,

the court erred in charging Newman with the entire sum.

We

agree.

Under

the law

in

this circuit,

the

district court should have fixed the amount of restitution at

$184,300, the amount that
See
___

Cronin, 990 F.2d at

______

Newman was convicted of diverting.

666.

The

under

Cronin restitution is limited

______

urges

nonetheless

taken

by a

that we

minority of

government concedes that

to that lesser sum, but

adopt the

alternative position,

circuits, under

which a

court may

award restitution for all of the harm caused by the scheme to

defraud, not simply the specific harm for which the defendant
was convicted.

See,

e.g., United

States v.

Stouffer, 986

___
F.2d

916, 929

(5th

____

______________

Cir.), cert. denied,

_____________

(1993).

In most circumstances,

bound to

adhere to precedent

The

precedent.

en

114 S.

a panel in

Ct.

115

this circuit is

established by

unless departure is mandated

Court.

________

a prior

panel

legislatively or by the Supreme

banc court

alone

can

reconsider circuit

We follow our precedent in Cronin.

______
III.
III.
For the reasons set forth above, we affirm Newman's

conviction.
except:

(1)

We also affirm
the

district court to
the

all aspects of Newman's sentence

restitution

order, which

reduce from $489,179 to

order to pay the

costs of supervised

we

direct

the

$184,300; and (2)

release, which we

-2626

direct

the district

court

to vacate

per the

government's

request, see supra, note 7.

___ _____
So ordered.
__________

-2727