United States v. Reeder ( 1999 )

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    <pre>                  United States Court of Appeals <br>                      For the First Circuit <br>                       ____________________ <br> <br> <br>No. 97-1831 <br> <br>                          UNITED STATES, <br> <br>                            Appellee, <br> <br>                                v. <br> <br>             GEORGE WAYNE REEDER, A/K/A WAYNE REEDER, <br> <br>                      Defendant, Appellant. <br> <br>                       ____________________ <br> <br>           APPEAL FROM THE UNITED STATES DISTRICT COURT <br> <br>                 FOR THE DISTRICT OF RHODE ISLAND <br> <br>       [Hon. Francis J. Boyle, Senior U.S. District Judge] <br> <br>                       ____________________ <br> <br>                              Before <br> <br>                     Torruella, Chief Judge, <br> <br>             Aldrich and Cyr, Senior Circuit Judges. <br> <br>                      _____________________ <br> <br>    Dennis P. Riordan, with whom Dylan L. Schaffer, Riordan & <br>Rosenthal, Law Offices of e.robert (bob) wallach, P.C. and <br>e. robert (bob) wallach, P.C. were on brief, for appellant. <br>    Sangita K. Rao, Attorney, Department of Justice, with whom <br>Margaret E. Curran, United States Attorney, and Craig N. Moore, <br>Assistant United States Attorney, were on brief, for appellee. <br> <br> <br>                       ____________________ <br> <br>                         March 10, 1999 <br>                       ____________________

             TORRUELLA, Chief Judge.  Appellant, George Wayne Reeder, <br>was charged with five counts of wire fraud, in violation of 18 <br>U.S.C.  1343, and five counts of interstate transportation of <br>stolen property, in violation of 18 U.S.C.  2314.  The charges are <br>based on five wire transfers made in June 1988.  The transfers were <br>to pay liens and costs on properties owned by Reeder which had been <br>posted as collateral for the purchase of two insurance companies.  <br>Reeder's first trial in May 1996 resulted in a hung jury.  <br>Following a retrial in October 1996, Reeder was convicted of all <br>ten counts.  The district court sentenced Reeder to forty-six <br>months in prison and ordered him to pay restitution in the amount <br>of $16.5 million.  In all respects, we affirm. <br>                            BACKGROUND <br>          We review the facts of a criminal case on appeal from a <br>conviction in the light most favorable to the verdict.  See United <br>States v. Gonzlez-Maldonado, 115 F.3d 9, 12 (1st Cir. 1997).  Our <br>presentation of the facts draws considerably on our recent opinion <br>in United States v. Christopher, 142 F.3d 46 (1st Cir. 1998). <br>          In mid-1987, Charles Christopher and other investors <br>formed a holding company called Resolute Holdings, Inc. <br>("Resolute") for the purpose of acquiring insurance companies.  <br>Resolute sought to acquire American Universal Insurance Company <br>("American"), an insurer headquartered in Providence, Rhode Island, <br>and Diamond Benefits Life Insurance Company ("Diamond"), an insurer <br>that was licensed in Arizona and had its principal offices in <br>California.  Resolute, however, was a shell company, with no assets <br>except $250,000 in working capital.  In late 1987, Christopher and <br>Resolute enlisted the participation of Reeder, a California <br>developer who had real estate holdings and controlled several <br>companies, including Hill Top Developers ("Hill Top").  Reeder <br>agreed to contribute capital to the insurance companies in exchange <br>for a share in Resolute. <br>          In early February 1988, Reeder negotiated a deal with <br>Resolute.  Under the terms of Reeder's deal with Resolute, in <br>exchange for Reeder's capital contribution to the insurance <br>companies, Reeder received a 60% share of Resolute and about $2 <br>million in yearly profit participation.  Reeder thus acquired a <br>controlling interest in Resolute, although the formal transfer of <br>Resolute shares to Reeder did not become official until June 1988. <br>          In addition to reaching an agreement with the respective <br>sellers of American and Diamond, Resolute had to obtain the <br>approval of state insurance regulatory authorities.  By statute, <br>the Rhode Island Department of Business Regulation ("RIDBR") had to <br>approve the sale of American, and the Departments of Insurance in <br>both Arizona and California had to approve the sale of Diamond.  <br>Resolute submitted an application, known as a Form A statement, to <br>each of those three states.  Each Form A required the disclosure of <br>extensive background and financial information about the <br>individuals involved in the acquisition, their business plan for <br>the company, and the financial means by which the company would be <br>acquired, so that the regulators could assess whether the <br>acquisition would jeopardize the interests of policyholders. <br>          As part of its acquisition plan submitted to the <br>insurance regulators, Resolute agreed to capitalize the insurance <br>companies by contributing Reeder's $50 million promissory note, <br>secured by Heritage Ranch and Indian Palms, to American.  To <br>capitalize Diamond, Resolute agreed to contribute Reeder's $12 <br>million promissory note, secured by Indian Springs. <br>          The acquisition of Diamond had an additional component.  <br>Resolute had negotiated for Diamond to assume a block of annuity <br>policies from the Life Assurance Company of Pennsylvania ("LACOP").  <br>As consideration for its assumption of about $31 million in LACOP's <br>annuity obligations, Diamond was to receive about $29.4 million in <br>cash from LACOP.  Of that sum, $18 million was to be delivered to <br>Diamond at closing, with the remainder to follow several months <br>later. <br>          At the time of Resolute's Form A applications, all of the <br>Reeder properties securing Reeder's promissory notes -- Heritage <br>Ranch, Indian Palms, and Indian Springs -- had extensive liens on <br>them.  On Heritage Ranch and Indian Palms alone, the total was <br>about $17 million.  Those preexisting liens were significant <br>because they meant that American's and Diamond's security interests <br>would be subordinated to other mortgages on the properties.  In <br>addition, pre-existing liens on the collateral decreased the value <br>of the promissory notes, thereby decreasing the amount of capital <br>with which the insurance companies could do business. <br>          In February 1988, Reeder made a deal with Christopher <br>that Resolute would purchase Reeder's liens from the banks so that <br>the closings could go forward.  Reeder and Resolute made repeated <br>representations to the insurance regulators that the pre-existing <br>liens on the Reeder properties would be cleared by closing.  At the <br>same time that these representations were being made, however, <br>Reeder was repeatedly advised that Resolute had no means by which <br>to pay the debt. <br>          In the Form A filings submitted to Rhode Island, Arizona, <br>and California, Resolute represented that all pre-existing liens on <br>the collateral securing its promissory notes to the insurance <br>companies would be discharged at or before closing on Resolute's <br>acquisition. <br>          On March 10, 1988, Arizona approved Resolute's <br>acquisition of Diamond.  Resolute understood that, by Diamond's <br>closing, it still had to provide documentation demonstrating that <br>the pre-existing liens on the property securing the notes to <br>Diamond had been cleared. <br>          The Rhode Island regulators were particularly concerned <br>about the encumbrances on the property securing the promissory note <br>to American.  In late April, RIDBR chief legal counsel Nancy Mayer <br>wrote to Resolute asking whether Reeder's corporations owned <br>Heritage Ranch and Indian Palms "free and clear of all <br>encumbrances." <br>          Reeder later admitted that he knew that the liens would <br>not be paid off by the closings on the insurance companies, despite <br>the representations to the regulators.  Nevertheless, Reeder was <br>still actively involved in the acquisition of the insurance <br>companies.  On May 24, Reeder had a meeting with Christopher and <br>several other Resolute principals to decide who was going to run <br>the insurance companies.  Reeder, soon to be the majority <br>shareholder of Resolute, had the ultimate authority to make that <br>decision.  Against the strong opposition of the other Resolute <br>principals, Reeder placed Christopher in charge of the insurance <br>companies. <br>          The RIDBR scheduled an approval hearing on the American <br>acquisition for May 26.  On May 24, just two days prior to that <br>hearing -- when Reeder knew that the American closing was imminent <br>-- Reeder signed a number of documents relating to the purchase of <br>American, including a capitalization agreement that was submitted <br>to the RIDBR as part of the Form A application.  In the <br>capitalization agreement, Reeder represented that, "[t]here are no <br>actions, suits or proceedings, pending or threatened, to the <br>current actual knowledge of the Makers, effecting [sic] the $50 <br>Million Note or any portion of the property, at law or in equity or <br>before or by any federal, state, municipal or other governmental <br>department, commission, [or] board."  This statement was not true.  <br>Reeder knew that suits were threatened against both Heritage Ranch <br>and Indian Palms, the two properties securing the $50 million <br>promissory note to American. <br>          At the time Reeder signed the capitalization agreement, <br>Reeder had a $10 million note outstanding with Continental Bank, <br>secured by Heritage Ranch.  Reeder had missed a $2.3 million <br>amortization payment due in October 1987.  In a meeting with <br>Continental in December 1987, Reeder told the bank that he did not <br>have the cash to meet his obligations under the loan.  On March 11, <br>1988, Continental notified Reeder that he was in default and that <br>the bank might institute foreclosure proceedings.  On April 29, <br>Continental demanded full payment on the loan, and on June 3, 1988, <br>Continental filed for foreclosure on Heritage Ranch. <br>          Reeder was also delinquent on several loans he had <br>outstanding with Home Federal Bank ("Home Fed").  Reeder owed Home <br>Fed more than $7 million for loans that were secured by both <br>Heritage Ranch and Indian Palms, and he had not made payments on <br>certain loans since June 1987.  On May 12, Home Fed demanded <br>payment in full on one of the loans secured by Heritage Ranch. <br>          On May 26, 1988, Rhode Island held the approval hearing <br>on the proposed acquisition of American by Resolute.  Resolute <br>maintained its position that it would pay off the pre-existing <br>liens on the Reeder properties securing the promissory note by <br>closing.  Indeed, at some point that day, although not at the <br>formal hearing, RIDBR Chief Counsel Mayer was told that the pre- <br>existing liens on the Reeder properties had been cleared. <br>          On May 27, 1988, the RIDBR issued a conditional order <br>approving Resolute's acquisition of American.  Although the <br>transaction closed that day, the order made clear that the transfer <br>of ownership would not become final until Resolute submitted final <br>title insurance policies for Heritage Ranch and Indian Palms "to be <br>effective as of the closing date which indicat[e]" that "all <br>mortgages, deeds of trust and the like have been paid in full and <br>discharged."  On June 7, 1988, California issued an order approving <br>Resolute's acquisition of Diamond, which Arizona had already <br>approved on March 10.  The extensive liens on Heritage Ranch, <br>Indian Palms, and Indian Springs were not paid off by May 27, when <br>the American purchase closed, nor by June 14, when the Diamond <br>purchase closed. <br>          On May 28, 1988, Christopher told Reeder that the <br>regulators had approved the American acquisition.  A few days <br>later, Reeder and Christopher had a private meeting to discuss the <br>acquisitions at Reeder's office in California.  Christopher <br>confirmed that the liens on Reeder's properties had not yet been <br>discharged.  Reeder became angry when Christopher informed him that <br>the Rhode Island regulators had amended the release clause <br>provision of Reeder's promissory note to American. <br>          The release clause governed the rate at which Reeder had <br>to pay down the balance on the $50 million promissory note to <br>American if he sold portions of the properties securing the note.  <br>Under the original provision, Reeder was required to pay American <br>only 110% of the appraised value of each lot sold, even though the <br>lots could be sold for a price considerably higher than the <br>appraised value.  Under the amended release clause, all monies <br>received from the sales of portions of the properties securing the <br>note had to be applied to reducing the principal balance of the <br>note.  Reeder could not receive any monies from the sale of the <br>lots until the $50 million note had been paid off in its entirety.  <br>Nor could Reeder take money from the insurance companies for <br>development costs associated with Heritage Ranch or Indian Palms.  <br>Reeder found the amended release clause to be "untenable," because <br>it deprived him of the steady cash flow he had expected from the <br>sale of lots at Heritage Ranch and Indian Palms. <br>          Reeder arranged with Christopher, in an oral agreement <br>with no documentation, for an $18 million "loan" to Hill Top.  The <br>"loan" was to be secured by Windbrook Country Club, yet another of <br>Reeder's properties, which was worth only $3 million.  Although <br>Reeder later said that, he expected that Resolute would be the <br>entity loaning Hill Top funds under the Windbrook "loan," Reeder <br>knew that Resolute had no assets except the insurance companies.  <br>Reeder also knew that, upon Resolute's acquisition of Diamond, <br>Diamond was to receive the  LACOP annuity money, the first <br>installment of which was in the amount of $18 million -- the same <br>amount as the Windbrook loan. <br>          On June 13, Reeder signed the documents for the Windbrook <br>loan.  Under the terms of the Windbrook loan, Diamond -- not <br>Resolute -- agreed to lend Hill Top up to $18 million to pay off <br>liens on Heritage Ranch, Indian Palms, and Windbrook Country Club.  <br>The documents were dated June 15, 1988 -- the day after the <br>expected Diamond closing. <br>          The Windbrook loan violated state regulatory <br>requirements.  Under Arizona insurance regulations, Diamond could <br>not advance loan proceeds in an amount greater than the value of <br>the collateral backing the loan.  In addition, it could not invest <br>more than 10% of its assets in a single investment.   No waiver was <br>requested or received for the $18 million Windbrook loan.  In <br>addition, the insurance regulators required that the money to pay <br>off the liens come from an external source. <br>          After Reeder's private meeting with Christopher about the <br>Windbrook loan, Reeder began settlement negotiations with <br>Continental and Home Fed over his outstanding loan obligations.  On <br>June 7, Reeder reached a settlement with Continental for a <br>"discounted note payoff" in which Reeder agreed to pay off his $10 <br>million note to Continental for about $8.7 million.  Reeder <br>arranged for the payment to be due on June 16 -- two days after the <br>anticipated Diamond closing. <br>          On June 10, Resolute shareholders met in Dallas, Texas <br>for their first meeting.  One of Reeder's attorneys, Arthur Karma <br>attended the meeting as a proxy for Reeder, the controlling <br>shareholder.  Pursuant to Reeder's instructions, Karma voted to <br>make Christopher a director of both insurance companies, as well as <br>the new President of American and the CEO of Diamond.  In addition, <br>Reeder had twice instructed Karma to make certain that Christopher <br>paid off the Continental loan, which Reeder had settled a few days <br>earlier.  Karma related Reeder's message to Christopher, and <br>Christopher said the liens would be paid in the next few days. <br>          Unbeknownst to Colleen Comey, the President of Diamond, <br>on June 13, the day before the closing on Diamond, Christopher <br>directed Keith Bell, an employee of American, to open an account in <br>Diamond's name at Fleet Bank in Providence, Rhode Island.  On <br>June 15, the day after Diamond's closing, Christopher directed Bell <br>to have LACOP transfer the first installment of $18 million owed to <br>Diamond to the Fleet Bank account. <br>          Once the $18 million was deposited in the Fleet Bank <br>account, Christopher directed Bell to make a series of wire <br>disbursements.  Five of those transfers were pursuant to Reeder's <br>directions and for Reeder's benefit. <br>          On June 16, Reeder caused $8.7 million to be sent from <br>the Diamond account to Continental Bank in Chicago, per the <br>settlement he had reached with the bank on June 7.  This payment <br>extinguished the most substantial pre-existing lien on Heritage <br>Ranch. <br>          Also on June 16, 1988, Reeder caused $465,000 to be <br>transferred to an account of the Burrillville Land Company in Santa <br>Monica, California.  Reeder had no interest in that company or its <br>accounts.  Burrillville, however, was managed by Carlsberg <br>Management, which was closely associated with Reeder's businesses.  <br>Then, on June 17, through written instructions, Reeder had the <br>account manager, Theresa DeLeon, allocate the $465,000 into three <br>separate checks for $100,000, $315,000, and $50,000, all payable to <br>Hill Top. <br>          On June 23, 1988, Reeder caused $825,000 to be <br>transferred to the client trust account of James Patison, the <br>lawyer who had negotiated the Home Fed settlement for Reeder.  <br>Reeder stated that this $825,000 transfer, which he discussed with <br>Christopher at their private meeting in early June, involved <br>payments to Reeder of funds he felt he was owed by Home Fed in <br>connection with two joint ventures Home Fed and Reeder had engaged <br>in:  Whimpy Gentry and Rancho 187.  Reeder's settlement agreement <br>with Home Fed, however, stated that it resolved all disputes <br>between the parties, including those two matters.  Reeder admitted <br>that the insurance companies were wholly unrelated to those two <br>projects.  Reeder also admitted that the $825,000 transfer <br>represented a portion of the discount he was able to negotiate in <br>his settlement with Home Fed. <br>          On June 23, 1988, Reeder caused $459,000 to be <br>transferred to Carlsberg Management.  As with the earlier transfer <br>to Burrillville, Reeder gave DeLeon written instructions on how to <br>disburse the funds.  The same day the funds were received, DeLeon <br>cut two checks: one for $384,000 payable to Hill Top, and one for <br>$75,000 payable to a Reeder intercorporate account.  Reeder stated <br>that this wire transfer, as well as the prior June 16 transfer of <br>$465,000, represented the approximately $1 million discount he had <br>negotiated on his outstanding debt with Continental Bank.  Reeder <br>also admitted that he had made an agreement with Christopher at <br>their early June meeting to take these amounts, as compensation for <br>the amended release clause, for development costs at Heritage   <br>Ranch -- a use that was prohibited by the regulators. <br>          Reeder had signed the settlement agreement with Home Fed <br>on June 22, which required him to pay Home Fed approximately $5.9 <br>million.  The Diamond account at Fleet Bank, however, had been <br>nearly exhausted by this time and did not have sufficient funds to <br>cover that amount.  Therefore, $3 million was transferred to <br>Diamond's Fleet account from an American account without any <br>justification or supporting documentation. <br>          Then, on June 24, 1988, Reeder caused approximately $5.9 <br>million to be transferred from the Fleet account to Home Fed in <br>payment of Reeder's obligations to that bank. <br>          The total amount taken from the insurance companies for <br>Reeder's benefit was approximately $16.5 million, consisting of <br>$13.5 million taken from Diamond and $3 million taken from <br>American. <br>          By August 1988, Colleen Comey, Diamond's President, had <br>become concerned about the whereabouts of the LACOP money.  At that <br>point, as annuity holders attempted to cash in their policies, <br>Diamond was writing checks that were returned for insufficient <br>funds.  When Comey began inquiring whether the LACOP money had been <br>received, she learned that it was gone.  In trying to determine how <br>the money had been spent, she was unable to reconstruct the <br>transactions.  Finally, after failing to receive an adequate <br>explanation from Christopher, Comey called Reeder to report her <br>concerns about the missing $18 million and make further inquiries.  <br>Reeder expressed no surprise at all when Comey informed him of the <br>missing $18 million, but he gave her no information about the <br>missing money, simply telling her to speak to Christopher or <br>William Geary, another Resolute principal.  On September 22, 1988, <br>concerned that the second installment of $10 million soon due from <br>LACOP would likewise disappear, Comey froze the Fleet account and <br>alerted regulators. The next day she was fired. <br>                            DISCUSSION <br>I.  Sufficiency of the Evidence <br>          When a defendant challenges his criminal conviction, <br>claiming that the government failed to present sufficient evidence <br>to prove the defendant guilty of the charged crime, the court must <br>"view the evidence, together with all reasonable inferences that <br>may be drawn therefrom, in the light most favorable to the <br>government," United States v. Campa, 679 F.2d 1006, 1010 (1st Cir. <br>1982), and while so doing, must ask whether "a rational trier of <br>facts could have found guilt beyond a reasonable doubt." United <br>States v. Ingraham, 832 F.2d 229, 239 (1st Cir. 1987), cert. <br>denied, 486 U.S. 1009 (1988).  The court must apply this standard <br>both to direct and to circumstantial evidence;  "[c]ircumstantial <br>evidence is intrinsically no different from testimonial evidence, <br>and is entitled to similar weight."  United States v. Van Helden, <br>920 F.2d 99, 101 (1st Cir. 1990) (citations omitted).  Thus, the <br>government may use circumstantial evidence to prove its case.  <br>However, the total evidence, with all reasonable inferences made in <br>the light most favorable to the government, must be such that a <br>rational trier of fact could have found guilt beyond a reasonable <br>doubt.  See United States v. Mena, 933 F.2d 19, 23 (1st Cir. 1991).  <br>Furthermore, the government need not present evidence that <br>precludes every reasonable hypothesis inconsistent with guilt in <br>order to sustain a conviction. See United States v. <br>Guerrero-Guerrero, 776 F.2d 1071, 1075 (1st Cir. 1985), cert. <br>denied, 475 U.S. 1029 (1986).  Rather, the jury is at liberty to <br>select freely among a variety of reasonable alternative <br>constructions of the evidence.  See United States v. Smith, 680 <br>F.2d 255, 259 (1st Cir. 1982), cert. denied, 459 U.S. 1110 (1983). <br>          A.  Wire Fraud <br>          Reeder argues that his wire fraud convictions cannot <br>stand because there is no evidence in the record that he knew that <br>Christopher's assurances concerning the liens were false, much less <br>that he shared Christopher's intent to deceive and defraud the <br>regulators.  See Defendant's Br. at 21.  We find his argument <br>unpersuasive. <br>          To prove wire fraud, the government must establish beyond <br>a reasonable doubt: (1) the defendant's knowing and willing <br>participation in a scheme or artifice to defraud with the specific <br>intent to defraud; and (2) the use of interstate wire <br>communications in furtherance of the scheme.  See United States v. <br>Sawyer, 85 F.3d 713, 723 (1st Cir. 1996).   <br>          Reeder challenges only the intent element.  He concedes <br>that Resolute and Christopher made numerous representations to the <br>regulators that the liens on Reeder's properties would be paid off <br>by closing.  He also admits that Christopher made these <br>misrepresentations with the intent to deceive as part of a scheme <br>to defraud the insurance regulators.  Reeder's argument is that the <br>evidence does not demonstrate that he knew those representations to <br>be false because he allegedly believed that Resolute would pay off <br>the liens. <br>          At trial, Reeder testified that he did not expect that <br>the liens would be paid off by closing, and that he did not think <br>that Resolute would pay off the liens before closing.  Reeder's own <br>testimony provided evidence that, despite the repeated <br>representations made to the insurance regulators that the pre- <br>existing liens on his properties would be cleared by closing, <br>Reeder knew that the liens would not be discharged at that time. <br>          Furthermore, Reeder was the de facto majority shareholder <br>of Resolute.  He admitted that the huge amount of money he was <br>fronting for the insurance companies was too much to be put at risk <br>without control of Resolute.  Although Reeder did not formally <br>receive his shares in Resolute until June 1988, the jury was <br>entitled to infer that he was the one making decisions for Resolute <br>before that time, as he was on May 24 when he placed Christopher in <br>charge of the insurance companies.  The evidence further showed <br>that Reeder kept in close and direct contact with Christopher <br>throughout the acquisition process, and Jarrell Ormand, Resolute's <br>lawyer in Texas, communicated with Reeder in responding to <br>inquiries from the RIDBR.  From this evidence, the jury could infer <br>that Reeder was intimately involved with Resolute's effort to <br>acquire the insurance companies and responsible for the <br>representations made to the regulators on behalf of Resolute that <br>the liens on his properties would be cleared by closing. <br>          The evidence also demonstrated that Reeder knew that <br>Resolute had no means by which to pay off the liens.  In letters on <br>March 11, May 13, and May 20, Karma and his law partner, David <br>Bence, informed Reeder of their increasing concern over Resolute's <br>failure to make any arrangements to discharge the debt.  Reeder, <br>however, ignored their pleas for a meeting, and instead made his <br>own false representation to the regulators that no suits were <br>threatened against the properties backing his promissory note to <br>American, even though two banks were about to initiate foreclosure <br>proceedings.  From this sequence of events, the jury could <br>reasonably infer that Reeder was aware of the fact that the liens <br>on his properties would not be paid off by closing, and that he <br>intended to deceive the regulators when he and Resolute made the <br>repeated representations that his properties would be unencumbered <br>upon Resolute's acquisition of the insurance companies.  See United <br>States v. Cassiere, 4 F.3d 1006, 1024 (1st Cir. 1993) ("Guilty <br>knowledge may be inferred where instances of fraud are repeatedly <br>brought to a defendant's attention without prompting alteration of <br>his facilitative conduct.") (quotation omitted). <br>          In support of his assertion that he believed that <br>Resolute would discharge his liens, Reeder relies primarily on <br>statements made by him, his corporations, or Christopher and his <br>agents that Resolute would pay off the liens.  The simple fact that <br>those statements were made, however, does not prove that Reeder <br>believed them.  Moreover, the jury was entitled not only to <br>disbelieve Reeder's statements, but also "[to] legitimately . . . <br>presume[] that the fabrication[s] w[ere] all the more proof of <br>[his] guilt."  United States v. Jimnez-Prez, 869 F.2d 9, 10 (1st. <br>Cir. 1989). <br>          Reeder's participation in making misrepresentations to <br>the regulators, his use of the wires to divert $16.5 million of the <br>insurance companies' funds, and his fraudulent efforts to conceal <br>his actions overwhelmingly establish his intentional participation <br>in the scheme to defraud.  Based on this evidence, a rational trier <br>of fact could easily have found guilt beyond a reasonable doubt. <br>          B.  Interstate Transportation of Stolen Property ("ITSP") <br>          Reeder contends that his ITSP convictions must be <br>overturned because the government failed to prove that he knew that <br>the property was taken by fraud.  We disagree. <br>          To convict on the five ITSP counts, the jury had to find <br>that Reeder transported in interstate commerce $5,000 or more that <br>he knew to have been stolen, converted, or taken by fraud.  SeeDowling v. United States, 473 U.S. 207, 214 (1985) (stating the <br>elements of 18 U.S.C.  2314).  Reeder agrees that Christopher <br>engaged in a scheme to defraud, and, as explained above, the <br>evidence demonstrates that, after the insurance companies were <br>acquired, Reeder entered into an agreement with Christopher to <br>divert $16.5 million of the insurance companies' funds for his own <br>purposes and structured the transactions to conceal his activities.  <br>Based on that evidence alone, the jury could reasonably infer that <br>Reeder knew that the money he transported had been taken by fraud. <br>II.  Government's Closing Argument <br>          Reeder argues that his convictions must be reversed <br>because the government's closing argument misled the jury into <br>finding guilt based on conduct not amounting to fraud.  At trial, <br>Reeder did not object to any portion of the prosecutor's closing <br>argument.  Therefore, his claim is reviewed only for plain error.  <br>See United States v. Young, 470 U.S. 1, 6, 14-15 (1985). <br>          Reeder contends that the prosecutor argued that the jury <br>could convict Reeder of wire fraud based: (1) on his admission that <br>he took $1 million from the insurance companies in response to the <br>amended release clause; (2) on his violation of a state regulation <br>by failing to secure a waiver from Arizona for the Windbrook loan; <br>or (3) on his failure to comply with the Windbrook contract terms <br>by taking money for purposes other than the discharge of liens.  <br>Reeder contends that such proof would be insufficient to sustain <br>his convictions because it would not constitute "a fraud in <br>obtaining the property."  Defendant's Br. at 30. <br>          Contrary to Reeder's assertions, the government did not <br>argue to the jury that it could convict Reeder of fraud if it found <br>simply that he had taken $1 million from the insurance companies, <br>violated a state regulation, or disregarded the loan terms. <br>          We consider the prosecutor's comments within the <br>framework and context of the entire case. See United States v.Morales-Cartagena, 987 F.2d 849, 854 (1st Cir. 1993).  Evidence at <br>trial demonstrated that Reeder: (1) admitted that he took $1 <br>million from the insurance companies; (2) failed to disclose or <br>secure a waiver from the state regulators for the Windbrook "loan" <br>despite his knowledge that insurance company transactions were <br>subject to strict oversight; and (3) took money from the insurance <br>companies for purposes unrelated to the business of the insurance <br>companies and not covered by the terms of the Windbrook "loan." <br>          In his closing argument, the prosecutor argued that this <br>evidence, in the context of and in combination with other evidence, <br>demonstrated Reeder's knowing participation in the fraudulent <br>diversion of insurance company assets and his intent to defraud.  <br>See, e.g., United States v. Woodward, 149 F.3d 46, 62 (1st Cir. <br>1998) (violation of state law probative of intent to deceive in <br>mail fraud case); see id. at 57 ("The jury was entitled to infer <br>[defendant's] intent from the circumstances surrounding his <br>actions, from indirect, as opposed to direct, evidence.") <br>(quotation omitted); see also United States v. Tajeddini, 996 F.2d <br>1278, 1282 (1st Cir. 1993) ("[T]he prosecutor is entitled, in <br>closing, to ask the jury to draw warrantable inferences from the <br>evidence admitted during trial."). <br>          There is no reason to believe that the jury erroneously <br>concluded that it could convict simply because Reeder violated a <br>regulatory order or breached a contract.  Defense counsel <br>repeatedly warned the jury that Reeder was "not on trial for <br>violating a conditional order" or "for violation of a state <br>statute."  They further informed the jury that "[t]his is not a <br>breach of contract case," and that the jury had to decide whether <br>Reeder "knowingly and willfully obtain[ed] the money through deceit <br>or fraud."  Furthermore, the trial court's instructions cured any <br>alleged error in the closing argument.  The court correctly <br>instructed the jury on the elements of the offense for both the <br>wire fraud and the ITSP counts.  The court specifically instructed <br>the jury that "[t]he violation of an insurance regulatory order or <br>state law is not itself a federal crime." <br>III.  Variance <br>          Reeder argues that the alleged theories of conviction <br>offered by the prosecution in its closing argument varied from the <br>theory of conviction alleged in the indictment.  Specifically, he <br>contends that the government urged the jury to convict on what he <br>terms "non-fraud" theories: (1) the admission that Reeder took $1 <br>million; (2) the failure to get a waiver for the Windbrook loan; <br>and (3) the failure to comply with the contract terms.  He urges <br>this Court to reverse because these "non-fraud" theories of <br>conviction varied from the theory of fraud charged in the <br>indictment.  Reeder argues that his rights were substantially <br>affected by the alleged variance because the jury was allowed to <br>convict on a theory insufficient to constitute the federal crime of <br>wire fraud.  Reeder's variance argument is simply a restatement of <br>his claim that the jury may have convicted him on a legally <br>insufficient theory based on the government's closing argument.  <br>Couched in different terms, it is still unconvincing. <br>          A variance occurs when the proof at trial paints a <br>portrait that differs materially from the scenario detailed in the <br>indictment.  See United States v. Vavlitis, 9 F.3d 206, 210 (1st <br>Cir. 1993).  A variance requires reversal of a conviction only if <br>it is both material and prejudicial, for example, if the variance <br>works a substantial interference with the defendant's right to be <br>informed of the charges.  See Vavlitis, 9 F.3d at 210.  When, as <br>here, the indictment gives a defendant particular notice of the <br>events charged, and the proof at trial centers on those events, <br>minor differences in the details of the facts charged, as <br>contrasted to those proved, are unlikely to be either material or <br>prejudicial. <br>          There was no variance between the evidence presented at <br>trial and the indictment.  The proof at trial is necessarily more <br>detailed than the facts alleged in the indictment, which is simply <br>a "plain, concise and definite written statement of the essential <br>facts constituting the offense charged."  Fed. R. Crim. P. 7(c)(1).  <br>The indictment charged a scheme to defraud encompassing the <br>acquisition of insurance companies and the diversion of the <br>companies' assets.  Paragraphs 28 to 44 of the Redacted Indictment <br>discuss the fraudulent activity undertaken after the acquisition of <br>the insurance companies, and specifically refer to the Windbrook <br>loan. See RI  36-38.  To the extent that: (1) the admission <br>concerning taking $1 million because of the amended release clause; <br>(2) the failure to secure a waiver for the Windbrook loan; and (3) <br>the failure to comply with the Windbrook loan terms were not <br>specifically detailed in the indictment, these facts did not <br>materially vary the nature of the charged fraudulent scheme. <br>          No prejudice resulted because Reeder was not deprived "of <br>sufficiently specific information to prepare a defense, unfairly <br>surprise[d] . . . at trial, or isolate[d] . . . from the <br>constitutional protection against double jeopardy."  United States <br>v. Fermn Castillo, 829 F.2d 1194, 1197 (1st Cir. 1987). <br>IV.  Unanimity <br>          Reeder argues that the district court erred in failing to <br>instruct the jurors that they had to unanimously agree on "the <br>theories and acts of fraud" underlying their guilty verdict.  We <br>find no such error. <br>          In Schad v. Arizona, the Supreme Court held that, in <br>returning general verdicts in cases in which the government has <br>alleged in a single count that the defendant committed the offense <br>by one or more specified means, jurors are not required to agree <br>upon a single means of commission.  See 501 U.S. 624, 631 (1991) <br>(plurality opinion); id. at 649 (Scalia, J., concurring in part and <br>concurring in the judgment) (explaining that, for example, where "a <br>woman's charred body has been found in a house, and there is ample <br>evidence that the defendant set out to kill her," the jury does not <br>have to agree on whether defendant "strangled victim to death," or <br>"left her unconscious and set the fire to kill her").  While a jury <br>must agree on all of the elements of an offense, it need not agree <br>on the means by which all the elements were accomplished.  <br>          Here, the jury was instructed that one of the elements of <br>the wire fraud counts was the defendant's knowing participation in <br>a scheme to defraud.  The government alleged and proved a single <br>scheme to defraud.  While the jurors had to unanimously agree that <br>Reeder knowingly participated in a scheme to defraud -- an element <br>of the crime -- they did not, contrary to Reeder's contention, have <br>to unanimously agree on each piece of evidence offered to prove <br>Reeder's participation. <br>V.  Attorney-Client Privilege <br>          At trial, Reeder objected to the district court's <br>admission of Karma's testimony about his 1991 conversation with <br>Reeder, during which Reeder asked for Karma's help in covering up <br>his use of insurance company money.  The district court found that <br>Karma's testimony was not protected by the attorney-client <br>privilege on two bases.  First, the court determined that the <br>conversation was admissible under the crime-fraud exception to the <br>attorney-client privilege.  Second, the court determined that <br>Reeder had waived the attorney-client privilege by failing to <br>object to Karma's extensive prior testimony about his <br>communications with Reeder relating to the insurance company <br>transactions.  We agree with the district court that Reeder's  <br>conversation with Karma was admissible under the crime-fraud <br>exception. <br>          The importance and sanctity of the attorney-client <br>privilege is well established.  See  Upjohn v. United States, 449 <br>U.S. 383 (1981).  Because it "'withhold[s] relevant information <br>from the factfinder,'" United States v. Zolin, 491 U.S. 554, 562 <br>(1989) (citation omitted), the "'attorney-client privilege does not <br>apply where the client consults an attorney to further a crime or <br>fraud.'"  Motley v. Marathon Oil Co., 71 F.3d 1547, 1551 (10th Cir. <br>1995) (quoting In re Grand Jury Proceedings (Company X), 857 F.2d <br>710, 712 (10th Cir. 1988)).  "It is the purpose of the crime-fraud <br>exception to the attorney-client privilege to assure that the 'seal <br>of secrecy,'" between lawyer and client does not extend to <br>communications 'made for the purpose of getting advice for the <br>commission of a fraud' or crime."  Zolin, 491 U.S. at 563 <br>(citations omitted).  "Thus, the attorney-client privilege is <br>forfeited inter alia where the client sought the services of the <br>lawyer to enable or aid the client to commit what the client knew <br>or reasonably should have known to be a crime of fraud."  United <br>States v. Rakes, 136 F.3d 1, 4 (1st Cir. 1998) (emphasis added). <br>          In order to successfully invoke the crime-fraud <br>exception, the government must make a prima facie showing that the <br>attorney's assistance was sought in furtherance of a crime or <br>fraud.  See In re Grand Jury Subpoenas ("Subpoenas"), 144 F.3d 653, <br>660 (10th Cir. 1998); United States v. Jara, 973 F.2d 746, 748 (9th <br>Cir. 1992).  A district court's determination to admit evidence <br>under the crime-fraud exception is reviewed for abuse of <br>discretion. See Subpoenas, 144 F.3d at 659; In re Grand Jury <br>Proceedings, 102 F.3d 748, 751 (4th Cir. 1996); In re Sealed Case, <br>754 F.2d 395, 399-400 (D.C. Cir. 1985).  The facts underlying the <br>district court's decision on the crime-fraud exception are reviewed <br>for clear error.  See United States v. Jacobs, 117 F.3d 82, 87 (2d <br>Cir. 1997). <br>          The record demonstrates that, in their 1991 conversation, <br>Reeder told Karma that he had "a problem" with some of the <br>insurance company transactions.  Reeder then admitted that he had <br>taken more than $1 million from the insurance companies, and handed <br>Karma a document indicating that more than $1 million from the <br>insurance companies had not been properly applied.  Thereafter, <br>Reeder stated that he could explain how he had used the money.  <br>After reviewing the transactions, Karma said, "This won't work.  <br>The monies that were sent by American Universal were for work that <br>had been performed for liens that were already on the property."  <br>Reeder responded, "No problem. 'I can get my friends to write new <br>invoices and we'll pay them as of 1988.'"  Karma told Reeder that <br>to do so would be asking 20-30 people to commit fraud, that he did <br>not want any part of it, and he advised Reeder not to do it.  <br>Reeder then stated, "I thought maybe you could come up with some <br>idea."  Karma once again refused to help Reeder cover up the <br>transactions,  responding, "Wayne, it's a crime.  I don't want <br>anything to do with it.  Don't ever discuss it with me again."  The <br>district court's determination that the government made a prima <br>facie showing that Reeder solicited Karma's assistance to cover up <br>his criminal conduct was not an abuse of discretion.  Reeder sought <br>Karma's services to enable him to commit what he knew or reasonably <br>should have known to be fraud.  See Rakes, 136 F.3d at 4. <br>          Reeder argues that the crime-fraud exception does not <br>apply because he was simply asking Karma's advice about whether he <br>could solve a problem in a particular manner.  The record belies <br>Reeder's assertion.  Reeder did not merely ask Karma whether <br>backdating invoices would be illegal, which would be equivalent to <br>Reeder's hypothetical about "the head of a corporation asking his <br>counsel if he can condition a campaign contribution to a politician <br>on the politician's promise to support legislation."  Here, Reeder <br>twice asked for Karma's help in a cover-up of Reeder's fraudulent <br>diversion of the insurance companies' money.  See Subpoenas, 144 <br>F.3d at 660 ("The exception does not apply if the assistance is <br>sought only to disclose past wrongdoing, . . . but it does apply if <br>the assistance was used to cover up and perpetuate the crime or <br>fraud.").  Therefore, the district court did not abuse its <br>discretion in admitting Karma's testimony under the crime-fraud <br>exception. <br>          Because we hold that the conversation was admissible <br>under the crime-fraud exception, there is no need to reach the <br>waiver issue. <br>VI.  Evidentiary Rulings <br>          Reeder challenges several of the district court's <br>evidentiary rulings. We review a district court's rulings on <br>admissibility and relevance for abuse of discretion.  See Cassiere, <br>4 F.3d at 1018.  Under Fed. R. Evid. 403, relevant evidence may be <br>excluded if its probative value is substantially outweighed by the <br>danger of prejudice, confusion of the issues, or misleading the <br>jury.  This Court grants the trial court "especially wide latitude" <br>when Rule 403 balancing is the subject of review.  See United <br>States v. Rivera-Gmez, 67 F.3d 993, 996 (1st Cir. 1995).  "[O]nly <br>rarely -- and in extraordinary circumstances -- will we, from the <br>vista of a cold appellate record, reverse a district court's on- <br>the-spot judgment concerning the relative weighing of probative <br>value and unfair effect."  Williams v. Drake, 146 F.3d 44, 47 (1st <br>Cir. 1998) (quotation omitted). <br>          First, Reeder argues that the district court erred in <br>excluding testimony from Karma and Reeder that the Windbrook loan <br>was restructured to substitute Resolute for Diamond as the payor.  <br>The crime was completed when Reeder made the wire transfers in June <br>1988, thereby diverting the insurance companies' funds for his own <br>purposes.  Evidence of elaborate accounting transactions undertaken <br>after June 1988 to restructure the Windbrook loan are irrelevant to <br>Reeder's state of mind at the time that he misappropriated the <br>$16.5 million.  In any event, any error in the exclusion was <br>harmless because the district court allowed both Reeder and Ormand <br>to testify that the Windbrook loan was rebooked as a loan from <br>Resolute.  See United States v. Brown, 938 F.2d 1482, 1488 (1st <br>Cir. 1991) (any error in the exclusion of evidence is rendered <br>harmless where "defendant's theory . . . was manifested to the jury <br>through testimony which was allowed"). <br>          Second, Reeder challenges the district court's exclusion <br>of notes taken by Bence, Karma's law partner, during a June 13, <br>1988, conversation with Ormand, to the effect that Ormand did not <br>think that the Windbrook loan violated state insurance laws.  This <br>evidence was inadmissible because Reeder failed to lay a proper <br>evidentiary foundation.  Reeder sought to introduce this exhibit <br>through Karma.  Karma testified, however, that he did not know what <br>Bence discussed with Ormand that day.  Reeder thus sought to <br>introduce "Mr. Ormand's opinion as expressed to Mr. Bence as <br>recorded by Mr. Bence on a paper that's in this witness's [Karma's] <br>file," about a conversation that Karma had already testified he <br>knew nothing about.  The district court suggested that the document <br>might be admissible through Ormand, that defense counsel could <br>offer it through Bence, or that Reeder could testify about it.  <br>Reeder did not pursue any of these avenues.  Consequently, the <br>district court did not abuse its discretion in determining that <br>this document could not be introduced through Karma. <br>          Third, Reeder argues that the district court erroneously <br>excluded evidence demonstrating that various people knew about the <br>Windbrook loan.  Reeder sought to introduce through Durfee, <br>American's Chief Financial Officer, a letter that Durfee wrote to <br>Ormand referring to the documents that were required in order to <br>make certain booking entries at American regarding the <br>restructuring of the Windbrook loan.  The government objected based <br>on relevance.  The court queried where the original documents <br>supporting the book entries referred to in the letter were, and <br>defense counsel stated that he did not have them.  The court then <br>excluded the exhibit on the basis that this evidence was "secondary <br>at best" and explained, "I think we need something a little <br>better."  The court also stated, "Certainly, you can ask this <br>witness if he has a recollection if this was recorded on the <br>books."  Defense counsel failed to ask that question.  The district <br>court did not abuse its discretion in ruling that Reeder had failed <br>to lay a proper foundation for the admissibility of the Durfee <br>letter by failing to produce the documents that would support the <br>accounting entries discussed in the letter. <br>          Later, Reeder sought testimony from Durfee as to whether <br>the Windbrook loan was restructured so that it became a receivable <br>of Resolute rather than Diamond.  As discussed above, the district <br>court did not exceed its discretion in determining that the <br>relevance of that testimony was substantially outweighed by the <br>confusion it would bring to the case.  Moreover, Durfee was allowed <br>to testify that he was aware of the Windbrook loan and of the wire <br>transfers from Diamond's account at Fleet Bank, thereby supporting <br>Reeder's defense that many people were aware of the loan. <br>          On re-cross examination of Ormand, Reeder sought to <br>introduce an August 9, 1988, letter Ormand sent to one of <br>Resolute's other lawyers that discussed some of the transactions <br>involved in the restructuring of the Windbrook loan.  Ormand <br>testified that he did not know if a copy was mailed to Comey, <br>Diamond's President, but that a copy "probably was sent" to her.  <br>Comey had testified that she did not remember receiving the letter.  <br>The district court sustained the government's objection that the <br>letter was inadmissible hearsay and irrelevant.  Reeder argues that <br>this evidence would have demonstrated that Diamond executives were <br>aware of the restructuring, and would have refuted Comey's prior <br>testimony that she had difficulty obtaining information about the <br>whereabouts of the LACOP money. <br>          The district court's ruling was proper.  First, the <br>document was inadmissible hearsay with respect to the facts <br>contained within it.  Second, the document was not admissible to <br>impeach Comey, because Reeder failed to establish a proper <br>foundation that the letter was even sent to Comey, let alone <br>whether she received it.  Third, the district court's decision that <br>the evidence was outside the limited scope of a re-cross <br>examination was not an abuse of discretion.  Fourth, the district <br>court's decision that evidence relating to the details of the <br>restructuring was irrelevant was not an abuse of discretion. <br>          Finally, Reeder sought to introduce notes Ormand took <br>during a March 1988 conversation with Susan Gallinger, Resolute's <br>local counsel in Arizona, in which they discussed the feasibility <br>of having Diamond purchase the liens.  The court properly sustained <br>the government's objection that the notes were inadmissible <br>hearsay.  Reeder does not even attempt to argue that the district <br>court's ruling was erroneous.  Nor does Reeder explain how this <br>evidence was relevant to demonstrating that regulators or insurance <br>company executives were aware of the Windbrook loan, or how the <br>exclusion of this evidence affected his defense.  Thus, the <br>evidence was properly excluded. <br>          Contrary to Reeder's assertion, the district court's <br>evidentiary rulings taken together did not amount to a Sixth <br>Amendment violation eviscerating his defense.  Under the <br>Constitution, a defendant "does not have an unfettered right to <br>offer [evidence] that is incompetent, privileged, or otherwise <br>inadmissible under standard rules of evidence."  Montana v.Egelhoff, 518 U.S. 37, 42 (1996) (quoting Taylor v. Illinois, 484 <br>U.S. 400, 410 (1988)); United States v. Kepreos, 759 F.2d 961, 964 <br>(1st Cir.) (same), cert. denied, 474 U.S. 901 (1985).  The district <br>court's rulings were proper and within its discretion. <br>VII.  Sentencing Issues <br>          Reeder was sentenced under Guideline  2F1.1 of the 1988 <br>Sentencing Guidelines Manual.  His base offense level was 6.  The <br>court imposed an 11-level upward adjustment because the amount of <br>loss involved exceeded $5 million.  In imposing the upward <br>adjustment, the district court found that the loss in this case was <br>$16.5 million, the money Reeder had Christopher divert from the <br>Fleet Bank account for Reeder's benefit.  The court added two more <br>offense levels because the offense involved more than minimal <br>planning or a scheme to defraud more than one victim, and imposed <br>a four-level role in the offense enhancement.  As a result, <br>Reeder's total offense level was determined to be 23.  Reeder was <br>assigned to Criminal History Category I, resulting in a guidelines <br>range of 46-57 months.  The district court sentenced him to 46 <br>months of imprisonment.  Reeder argues that the district court: (1) <br>incorrectly calculated the amount of the loss; and (2) incorrectly <br>imposed a four-level role in the offense enhancement.  Neither <br>argument is persuasive. <br>          A.  Loss calculation <br>          Reeder challenges the district court's loss calculation. <br>He argues that the $16.5 million figure cannot be used in <br>calculating his offense level because the government argued in the <br>Christopher case that Christopher alone was responsible for that <br>loss. <br>          Under the Guidelines, loss is the "value of the property <br>taken."  U.S.S.G.  2B1.1 comment. 2 (1988) (cross-referenced from <br> 2F1.1)).  After adding 11 levels to Reeder's base offense level <br>because the amount of loss exceeded $5 million, the court declined <br>to grant a downward departure based on Reeder's argument that the <br>loss amount overstated the seriousness of his offense because <br>Christopher contributed to the loss. <br>          "[T]he victim loss table in  U.S.S.G. 2F1.1(b)(1) <br>presumes that the defendant alone is responsible for the entire <br>amount of victim loss specified in the particular loss range <br>selected by the sentencing court."  United States v. Gregorio, 956 <br>F.2d 341, 346 (1st Cir. 1992).  Any portion of the total loss <br>sustained by the victim as a consequence of factors extraneous to <br>the defendant's criminal conduct is not deducted from total "victim <br>loss" prior to the determination of the applicable guideline <br>sentencing range pursuant to  U.S.S.G.  2F1.1(b)(1).  See id. at <br>347 ("victim loss" table encapsulates "heartland" sentencing <br>formula for reflecting approximate total "victim loss" in the <br>guideline sentencing range).  Rather, whatever distortive effects <br>extraneous causes may have had on the total "victim loss" <br>calculation may warrant a departure from the applicable guideline <br>sentencing range.  See  U.S.S.G. 2F1.1, comment. (n. 10) <br>("downward departure may be warranted" where "total dollar loss <br>that results from the offense may overstate its seriousness," which <br>"typically occur[s]" when defendant's fraud "is not the sole cause <br>of the loss"); United States v. Kopp, 951 F.2d 521, 531 (3d Cir. <br>1991) ("To the extent actual loss had other, more proximate causes, <br>a discretionary downward departure -- but not a mandatory 'loss' <br>adjustment -- might be appropriate."). <br>          We lack jurisdiction to review the district court's <br>decision not to depart downward under the long-standing rule that <br>"a criminal defendant cannot ground an appeal on a sentencing <br>court's discretionary decision not to depart below the guideline <br>sentencing range."  United States v. Pierro, 32 F.3d 611, 619 (1st <br>Cir. 1994), cert. denied, 513 U.S. 1119 (1995);  see generally, <br>United States v. Tucker, 892 F.2d 8, 9 (1st Cir. 1989) (holding <br>that the defendant may not appeal a district court's decision not <br>to depart downward). <br>          Reeder attempts to circumvent the limitations on this <br>Court's review of departure decisions by recasting his argument as <br>an attack on the loss amount used in calculating the adjusted <br>offense level.  This Court has clearly held, however, that  <br> <br>          [a]ny portion of the total loss sustained by <br>          the victim as a consequence of factors <br>          extraneous to the defendant's criminal conduct <br>          is not deducted from total "victim loss" prior <br>          to the determination of the applicable <br>          guideline sentencing range . . . . Rather, <br>          whatever distortive effects extraneous causes <br>          may have had on the total "victim loss" <br>          calculation may warrant a departure from the <br>          applicable [guideline range]. <br> <br>United States v. Shattuck, 961 F.2d 1012, 1016-17 (1st Cir. 1992).  <br>Thus, Reeder's argument that the district court erred in failing to <br>consider other causes, such as Christopher's participation, for the <br>loss in calculating Reeder's adjusted offense level is incorrect as <br>a matter of law. <br>     Second, Reeder argues that the loss amount attributed to <br>him should be offset by the property that was eventually forfeited <br>to the insurance companies.  That contention is foreclosed by our <br>decision in Christopher.  As we stated there: "To reduce the loss <br>by the value of the foreclosed collateral . . . would double count: <br>the insurance companies were entitled to the protection of lien- <br>free collateral without having to reduce their own capital in order <br>to pay off the liens."  Christopher, 142 F.3d at 55.  Thus, <br>Reeder's effort to distinguish himself from Christopher on the <br>basis that Reeder contributed properties to the companies is <br>unavailing.  If not for Reeder's diversion of funds, the insurance <br>companies would have the forfeited collateral and the $16.5 <br>million.  As the district court stated, "What [Reeder] want[s] is <br>credit for what he left in the bank after he robbed it."

        B.  Offense Enhancement <br>     Reeder challenges the four-level enhancement for his role <br>as an organizer or leader of a criminal activity that involved (1) <br>five or more participants or (2) was otherwise extensive.  See  <br>U.S.S.G.  3B1.1(a).  Reeder contends only that he did not lead or <br>organize five or more persons who were "criminally responsible" for <br>the offense.  He makes no argument that the criminal activity was <br>not "otherwise extensive," the basis for the district court's <br>enhancement.  United States v. Rostoff, 53 F.3d 398, 413 (1st Cir. <br>1995) (extensiveness prong does not depend on number of <br>participants).  Reeder's assertion that Christopher was the true <br>leader is irrelevant.  The district court found that Reeder had <br>ultimate control of Resolute, placed Christopher in charge of the <br>insurance companies, and directed the disposition of monies taken <br>from the companies.  A careful review of the record leaves no doubt <br>as to the extensiveness of the criminal enterprise. <br>                            CONCLUSION <br>     For the reasons stated in this opinion, we affirm.</pre>