United States of America v. Jacquita D. Hayes

Filed February 20, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-2802
UNITED STATES OF AMERICA
v.
JACQUITA D. HAYES, Appellant
On Appeal From the United States District Court
For the District of New Jersey
(D. C. Crim. No. 00-cr-00264)
District Judge: Honorable Stephen M. Orlofsky
Argued: December 19, 2000
Before: BECKER, Chief Judge, NYGAARD and
FUENTES, Circuit Judges.
(Filed: February 20, 2001)
JOHN H. YAUCH, ESQUIRE
(ARGUED)
LISA M. MACK, ESQUIRE
Federal Public Defender
972 Broad Street
Newark, NJ 07102
Counsel for Appellant

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ROBERT J. CLEARY, ESQUIRE
United States Attorney
GEORGE S. LEONE, ESQUIRE
Assistant United States Attorney
Chief, Appeals Division
MAUREEN A. RUANE, ESQUIRE
(ARGUED)
Assistant United States Attorney
970 Broad Street
Newark, NJ 07102-2535
Counsel for Appellee
OPINION OF THE COURT
BECKER, Chief Judge.
This is yet another sentencing appeal that tur ns on the
proper determination of loss amount under the fraud
provisions of the Sentencing Guidelines, U.S.S.G. § 2F1. 1.
Defendant Jacquita D. Hayes, who lacked the necessary
college degree to be a social worker, but who forged her
qualifications and worked for several years for three New
Jersey social service agencies, was convicted in the District
Court of wire fraud, 18 U.S.C. § 1343, for causing one of
the agencies to deposit her salary into her bank account.
The sole issue before us on appeal (and the principal issue
before the District Court at sentencing) was whether the
total salary paid to Hayes in all of her fraudulently obtained
employment should have been assessed as the amount of
loss (the salary from the other two agencies being drawn in
as relevant conduct under U.S.S.G. § 1B1.3) or whether,
under the rule of United States v. Maurello, 76 F. 3d 1304
(3d Cir. 1996), the court should have attempted to
determine whether any of the services per formed by
defendant had value. If the latter, the loss calculation
should have been made by determining which portions of
Hayes' s services had value to the clients (or to the agency)
and which did not.
In Maurello, the defendant was a lawyer who had been
disbarred for ethics violations. We held that it was possible
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to estimate the value of the services he had per formed so
that the entire amount he had taken would not be charged
as a loss. In the case at bar, the District Court felt that it
was impossible to make the Maurello calculation in a
situation where the defendant lacked the minimum
educational requirements for the job, and it therefore
assessed the full amount of Hayes' s salary as the amount
of the loss. However, the record establishes that Hayes
received a number of quite high perfor mance ratings, and
was granted a promotion. Under these cir cumstances, it
seems to us that the Maurello calculation could be made,
perhaps with the aid of an expert in social work who could
evaluate Hayes' s files.
The Government argues that Maur ello is distinguishable.
It would have us treat Maurello as having been "qualified"
for the work performed (in contrast with Hayes' s lack of
qualifications), as though Maurello' s ethics violations and
lack of a license were something of a technicality. We
believe that such an approach understates the purpose of
having ethics requirements for attor neys, and unduly
burdens courts by forcing them to distinguish "technical"
from "substantive" job requir ements. Therefore, we are
satisfied that Maurello contr ols. Because, had the District
Court applied Maurello, it might havefixed a lower offense
level resulting in a lesser sentence than the year and a day
sentence imposed, we will vacate and remand for
resentencing.
I.
Hayes wanted to be a social worker, but to secure a
position with the New Jersey Division of Youth and Family
Services (" DYFS"), she not only lied about having a
bachelor' s degree, but also submitted a for ged diploma as
proof of her educational achievement. Hayes got the job and
spent the next 4-1/2 years as a fieldworker counseling
troubled children for DYFS. Her per formance is hard to
gauge because DYFS does not monitor its field workers, but
there were no complaints from families about her
performance, and, in their reviews, her superiors praised
her written assignments and case assessment skills, and
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lauded her commitment, enthusiasm, and hard work. 1 At
some point during her employment she mentioned that she
was thinking of leaving DYFS, and she requested and
received a letter of reference. But she remained on the job
until she was ultimately fired for falsifying documentation
concerning payment to a family.
In 1995, Hayes got a job with the Youth Consultation
Service of New Jersey ("YCS"), providing therapy for
children before their placement in adoptive homes. To meet
the educational requirements for this work, Hayes falsely
claimed that she had a bachelor' s degree and a master' s
degree. Unlike the DYFS job, Hayes was accompanied by a
supervisor as she conducted her field work and r eceived
poor evaluations. Co-workers also reported that she smelled
of alcohol and vomit. As a result, YCS investigated her
background and discovered that she held no degrees; when
confronted, Hayes promised she would bring her diploma to
work in order to prove herself. She left and never returned.
All told, she was at YCS for two months.
In 1996, Hayes got a job with Mentor Clinical Services
("Mentor"). Again, her duties involved counseling troubled
children, and again she falsely claimed to have the
bachelor' s degree and master' s degree that constituted the
minimal educational requirements of the job, backing up
these prevarications with forged paperwork. She even
forged a social worker' s license and listed her mother
(without disclosing the relationship) as a pr ofessional
reference. After a year, she was pr omoted and given a ten
percent raise. There was no direct supervision of her
counseling, and Mentor received no complaints. In October
1997 she was fired when Mentor determined that she had
lied about her credentials. There is some dispute between
Hayes and the Government regarding her precise
responsibilities at Mentor: According to Hayes, most of her
work at Mentor was oversight and administration, but the
_________________________________________________________________
1. Hayes did have some trouble at DYFS: She had an affair with a co-
worker during working hours, was disciplined for looking at confidential
records, crashed a New Jersey vehicle while intoxicated, was suspected
of theft, and showed up drunk for work. These incidents did not,
however, form the basis for her dischar ge.
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Government contends that Hayes had a gr eat deal of
clinical responsibility in addition to her supervisory duties.
DYFS is funded by both the federal government and the
State of New Jersey. Both Mentor and YCS receive funding
from DYFS and other state agencies, and both Mentor and
YCS received reimbursement from DYFS for the payment of
Hayes' s salary.2
Hayes was charged with one count of wir e fraud, for
causing Mentor to deposit her salary into her bank account
even though she was not qualified for the job. She pled
guilty, and, for sentencing purposes, her fraudulent
employment at DYFS and YCS was deemed relevant
conduct under U. S.S.G. § 1B1.3. Thus, in or der to
determine her offense level under the Sentencing
Guidelines pursuant to U.S.S.G. § 2F1.1, it became
necessary to determine the total amount of monetary loss
to the defrauded agencies.
The government argued, and the District Court agreed,
that the total "loss" was Hayes' s total salary for the work
performed from 1990 through 1997, which was
$190,298.77. This put her at offense level 13. Two levels
were added for "more than minimal planning," U.S.S.G.
§ 2F1. 1(b)(2), and two levels subtracted for acceptance of
responsibility, see U.S.S.G. § 3E1.1. This made her eligible
for 12 to 18 months' imprisonment, and the District Court
sentenced her to a year and a day, plus a ter m of
supervised release. Hayes now appeals the loss calculation,
arguing that because the agencies received her services in
exchange for the salary, the loss amount should be zero.
II.
The offense is governed by the Fraud Guidelines, which
explain that the offense level is to be deter mined by the
amount of the loss. The Guidelines provide examples
demonstrating that when something of value is pr ovided in
return for the loss, the "loss" valuation is equal to the
_________________________________________________________________
2. It is not entirely clear from the r ecord, but it appears either that DYFS
is not obligated to pay the salaries of workers who do not meet minimum
educational requirements, or that it has a policy against such payments.
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difference between what was provided and what was taken.
See U.S.S.G. § 2F1. 1, cmt. n.8(a) ("A fraud may involve the
misrepresentation of the value of an item that does have
some value . . . . Where, for example, a defendant
fraudulently represents that stock is worth $40,000 . . . the
loss is the amount by which the stock was overvalued
. . . ."). The application notes further pr ovide that loss need
only be a reasonable estimate, based on available
information. See U.S.S.G. § 2F1. 1, cmt. n.9.
United States v. Maurello, 76 F .3d 1304 (3d Cir. 1996),
involved an attorney who had been disbarr ed for ethics
violations, including witness tampering and fraudulently
obtaining credit cards. In anticipation of the disbarment,
the attorney set up a new law practice, assuming the
names of two New Jersey bar members who were no longer
practicing. After Maurello had perfor med services for
several clients, the scheme was discovered, and he was
charged with mail fraud. To calculate loss, the probation
officer contacted all of his post-disbarment clients,
explained the situation, and asked whether they wer e
dissatisfied with his services; loss was then assessed by
totaling the fees of those who claimed to have experienced
problems. Both sides challenged this methodology: Maurello
argued that the loss should be zero, and the Government
wanted loss to be calculated by reference to the total fees
paid by all clients (even the satisfied ones) on the theory
that the services of an unlicensed attorney had no "market
value." Id. at 1311. The District Court accepted the
Government' s position, reasoning that any other calculation
would unfairly penalize the incompetent attor ney more than
a competent one, even though both had an equally evil
intention. See id. at 1312.
On appeal, we concluded that the Guidelines' s use of the
loss calculations to inflate punishment beyond the base
offense level is intended to capture the amount of harm
caused by the crime, and it therefore is perfectly
appropriate to treat the competent attor ney (who has
provided his clients with valuable services) differently from
the incompetent one. We explained: "T o the extent that the
unauthorized services provided by defendant have not
harmed their recipients, but to the contrary have benefitted
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them, we conclude that defendant' s base offense level
should not be enhanced. " Id. at 1312. Because "loss" could
not be calculated merely by reference to the fees charged,
we sought to find an "appropriate substitute." Although we
endorsed the approach taken by the probation officer, i.e.,
beginning with the fees of dissatisfied clients, we noted that
some clients might falsely claim to have been dissatisfied in
hopes of getting a financial windfall. Ther efore, we required
the Government to demonstrate that the complaints by
such clients were "bona fide" and capable of reasonably
supporting a loss determination. See id. at 1313. We
reversed, but concluded by observing that if, on remand,
the District Court was still convinced that a mer e reference
to the amount of monetary "loss" failed to capture the
seriousness of the offense, the court could apply an upward
departure in accordance with 2F1.1' s instruction that "[i]n
cases in which the loss determined . . . does not fully
capture the harmfulness . . . of the conduct, an upward
departure may be warranted." Id. (quoting U. S.S.G. § 2F1. 1,
cmt. n. 11).
Hayes, of course, argues that her case is just like
Maurello. However, the District Court believed, and the
Government agrees, that Maurello was different because: (1)
the actual value of the lawyer' s services could be assessed;
(2) the clients were available to comment on the services;
and (3) there was no allegation that the defendant' s skills
as an attorney were deficient. In contrast, the "clients" that
Hayes serviced -- the abused children -- cannot be
surveyed, for they are fragile and unlikely to complain.
Moreover, the agencies might be r eluctant to confess to the
children and their families that an unqualified worker was
counseling them; at a minimum, such actions would be an
invitation to a lawsuit. As a result, the District Court held
that the value of Hayes' s services could not be assessed,
and that the best estimate would be the entir e amount of
her salary. The court also declined to consider evidence
that some employers had given Hayes positive evaluations,
although we are not entirely clear whether the evidence was
rejected as non-probative of the issue of valuation, or as
irrelevant because the "value" of services provided was not
germane to sentencing.
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In reaching its conclusion, the District Court relied in
part on United States v. Geevers, 226 F .3d 186 (3d Cir.
2000). Geevers pled guilty to bank fraud via use of a check
kiting scheme. In that case, the District Court held that the
loss Geevers had intended to cause could be ascertained by
reference to the full face value of the checks, despite
Geevers' s argument that no reasonable check-kiter could
really expect to get away with that much. On appeal, the
panel affirmed, concluding that Geevers' s expectations were
not equivalent to his intent -- that is, Geevers was trying to
get away with whatever he could manage, and the fact that
he might have understood that at some point the scheme
would fail did not mean that his intention was different.
Further, the panel believed that Geevers' s intent was a
factual question in which a prima facie case could be made
out for the Government by showing the face amount of the
checks, and that the burden would then shift to Geevers to
show that he had intended to take less than those
amounts. See id. at 193. In Hayes' s case, the District Court
noted that Hayes " knew what she was doing her e. She
received whatever income she received . . . knowing full well
that she was not qualified. . . ." The court therefore believed
that Hayes' s scheme was like Geevers' s deliberate attempt
to defraud the banks of the face value of the checks.
In analyzing the District Court' s determination, we must
first decide the proper standard of r eview. The government
contends that review is deferential because the District
Court reached a factual conclusion that, in light of the
difficulty with collecting evidence, the value of Hayes' s
salary is the best estimate of the loss. We disagree. As we
see it, what happened was as follows: (1) Hayes claimed
that it was the Government' s burden to establish loss a la
Maurello; (2) the District Court held that the Maurello rule
was inapplicable, and that this case was mor e like Geevers
because Hayes "knew" she was applying for a job for which
she was unqualified; and (3) the court further felt that
Maurello was inapposite because the court did not see how
it would be possible to interview clients to gather evidence
of dissatisfaction as Maurello r equired. Under these
circumstances, we agree with Hayes that the real issue
presented is whether loss must be deter mined within the
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Maurello framework, a legal question over which we have
plenary review.
III.
The Government' s argument in essence is that: (1) the
Maurello panel applied a presumption that the services
provided were valuable because Maurello was qualified (if
unauthorized) to provide them; (2) once that pr esumption
had been established, the Government then had the burden
to show that the services were not valuable; and (3) no
such presumption need be given in a case like Hayes' s
because she was unqualified to perfor m the service. We find
this analysis flawed.
The burden was on the Government in Maurello because
the burden is always on the Gover nment to establish
actual loss. See, e.g., United States v. Evans, 155 F. 3d 245
(3d Cir. 1998); United States v. Dickler , 64 F.3d 818 (3d Cir.
1995). Maurello was disbarred for ethics violations; in other
words, he was legally declared to be unfit to practice law.
Yet the government would have us tr eat him as "qualified, "
as though Maurello' s ethics violations and lack of a license
were something of a technicality. Such an appr oach, we
think, understates the purpose of having ethics
requirements for attorneys, and for ces courts to distinguish
between "technical" and "substantive" job requirements.
There was certainly nothing in the Maur ello opinion to
suggest that the result would have been dif ferent if
Maurello had not held a law degree: "A client who obtains
a satisfactory contract . . . has received something of value,
irrespective of whether the lawyer was licensed at the time.
The services rendered do not become worthless if the client
later learns that the attorney was not licensed to practice.
. . . " Maurello, 76 F. 3d at 1311.
Hayes worked for DYFS for nearly five years, and r eceived
several positive evaluations. She came to Mentor with
nearly five years' experience, and was promoted and given
a raise. The Government conceded at sentencing that
"[s]ome of her services appear to be absolutely helpful,"
when advising the District Court to sentence Hayes to the
lower end of the range. Certainly this is enough evidence to
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demonstrate that Hayes intended to provide, and did
provide, actual services in exchange for her salary,
necessitating that an inquiry be conducted as to the value
of those services.
Another way of conceiving the problem is that in
Maurello, the Government had the burden of proving that
the mere fact of a lack of a license meant that the services
were valueless. In Hayes' s case, then, the bur den is on the
Government to show that the fact of a lack of academic
credentials means that the services render ed were
valueless, and it did not. Rather than conceiving of Maurello
as a case in which the burden shifted to the Government,
we think the more appropriate question is why the burden
in Geevers shifted to the defendant. The answer to that
question is simply that Geevers wrote bad checks, without
intending to give anything at all in retur n; Geevers certainly
never argued that he had planned to retur n the money, or
provide something of value in exchange. In a case like
Geevers, it does not make sense for the Gover nment to
have to prove anything further. Hayes, by contrast,
accepted her salary, but showed up to work r egularly and
performed services.
IV.
In light of the foregoing analysis, and the fact that the
record establishes that Hayes got quite a number of good
ratings and a promotion, we believe that the Maurello
calculation could be made here, perhaps with the aid of an
expert in social work who would evaluate her files. 3 We do
not suggest that a file analysis will yield an exact calculus,
but neither did the survey of client satisfaction in Maurello,
and there is no reason to believe a file analysis (or some
other measure the District Court may devise) will not be at
least as accurate. None of this is to condone Hayes' s
criminal conduct (any more than Maurello' s), but at this
stage, what is at issue is not culpability, but quantification
of loss, as dictated by the Guidelines regime.
_________________________________________________________________
3. There are, of course, other appr oaches that the District Court might
utilize.
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We therefore conclude that the judgment must be vacated
and the case remanded for resentencing. 4 We intimate no
view as to what the outcome on remand should be. We hold
only that, under the present circumstances, the District
Court should have attempted the loss calculation. W e
acknowledge that, if the District Court is satisfied that the
ultimate calculation does not adequately captur e the
amount of the loss, it may depart upward. See U.S.S.G.
_________________________________________________________________
4. We note in this regard that the other approaches suggested by the
Government -- calculating loss on the basis of gain to the defendant or
diversion of government program benefits -- are unavailing. The
application notes to the Fraud Guidelines mandate that with respect to
government benefits, "loss is the value of the benefits diverted from
intended recipients or uses." U.S.S.G. § 2F1.1, cmt. n. 8(d). This
instruction seems geared towards dealing with people who actually take
money out of government programs, and is particularly concerned with
directing courts to look at what the money was to pay for or where the
money was supposed to go, in contrast to an approach that would focus
on where the money was coming from (i.e., the Government). For
instance, that Guideline may be invoked when someone exchanges cash
for food stamps and then redeems the stamps fr om the Government: If
a regular " loss" calculation were used, there might be almost no loss at
all, because the Government pays out the same amount (face value of
the stamps) that it might have done otherwise, and the money actually
ends up in the hands of the intended recipients (poor people) by virtue
of the fact that they sold their stamps. In contrast, the Guidelines' s
focus on intended use ensures that the face value is the full loss,
because the money was intended to go for food, not cash, to the stamp
recipients. See United States v. Griffin , 215 F.3d 866 (8th Cir. 2000).
We have held that the defendant' s gain may be substituted for the
victim' s loss when "loss" is difficult to quantify. See United States v.
Dickler, 64 F. 3d 818, 826 (3d Cir . 1995). However, as we have observed,
such an approach is appropriate because it bears some rational
relationship to the loss calculation. See id. In determining the
defendant' s gain, the court must also decide whether the net or gross
gain is the more appropriate measur e, based on whether the defendant' s
"costs" also bear a relationship to loss valuation by conferring a benefit
on the victim. See id. at 829 n.13. In this instance, Hayes' s "costs" came
from the effort and work she put in to her job; but the court cannot
determine whether such "costs" bear a r elationship to the loss incurred
by the social service agencies without first attempting to calculate
whether Hayes provided value to her employers. Such an approach,
however, puts us right back where we started.
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§ 2F1.1, cmt. n.11. We also add that we do not suggest that
the District Court will always be able to calculate loss in
cases of this genre, only that it seems possible to do so
here.
We acknowledge that district judges may view this case
(and indeed Maurello) as imposing on the already
cumbersome Guidelines sentencing process an expensive,
time consuming, and elusive additional burden. Although
we sympathize with such objections, and respond"touche,"
the responsibility for this state of af fairs does not rest with
us but rather with a sentencing regime that insists upon
assessing penalties by the mechanical quantification of
harm rather than by a qualitative, albeit subjective,
evaluation of blame. It may be relatively simple to quantify
the use of illegal drugs by measuring drug purity quality. It
has proven much more difficult to quantify loss, as the
rough statistic in the margin reflects. 5
This result once again demonstrates the deepflaws of a
system that creates a hulking superstructur e of regulation
when the simple extension of a modest amount of
additional discretion to our extraordinarily able and
dedicated cadre of district judges would do the job better.
See United States v. Walker, 202 F . 3d 181, 182 n.1 (3d Cir.
2000). However, we are bound as judges of the Third Article
to carry out the mandate of the Congress and the United
States Sentencing Commission. Because this is a case in
which we believe that it has been amply demonstrated that
Hayes provided some value to the agencies and that her full
salary cannot therefore be termed"loss, " we have no choice
but to vacate the judgment and remand for further
proceedings consistent with this opinion. It is so ordered.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
5. A Westlaw search conducted on January 16, 2001 yielded 1,709
federal cases addressing loss calculations under the Sentencing
Guidelines.
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