author: BAUER, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. David HERNANDEZ, Defendant-Appellant.
    No. 95-1882.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 12, 1996.
    Decided May 21, 1996.

      Barry Rand Elden, Chief of Appeals, Mark Filip (argued), Office of the U.S. Atty., Criminal Appellate Division, Chicago, IL, for Plaintiff-Appellee.
    Camille B. Conway, Lynn C. Hartfield (argued), Office of the Federal Defender Program, Chicago, IL, for Defendant-Appellant.
    Before POSNER, Chief Judge, BAUER and KANNE, Circuit Judges.
   BAUER, Circuit Judge.

A jury convicted David Hernandez of knowingly and intentionally possessing with intent to distribute cocaine and heroin in violation of 21 U.S.C. § 841(a)(1). Hernandez challenges two of the district court’s evidentiary rulings and its refusal to quash the venire prior to trial. We affirm.

BACKGROUND

A drug interdiction task force operating at O’Hare International Airport received a tip that a suspected drug courier would be arriving on American Airlines Flight 1390. Not surprisingly, a man fitting the exact description (Hernandez, of course) deplaned in Chicago. The agents followed Hernandez to the baggage claim area where he found his luggage and attempted to leave the airport. The agents approached Hernandez and, after informing him that he was free to leave, began questioning him. He told them that he had just flown in from Los Angeles but was unable to produce his ticket because he had lost it. He then denied that the suitcase he was carrying belonged to him. The agents reminded him that they had watched him carefully select the bag from the baggage carousel, but he insisted that the bag was not his. All the while, he was visibly shaking and sweating. The agents took the suitcase and Hernandez proceeded to the baggage service desk where he claimed that he had lost his luggage. His claim was not processed however, because he had “lost” his ticket, baggage claim, and boarding pass, and because no Hernandez was listed on the passenger log. Shortly thereafter, the agents obtained a search warrant and discovered two kilograms of cocaine and 100 grams of heroin in the suitcase.

During voir dire of prospective jurors prior to trial, several venire members, responding to standard voir dire questions, raised a variety of concerns or frustrations about the criminal justice system. Some of these veni-re members were excused for cause. Hernandez moved to quash the entire venire on the ground that the inflammatory comments regarding the judicial system had tainted the remaining panel members. The district court denied the motion, finding that any statements made “would not prevent the other jurors from being fair and impartial in the trial of the case.”

At trial, the court permitted the government to introduce Hernandez’ prior arrest in 1993 during which a Customs Inspector stopped Hernandez at the United States border and seized 42.9 pounds of marijuana from his car. That arrest ultimately resulted in a guilty plea to a misdemeanor marijuana possession charge. Hernandez objected to this evidence as inadmissible under Fed.R.Evid. 404(b). The judge overruled the objection and admitted the evidence for the purpose of showing “proof of intent and knowledge” as well as “absence of mistake.”

Also at trial, the government moved to prevent Hernandez from questioning a government witness about a prior civil ease. Clay Searle, the Los Angeles Police Officer who had given the drug interdiction task force the tip about Hernandez, and whose sole testimony would be that he observed Hernandez sitting in a certain seat on the airplane, had been a losing defendant in an earlier civil rights lawsuit. Morgan v. Woessner, 997 F.2d 1244 (9th Cir.1993), cert. dismissed, — U.S.-, 114 S.Ct. 671, 126 L.Ed.2d 640 (1994). Hernandez sought to cross-examine this officer about the Morgan case in order to show his lack of competence as an agent and his lack of credibility. The district court granted the government’s motion and refused to allow Hernandez to cross-examine the officer about Morgan. In particular, the court found that Morgan was irrelevant to the case at hand and was inadmissible under Fed.R.Evid. 403(b) because it would “invit[e] the jury to have unfair prejudice and to speculate, guess, and conjecture, as opposed to anything that would have probative value.”

ANALYSIS

Hernandez raises three issues. First, he argues that the district court erred in refusing to quash the entire venire because of what he characterizes as inflammatory statements made by certain venire members. We review that claim for abuse of discretion. United States v. Knipp, 963 F.2d 839, 845 (6th Cir.1992) (citation omitted). Next, Hernandez claims that the district court improperly admitted evidence of Hernandez’ prior crime in violation of Fed.R.Evid. 404(b). We review this claim for abuse of discretion. United States v. Wilson, 31 F.3d 510, 514 (7th Cir.1994). Finally, Hernandez argues that the district court improperly limited cross-examination of a prosecution witness. The question of which standard of review applies to this issue is somewhat complicated so we begin with it.

A. Limitation on Cross-Examination of Officer Searle

The Sixth Amendment guarantees criminal defendants the right to cross-examine witnesses. Ohio v. Roberts, 448 U.S. 56, 62-64, 100 S.Ct. 2531, 2537-38, 65 L.Ed.2d 597 (1980). Nevertheless, the district court “retains broad discretion in limiting the extent and scope of cross-examination.” United States v. Valles, 41 F.3d 355, 359 (7th Cir.1994). As a general matter, we review a district court’s limitation of cross-examination for abuse of discretion. United States v. Jackson, 51 F.3d 646, 652 (7th Cir.1995). However, we review such limitations de novo where they directly implicate the Sixth Amendment right to confrontation. Id. Therefore, in determining the appropriate standard of review, we must “distinguish between the core values of the confrontation right and more peripheral concerns which remain within the ambit of the trial judge’s discretion.” United States v. Saunders, 973 F.2d 1354, 1358 (7th Cir.1992), cert. denied, 506 U.S. 1070, 113 S.Ct. 1026, 122 L.Ed.2d 171 (1993).

The assignment of the correct standard of review is further complicated by the parties’ contrasting characterization of the purpose of Searle’s cross-examination.. Hernandez claims that he wanted to cross-examine Searle about Morgan in order to reveal Searle’s bias against racial and ethnic minorities. Exposing the bias of a witness is -within the core values of the Confrontation Clause so, Hernandez argues, we must review his claim de novo. See Valles, 41 F.3d at 359.

The government argues that Hernandez failed to raise the specter of racial bias in the district court and therefore we should review the bias claim for clear error. United States v. Olano, 507 U.S. 725, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). In the alternative, the government argues that Hernandez only sought to cross-examine Searle as to his general credibility, not his bias. If so, we would review for abuse of discretion because “[t]he general credibility of a witness is a matter collateral to the Sixth Amendment confrontation right.” United States v. Nelson, 39 F.3d 705, 709 (7th Cir.1994). Finally, the government argues that it should prevail even if we review de novo.

Hernandez concedes that he did not raise explicitly the issue of Searle’s alleged bias against racial and ethnic minorities. He argues that he tried to raise the issue, but was repeatedly interrupted by the district court and the prosecutor. We have reviewed the record carefully and conclude that Hernandez did not even propose to question Searle about his alleged bias. Instead, Hernandez sought to attack Searle’s general credibility and competence as an agent. Accordingly, we will review his claim for abuse of discretion. See Nelson, 39 F.3d at 709; United States v. Dimas, 3 F.3d 1015, 1019 (7th Cir.1993).

We begin our analysis with the well-settled proposition that trial judges “retain wide latitude to impose reasonable limits on cross examination based on concerns about harassment, prejudice, confusion of the issues ... or interrogation that is ... only marginally relevant.” United States v. Neely, 980 F.2d 1074, 1081 (7th Cir.1992), quoting Delaware v. Van Arsdall, 475 U.S. 673, 679, 106 S.Ct. 1431, 1435, 89 L.Ed.2d 674 (1986). Given our deferential review, we find that the district court did not err in limiting Searle’s cross-examination.

We agree with the district court that the facts underlying Morgan were irrelevant to Searle’s actual testimony. First, there was no finding in Morgan that Searle was biased against all racial and ethnic minorities. In addition, contrary to Hernandez’ argument in this court, the Ninth Circuit did not make “specific findings that they did not believe Officer Searle’s version of the [Morgan ] facts.” At most, Morgan may raise an inference that Searle might have been biased against African-Americans. That does not mean that Searle was out to get all nonwhites.

Regardless, in granting the government’s motion in limine regarding Searle, the district court stressed repeatedly that Searle would be testifying to the limited facts of his personal observation on the airplane. In fact, he would not even be identified as a police officer. Hernandez did not object to this latter limitation, ostensibly because he did not want the jury to know that the LAPD considered him a suspected drug courier. Given the limited scope of Searle’s testimony, the facts of Morgan were irrelevant. Or as the district court put it: “Talk about a red herring. It’s crimson_ And certainly under a 403 balancing test, you are inviting the jury to have unfair prejudice and to speculate, guess and conjecture....”

The district court emphasized that Hernandez was free to cross-examine Searle on any other matters, if relevant. As it turns out, Hernandez did not ask Searle any questions on cross-examination. He claims this was a result of unfair limitation on his right of confrontation. The district court’s limitation of the cross-examination was proper.

B. Admission of “Other Acts” Evidence Under Rule

Hernandez next argues that the district erroneously admitted evidence of Hernandez’ prior drug arrest and conviction pursuant to Fed.R.Evid. 404(b). Rule 404(b) provides that “other acts” evidence is inadmissible to show that the defendant has a bad character and propensity to commit crime and that he acted consistently with that propensity or character. Neely, 980 F.2d at 1078. Evidence of “other acts” may be admitted, however, to establish “motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.” Fed.R.Evid. 404(b).

We apply a four-part test in reviewing the admissibility of 404(b) evidence. Wilson, 31 F.3d at 514-15. First, the evidence must be directed toward establishing a matter in issue other than the defendant’s propensity to commit the crime charged. Second, the “other act” must be similar to the charged conduct and be close enough in time to be relevant to the matter at issue. Third, the evidence must be sufficient to support a jury finding that the defendant committed the similar act. Finally, the probative value of the evidence must not be substantially outweighed by the danger of unfair prejudice. Id.

Hernandez takes up the cudgels on three of the four parts; he concedes that he committed the purportedly similar act. Hernandez insists that the sole purpose of admitting the prior marijuana conviction was to show that he had a propensity for drug dealing. The government argues, and the district court agreed, that the evidence was relevant to show Hernandez’ intent to distribute the drugs he possessed. We agree. We have oft held that “when a defendant is charged with a specific intent crime, the government may present other acts evidence to prove intent.” United States v. Curry, 79 F.3d 1489, 1495 (7th Cir.1996).

Hernandez resorts to the dreaded slippery slope to argue that if this ruling is correct then all prior drug convictions will be admissible under Rule 404(b) in subsequent drug prosecutions. We give short shrift to this argument. First of all, as discussed above, we apply a four-part test in reviewing 404(b) admissibility. Satisfying the first part of the test does not guarantee admissibility. More importantly, the prior bad act may not be just any drug crime, it must be relevant to showing intent or the other matters listed in Rule 404(b). Here, the Customs Official stopped Hernandez with 43 pounds of marijuana hidden in his automobile—clearly a distribution amount. That incident is relevant to show Hernandez’ specific intent to distribute the large quantity of drugs in his suitcase. Furthermore, the prior possession also satisfied this part of the 404(b) test as bearing on lack of mistake because it tends to show that Hernandez “was not some hapless fool mistakenly caught up in an overzealous law enforcement action.” United States v. Kreiser, 15 F.3d 635, 640 (7th Cir.1994)

Moving on to the other factors, we agree that Hernandez’ prior conviction satisfied the similarity/proximify requirements. Proximity is a gimme given our prior holding that a period of seven years is sufficiently close in time for 404(b) purposes. Kreiser, 15 F.3d at 640—41. Similarity is tougher, but given our deferential standard of review, we concur in the district court’s conclusion that the prior conviction was similar enough for 404(b) purposes. Different drugs were involved, but both incidents concerned distribution amounts of drugs and illicit transport. We will not disturb the district court’s reasoned exercise of its discretion regarding this element.

Finally, we reject Hernandez’ argument that the district court failed to weigh the probative and prejudicial value of the prior bad act evidence. The district court explicitly stated that “the probative value of the evidence is greater than it might be in another type of ease and outweighs the prejudicial effect ... in this cáse.” We have no reason to believe that the trial judge was just mouthing empty platitudes. The record amply demonstrates that the parties argued over this issue and that the district court carefully weighed the relevant factors. Furthermore, the district court instructed the jury both before and after the 404(b) evidence was admitted that it could be considered “only on the question of the defendant’s intent, knowledge, absence of mistake, or accident as it relates to the charges in the indictment.” Absent any substantial evidence to the contrary, we presume that the jurors followed their instructions. Curry, 79 F.3d at 1497. In sum, the district court properly admitted the 404(b) evidence regarding Hernandez’ prior drug conviction.

C. District Court’s Refusal to Quash Entire Venire

Finally, Hernandez’ argument that the district court erred by failing to quash the entire venire because of comments by several venire members is without merit. We review this claim for abuse of discretion and will reverse only if “manifest injustice” resulted from the judge’s refusal to dismiss venire members who heard improper comments. United States v. Jones, 696 F.2d 479, 492 (7th Cir.1982), cert. denied, 462 U.S. 1106, 103 S.Ct. 2453, 77 L.Ed.2d 1333 (1983). It did not.

Hernandez focuses on five venire members who made “explicit comments to the effect that the judicial system was ineffective in apprehending and punishing offenders.” In addition, fifteen venire members “spoke of their experiences related to crime victims, and not one affirmatively expressed satisfaction with the judicial resolution of the incidents.” We have reviewed all of the pertinent statements and we agree with the district court’s ruling that none of the statements prevented the other jurors from being fair and impartial.

Furthermore, after denying Hernandez’ motion to quash, the district court asked all of the venire members whether any statement or event during voir dire would impair their ability to be fair. None of the venire members who responded affirmatively remained on the venire. “Absent any reasons [beyond speculation] to suspect as untrue the juror’s claims of ability to remain impartial despite exposure to improper ... comment, the court should credit those responses.” United States v. Moutry, 46 F.3d 598, 603 (7th Cir.1995). The district court did not abuse its discretion in denying the motion to quash the venire.

CONCLUSION

For the foregoing reasons, Hernandez’ conviction is

AFFIRMED.

      . Because Hernandez does not press his bias argument independently of his claim that he raised bias in the district court, we need not even apply clear error review to the bias issue. United States v. Benson, 67 F.3d 641, 644 n. 1 (7th Cir.1995).


source: Caselaw Access Project

author: POSNER, Chief Judge.

license: Public Domain

text:
    William R. FRY, et al., Plaintiffs-Appellants, v. UAL CORPORATION, Defendant-Appellee.
    No. 95-3157.
    United States Court of Appeals, Seventh Circuit.
    Argued April 4, 1996.
    Decided May 23, 1996.
    Rehearing and Suggestion for Rehearing En Banc Denied July 3, 1996.

      Fay Clayton, Robinson, Curley & Clayton, Chicago, IL, Charles Barnhill, Jr., Davis, Miner, Barnhill & Galland, Madison, WI, David B. Kahn, Mark E. King, argued, Kahn & Associates, Northfield, IL, for Plaintiffs-Appellants.
    Susan Getzendanner, argued, Charles F. Smith, John K. Lyons, Skadden, Arps, Slate, Meagher & Flom, Stephen P. Sawyer, United Airlines, Chicago, IL, for Defendant-Ap-pellee.
    Before POSNER, Chief Judge, and KANNE and EVANS, Circuit Judges.
   POSNER, Chief Judge.

This is a class action on behalf of persons who sold either common stock of Allegis Corporation (now UAL Corporation) or puts in common stock of Allegis between October 29 and December 8, 1987. The plaintiffs complain that Allegis defrauded them, in violation of Rule 10b-5 of the Securities and Exchange Commission, by concealing information that if revealed would have caused the price of the stock to rise during the complaint period. There are other charges but they need not be discussed separately. The district judge granted summary judgment for the defendant.

There is a threshold question: whether the sellers of puts, or other options, are (as the district judge held) within the class of investors protected by Rule 10b-5. If not, they should have been dismissed from the suit without consideration of the merits of their claim that they were defrauded along with the owners of the stock.

A put entitles the holder to sell a specified security by a specified delivery date at a specified price (the “strike price”) to the seller of the put. The buyer hopes that the price of the security will fall between the date of the contract and the date of delivery so that he can buy it at a price lower than the strike price, the price at which the seller of the put is obligated to purchase the stock if it is tendered. The seller of the put, conversely, hopes that the price of the security will stay above the strike price, for then the buyer will not exercise his option and the seller will have a profit equal to the price at which he sold the put. If the market price falls below the strike price, the seller of the put will lose the difference between those two prices (minus the price of the put itself). See Richard A. Brealey & Stewart C. Myers, Principles of Corporate Finance 486-88 (4th ed. 1991).

So sellers of puts during the complaint period (whether the original writers of the puts or sellers in the secondary market), when the price of Allegis stock is alleged to have been artificially depressed, should have been happy rather than sad when the price jumped back up, as distinct from sellers of the stock itself, who lost this profit if they sold their stock during the period of depressed prices, and writers of puts before the complaint period (clearly not members of the plaintiff class), who may have had to honor the puts during the complaint period, when the price of the stock was depressed. The plaintiffs seem not to understand that stock and put prices move inversely to each other. But the defendant makes nothing of this, so we shall swallow our doubts and assume that some of the options traders whom the complaint, perhaps inaccurately, calls sellers of puts were hurt.

Puts and other stock options are securities within the meaning of the Securities Exchange Act, 15 U.S.C. § 78c (a)(10); Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750-51, 95 S.Ct. 1917, 1932-33, 44 L.Ed.2d 539 (1975), but they are not necessarily (or in this case) securities issued by the corporation that issued the underlying securities, the subject of the option contracts. For the proposition that Rule 10b-5 does not make the issuer of the underlying securities responsible for the effects of a securities fraud on the owners of options on those securities, the defendant cites Laventhall v. General Dynamics Corp., 704 F.2d 407, 412-14 (8th Cir.1983). The leading case in favor of issuer’s liability is Deutschman v. Beneficial Corp., 841 F.2d 502, 506-07 (3d Cir.1988); see 8 Louis Loss & Joel Seligman, Securities Regulation 3601 and n. 360 (3d ed. 1991). The objection to liability is that the extent of harm to the option holders depends on factors beyond the control of the issuer of the underlying securities, including the number of options and the terms of the option contracts.

The division of authority is illusory. Laventhall was an insider-trading case. The decision against liability turned on the fact that a corporation has no fiduciary obligation to option traders, as it does to its own shareholders. The existence of fiduciary obligation was critical because insider trading is the abuse of a fiduciary position, Chiarella v. United States, 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980), rather than out-and-out fraud, that is, fraud accomplished by misrepresentations (or, what amounts to the same thing, misleading omissions). The duty not to make misrepresentations does not depend on the existence of a fiduciary relationship. Basic, Inc. v. Levinson, 485 U.S. 224, 240 n. 18, 108 S.Ct. 978, 988 n. 18, 99 L.Ed.2d 194 (1988); Elizabeth M. Sacksteder, Note, “Securities Regulation for a Changing Market: Option Trader Standing Under Rule 10b-5,” 97 Yale L.J. 623, 641 (1988). If it did, very little fraud would be actionable. The garden-variety fraud in which the seller of a product misrepresents its qualities to the buyer would not be, because a seller is not his buyer’s fiduciary.

So the case law provides no support for the defendant’s position. And since fraud (whether it takes the form of a misrepresentation or of an abuse of a fiduciary position) is a deliberate wrong, the considerations that lead courts to limit the scope of liability for accidental wrongs to consequences that are in some sense “foreseeable” are not in play. Option traders play an important role in maintaining the efficiency of the securities markets, moreover, so they have a claim to protection against being defrauded.

Two arguments can be made against liability to options traders. First, since it is very difficult to see how they can be hurt by a securities fraud without the owner of the optioned securities being hurt, a more limited liability should be sufficient to deter most securities frauds. Second, it is very difficult for the corporation that issued the underlying securities to gauge its potential liability for a securities fraud if options traders are within the protected class. We have to worry about the danger of overdeterrence because, while securities fraud is nominally a species of deliberate wrongdoing, the doctrines of securities law and particularly the application of those doctrines to particular factual situations are so difficult, complex, and uncertain that there is a serious danger of erroneous impositions of liability.

But these two Rubicons were crossed when short sellers were held to have standing to sue under Rule 10b-5, Zlotnick v. TIE Communications, 836 F.2d 818, 821 (3d Cir.1988); cf. United States v. Russo, 74 F.3d 1383, 1392 (2d Cir.1996), a holding that we do not understand the defendant to question. The corporation has no control over the number of its shares that are shorted—the number may in fact exceed the total number of outstanding shares, Sullivan & Long, Inc. v. Scattered Corp., 47 F.3d 857, 859 (7th Cir.1995)—or over its potential liability, which is the difference between the price of the short sale and the (higher) market price when the short seller has to cover. The potential liability to short sellers is thus greater than that to either the buyers of puts, who can lose only the price they have paid for the put, or the sellers of puts, who can lose only the difference between the strike price and a lower market price (but not lower than zero of course), minus the price of the put. Only the writer of a call, who like a short seller agrees to sell stock to the buyer at the strike price, obliging the writer of the call to buy stock (unless he owns it already) at the market price—however high it goes—if necessary to honor the call, has as much exposure to loss as a short seller.

We don’t, strictly speaking, have to resolve the issue of the right of buyers of puts, or other option traders, to sue under Rule 10b-5. We described it as a threshold issue, but it is not jurisdictional. It has nothing to do with “standing” in the Article III sense; the buyers were harmed as a consequence of the defendant’s conduct and would be helped if the relief they seek is granted. It is true that when Congress makes clear that a statute is not intended to confer rights on a particular class of persons, a suit under the statute by a member of that class does not engage the jurisdiction of the federal courts, Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 814, 106 S.Ct. 3229, 3235, 92 L.Ed.2d 650 (1986), so. that the court must dismiss it even if neither party notices the problem, just as if there were no standing in the Article III sense. But if the scope of the statute is unclear, the question whether a particular class is protected by it becomes just another issue concerning the merits of the suit and therefore one that the court need not decide if, as we shall see is the case here, another issue is fully dispositive. This is especially true where, as is also true in this case, that other dispositive issue cannot be avoided. The plaintiffs include sellers of Allegis stock as well as option traders, and the rights of those sellers do not depend on whether option traders are entitled to participate in the suit.

Still, since the issue misnamed standing has been fully briefed and is fully ripe for decision, and its resolution does not appear to be open to substantial doubt, and the investment community is entitled to know where it stands on important issues of liability, we think it best not to be coy. We hold that option traders have standing to sue under Rule 10b-5.

This brings us to the main question presented by the appeal, which is whether the district judge erred in granting summary judgment for Allegis on the ground that there was insufficient evidence of fraud to create a jury issue. The story told by the plaintiffs begins in May of 1987, at which time Allegis, in addition to owning United Air Lines, its single biggest asset, also owned the Hilton and Westin hotel chains and the .Hertz car-rental company. A group of investors known as Conisten Partners, which owned 13 percent of the common stock of Allegis, announced that they wanted to take over Alleg-is’s board of directors in order to get the company to sell its nonairline properties, which were two-thirds of its total assets. Allegis quickly yielded to the demand for a bust up, announcing the following month that it would sell its nonairline assets and distribute the proceeds to the shareholders. There was still the question of how to make the distribution. One possibility was to distribute the proceeds to the shareholders in the form of a dividend. Another was a self-tender, in which MIegis would offer to buy a stated number of shares, using the proceeds of the sale of the nonairline assets to fund the purchase. Still another possibility (market repurchase), but one that received little consideration, was for Allegis to go into the market and buy up as many shares of its stock as the proceeds would enable it, and the rules of the Securities and Exchange Commission would permit it, to do. Some consideration may have been given to Alleg-is’s issuing puts on its stock and using the proceeds of the sales of the assets to buy back stock at the price specified in the-puts. Not considered at all was a spin off of the nonairline subsidiaries, which would have given Allegis’s shareholders shares in the spun-off companies to add to their Allegis shares. See generally Brealey & Myers, supra, at 373-74.

Coniston’s demand for a bust up did not specify the mode of distributing the proceeds. When the question was first discussed by the board of directors, at meetings in June and July of 1987, only the first two possibilities that we have outlined, a dividend distribution and a self-tender, were discussed, and the latter only very briefly. In August, Conisten raised for the first time the question whether a dividend distribution would be a tax-efficient method of distribution for it. A cash dividend is taxable to the recipient as ordinary income. If instead the proceeds of the sales of the nonairline assets were used to buy up shares, as in a self-tender, the sellers of" the shares, to the extent that they received more than they had paid for them, would be taxed on this profit at capital-gains rates, which at the time were lower. 26 U.S.C. §§ 1(h), (j) (1987).

The net difference in tax consequences between the two methods of distribution might be larger or smaller than the difference between ordinary-income and capital-gains tax rates, as a simplified example will show. Suppose that Corporation A has two wholly owned subsidiaries (and no other assets), one' worth $50 per share, the other $40 per share, so the price per share is $90. The second subsidiary, however, would be worth more were it owned by someone else. So A decides to sell it, anticipating that the sale of the subsidiary will yield $50 per share, so that when the sale is announced the price of A’s stock will rise to $100. If the sale of the subsidiary goes through and the proceeds— $50 per share — are distributed to the shareholders, the price of the stock will drop back to $50. Therefore a shareholder who does not want to pay income tax at ordinary-income rates on the $50 dividend has only to sell his stock, at $100, before the dividend is paid. He will have a gain measured by the difference between the price he paid for his stock and $100 but he will pay income tax on that gain at the capital-gains rather than the ordinary-income rate. This method of avoiding the higher tax rate on ordinary income is called “selling into the market.”

If instead of declaring a dividend our hypothetical Corporation A makes a self-tender for half its shares (half because the company is shrinking to half its original size as measured by value) at their current market value of $100 per share, a shareholder who accepts the tender will pay capital gains as before. But a shareholder is not required to accept a tender, and in the event he decides not to he won’t have to pay any tax at the time of the tender because he will not have realized his gain. Deferral of tax is a form of tax savings because of the time value of money, unless tax rates are expected to be much higher in future years.

The tax consequences of the self-tender route depend, however, on the demand for Corporation A’s stock by investors who are indifferent as between ordinary income and capital gains, perhaps because they are exempt from income tax. If there are few of them, it may be difficult to sell into the market at a good price, since any purchaser from such a seller who is not tax exempt will have to pay income tax at ordinary-income rates on the dividend that he will receive as the owner of the stock on the day the dividend is paid. Today, however, the market is thick with tax-exempt investors, such as pension funds and university endowment funds, and they are fond of blue-chip stocks such as Allegis. Conceivably, they would be willing to buy all the Allegis stock offered by shareholders wanting to sell into the market, and in that event the price of the stock would not be depressed by purchasers’ aversion to obtaining ordinary income in lieu of capital gains.

Taxes are not the only consideration in the choice between methods of distribution. An advantage of the self-tender is that a large shareholder need not reduce his influence over corporate management by selling any of his shares. An advantage of the dividend approach is that it gets the proceeds of the sale of the assets into the hands of the shareholders in the most direct way possible, without- any intervening stock transaction and hence with minimum transaction (and also regulatory-compliance) costs.

Despite Coniston’s preference for a self-tender, the next time the board discussed the method of distributing the proceeds of the contemplated sale of the nonairline assets, late in September, the only method discussed was the dividend. A few weeks later, on October 19, 1987, the stock market had its biggest crash since 1929. Allegis’s stock plunged nearly 30 percent. Nevertheless, ten days later the board issued a press release saying that the proceeds of the sales of the subsidiaries would be distributed to the shareholders in the form of dividends. The following month the board began having second thoughts, advised by its investment banker that the stock market crash had made self-tender an attractive alternative to cash dividends because with the price of the stock depressed many shareholders who would want to convert ordinary income to capital gains by selling into the market in advance of the payment of the dividend would be reluctant to do so, thinking it a bad time to sell. Believers in the efficient-markets hypothesis of finance theory think no time can be known in advance to be a better or a worse time to buy or sell stock, but they are still a minority of investors.

On December 9, 1987, the board announced in a press release that it would consider both alternatives — dividend and self-tender, rather than just the first. And on January 28,1988, after Conisten delivered an “ultimatum” to the board demanding self-tender, the board decided upon that method of distribution.

The plaintiffs argue that Allegis knew all along that self-tender would be the method of distribution, because that is what Conisten wanted; the only reason for the announcement of the dividend approach on October 29 was to put pressure on Conisten to relinquish its other demands, such as for control of the board. Because, the plaintiffs continue, self-tender was far more advantageous to most shareholders than the dividend approach, the announcement of October 29 caused share prices to fall, thus hurting shareholders who sold between then and December 8, when news that the company was at last considering a self-tender got about, ending the false impression that the October announcement had created.

There is no direct evidence either that Conisten before December 8 was insistent on a self-tender or that Allegis knew this and knew also that it must yield to Coniston’s demand. The plaintiffs argue that the dividend method of distributing the proceeds of the sale of Allegis’s nonairline assets was so patently irrational that Allegis must have been lying when it said that this was the method it was going to use. They support the argument with evidence that most recent bust ups have been implemented through self-tenders rather than dividend distributions. But they do not counter Allegis’s evidence that the dividend approach has advantages that might have commended it to the board. A self-tender would require the filing .of an offering statement with the SEC; a dividend would not. A self-tender would require each shareholder to make a decision (whether to accept the tender or not), and small shareholders might be in a quandary as to what to do, whereas the dividend would be automatic. Tax-indifferent shareholders, such as pension funds, might prefer the dividend because it would reduce transaction costs; they would not have to sell into the ' market, in order to obtain a tax advantage.

Against these advantages must be set the disadvantage to taxpaying shareholders of having to pay income tax at ordinary-income rather than capital-gains rates, or, if they sold into the market, to pay capital-gains taxes sooner rather than later; but the plaintiffs refuse to acknowledge the possibility that selling into the market might reduce the tax disadvantages of the dividend route substantially, even though not all the way to zero. When they say that Conisten would have incurred a $100 million tax liability if the proceeds of the sales of the nonairline assets had been distributed as dividends, they are ignoring the possibility of Coniston’s selling into the market. True, Conisten would not want to do this if it wanted to retain its influence over Allegis, which depended on the size of its shareholdings. So far as appears, however, the main reason Conisten had wanted to gain control of Alleg-is was to get it to divest itself of its nonair-line subsidiaries, which would be the result whether the company took the dividend or the self-tender path.

No rational jury could infer from a comparison in the abstract of the two methods of distributing the proceeds of the contemplated sales that Allegis was lying when it announced that it was going to use the dividend method. It thus becomes critical to determine whether there is any evidence besides the comparison. There is evidence that Co-nisten had always preferred the self-tender route, rather than coming gradually to a firm decision issuing in the ultimatum of January 1988. For in its self-tender offer, made the following month, Allegis acknowledged that back in the summer and fall of the previous year Conisten had “supported the making of a cash tender offer for a significant portion of the Shares rather than the payment of a dividend.” There is also evidence that Coni-sten preferred to have Allegis write puts on its stock, a method of distribution which would operate like a self-tender, and that Conisten expected Allegis eventually to accede to Coniston’s preferred method of distribution whatever that should turn out to be. But there is no evidence that Coniston’s preference for a self-tender or the equivalent was so intense that Allegis’s board of directors must have been fooling, or bluffing, when it opted for the dividend route. Conisten knew how to make its demands known to Allegis. It demanded a bust up, and got it, and in January 1988 it demanded a self-tender, and got that too. The absence of any evidence of a demand for the self-tender before January 1988 — the sort of evidence that was held to preclude summary judgment in Kronfeld v. Trans World, Airlines, Inc., 832 F.2d 726, 729, 737 (2d Cir.1987) — is a telling indication that until then Conisten was willing to go along with the dividend approach, which was the board’s preference.

The plaintiffs try to turn this pregnant silence to their advantage by arguing that it suggests a cover-up by Allegis and Conisten (who are now friends). But a ease cannot be built on the absence of evidence. One reads that it is an occupational failing of counterintelligence services that “those who believe in the enemy in our midst have minds insulated against evidence; its absence proves the extreme skill of the enemy.” A.W. Brian Simpson, In the Highest Degree Odious: Detention Without Trial in Wartime Britain 108 (1992). That won’t do as a theory of Rule 10b-5 liability. The natural interpretation of the absence of evidence that Conisten was demanding self-tender from the start is simply that not until sometime after October 29 did Conisten decide to make an issue of the method of distribution. Although it was a very powerful shareholder of Allegis (more precisely an alliance of shareholders) — the defendant’s lawyer herself, at argument, described Conisten as an 800-pound gorilla — it did not control Allegis and even a very powerful shareholder does not insist on getting his way every time. And even if, despite its lack of control, Conisten was at all times powerful enough to make Allegis dance to its tune, perhaps because it could make a credible threat to wage a successful proxy fight for control of the board, the plaintiffs have failed to show that the additional tax liability faced by Conisten if the dividend route were followed was so large that it is inconceivable that Conisten would have permitted Allegis to follow that route, and that Allegis knew this on October 29.

To prove fraud by purely circumstantial evidence is difficult, and the plaintiffs have not been able to surmount the difficulty. Although Allegis may have known on October 29 that the dividend proposal was a complete non-starter, there is no direct evidence of this and the plaintiffs’ effort to prove it indirectly founders on its inability to show how great a tax disadvantage Allegis faced if the proposal was adopted.

We can imagine other kinds of indirect evidence of fraud. Had Conisten gone ballistic when the dividend proposal was announced, this would be some evidence, alternative to an actual calculation of its incremental tax liability under the proposal, that the tax disadvantage to it was so great as to make the proposal obviously nonviable,. hence nonserious and merely a gambit in its ongoing struggle with the board of directors. But there is no evidence that Conisten protested before the end of the complaint period. The stock market, moreover, believed that the dividend proposal was viable. Otherwise the price of the stock would not have risen when it became known that Allegis would probably switch to a self-tender — the switch would have been anticipated and so discounted in the price of the stock. If it is obvious, as the plaintiffs believe, that the self-tender route would be the one eventually followed, why was the market surprised when Allegis disclosed that it was considering that route? The market is not infallible, but a case of fraud cannot be founded entirely on conjecture.

The plaintiffs argue, finally, that the October 29 announcement was misleading because AHegis’s lawyers and investment bankers were still studying the tax consequences of the dividend approach. All the record shows, however, is, in the plaintiffs’ own word, “sporadic” study of the issue both before and after the announcement. Even after the board decided on October 29 to go the dividend route, it could be expected to continue studying the tax issue, since the announcement might cause squawks among shareholders facing a heavy tax liability that a self-tender might reduce. Eventually it did cause a loud squawk — from Conisten. There is no evidence of an earlier squawk.

The district judge was right to grant summary judgment for the defendant.

AFFIRMED.


author: KANNE, Circuit Judge.

text:
    In the Matter of Dorothy McFARLAND, Debtor-Appellee. Appeal of SOUTH DIVISION CREDIT UNION.
    No. 95-1874.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 3, 1996.
    Decided May 23, 1996.

      Lauren Newman (argued), Robert J. Wa-linski, Walinski & Trunkett, South Div. Credit Union, Chicago, IL, for Appellant.
    Melvin J. Kaplan, Bennett A. Kahn (argued), Chicago, IL, for Debtor-Appellee.
    Before COFFEY, MANION, and. KANNE, Circuit Judges.
   KANNE, Circuit Judge.

South Division Credit Union filed an adversary complaint in a chapter 7 bankruptcy proceeding alleging the nondischargeability of the balance on a promissory note executed by the debtor, Dorothy McFarland. The bankruptcy court determined that only a fraction of the total balance was nondis-chargeable under the relevant statute, and the district court affirmed. South Division Credit Union v. McFarland, 179 B.R. 87 (N.D.Ill.1995). The district court found that the statutory language requires only that the amount of additional credit extended to the debtor in such a transaction is nondischargeable. This appeal followed, and it presents us with the question whether the discharge exception prescribed by 11 U.S.C. § 523(a)(2)(B) encompasses the entire amount of a loan whose proceeds are used in part to extinguish the debtor’s obligation on a previous loan from the same creditor.

I

The material facts are undisputed. McFarland had been a longtime Credit Union customer when she executed a promissory note on May 29, 1991, in the amount of $7,669.97 with a maturity date of February 28, 1995. She consistently made timely payments on this note. On May 11, 1993, McFarland applied for a loan from the Credit Union in the amount of $9,257.17 and subsequently executed a promissory note for this amount. The loan secured by the May 1993 note comprised a disbursement of $3,500 to McFarland and the satisfaction of her obligation on the May 1991 note, which then had a balance of $5,757.17.

The record suggests that this was the typical method by which the Credit Union extended additional credit while simultaneously refinancing existing debt. McFarland executed five separate promissory notes between December 10,1990, and May 11, 1993. We itemize the notes below using the terms that appear on the face of the notes:

Origination date Loan amount Disbursed to McFarland Credited to account Maturity date
12/10/90 $6,948.54 $ 900.00 $6,048.54 07/09/94
02/13/91 $7,549.96 $ 835.00 $6,714.96 02/13/95
05/29/91 $7,669.97 $ 500.00 $7,169.97 02/28/95
05/05/92 $7,233.36 $1,000.00 $6,233.36 05/01/96
05/11/93 $9,257.17 $3,500.00 $5,757.17 05/01/98

The terms of these promissory notes demonstrate that the proceeds of each note were used to pay off whatever balance McFarland owed the Credit Union on the most recent note. The remaining sum represented the amount of additional credit that the Credit Union extended to her on the same terms as those covering the refinancing of her outstanding balance. The Credit Union disbursed the additional credit to McFarland in the form of cash payments. Each promissory note referenced the same member, account, and contract numbers and the same secured collateral of $300.00 that was contained in McFarland’s account with the Credit Union.

McFarland applied for the May 1993 loan by providing the Credit Union with a financial statement that purported to list her assets and liabilities. She failed to include in that statement her liability as cosigner on a $7,000 promissory note to the Overland Bond Company (the “Overland note”) and the fact that she owed the Internal Revenue Service $1,500. The Credit Union made the May 1993 loan because the incomplete information McFarland provided showed a debt-to-income ratio of 42 percent, below the Credit Union’s limit of 45 percent. Had McFarland disclosed her liability on the Overland note or her debt to the IRS, the Credit Union would have calculated her debt-to-income ratio as exceeding 45 percent and denied her application. Had that occurred, the May 1991 note would have remained in force with a maturity date of February 28,1995.

McFarland filed for liquidation under chapter 7 of the Bankruptcy Act of 1988, 11 U.S.C. § 701 et seq., on September 8,1993, in the Northern District of Illinois. At that time, the May 1993 note had an outstanding balance of $8,712.28. The Credit Union filed an adversarial complaint in the bankruptcy proceeding seeking a determination that the entire balance of $8,712.28 was nondischargeable pursuant to the fraud exception contained at 11 U.S.C. § 523(a)(2)(B). The bankruptcy court conducted a hearing on June 15, 1994, at which it heard testimony from McFarland and Eileen Ivanauskas, collection administrator at the Credit Union. Immediately following the parties’ closing arguments, the bankruptcy court ordered that $3,500 of the balance was nondischargeable pursuant to § 523(a)(2)(B)'.

The Credit Union appealed to the district court pursuant to 28 U.S.C. § 158(a), and the district court affirmed the bankruptcy court in a memorandum opinion and order dated March 9, 1995. 179 B.R. 87. The district court focused upon the statutory requirement that a debt be nondischargeable “to the extent obtained” by a materially false statement. It found that McFarland had obtained only the $3,500 additional credit by virtue of her false financial statement and that the Credit Union did not assume any risk on McFarland’s existing balance of $5,757.17 when it used that portion of the loan proceeds to retire the May 1991 note.

II

In liquidation cases under Chapter 7, the court is required to grant qualified debtors discharges from debts except as provided by 11 U.S.C. § 523. See 11 U.S.C. § 727(b). In a nutshell, discharge operates to void a judgment predicated upon the debtor’s personal liability to the extent the judgment encompasses any portion of the discharged debt and also enjoins the commencement of any action seeking such a judgment. See 11 U.S.C. § 524. Discharge essentially places a debtor in a safe harbor with respect to discharged debt(s).

The Bankruptcy Code exclusively governs the determination of whether a debt is nondisehargeable, Brown v. Felsen, 442 U.S. 127, 129-30, 99 S.Ct. 2205, 2208-09, 60 L.Ed.2d 767 (1979), and the exceptions to discharge are set out at 11 U.S.C. § 523. The statutory provision at issue concerns the discharge exception for debts incurred through materially false written statements:

A discharge under section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt—
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained, by — -
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive ....

11 U.S.C. § 523(a)(2)(B).

The Bankruptcy Code also describes procedures for resolving controversies concerning (non)dischargeability. Either the creditor or the debtor may file a complaint under § 523(c), which requires the district court to provide notice and a hearing to determine whether a debt qualifies for the exception described by § 523(a)(2)(B). 11 U.S.C. § 523(c); BankR. R. 4007. Debts that might otherwise qualify under § 523(a)(2)(B) are presumed dischargeable unless a creditor files a complaint and proves otherwise. 3 Collier on Bankruptcy ¶ 523.05B, at 523-18 (15th ed. Feb.1996). The creditor bears the burden of proving by a preponderance of the evidence that the debt meets the statutory exception requirements. Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 661, 112 L.Ed.2d 755 (1991); In re Thirtyacre, 36 F.3d 697, 700 (7th Cir.1994).

Because this appeal concerns the district court’s legal interpretation of § 523(a)(2)(B), our review is de novo. In re Sheridan, 57 F.3d 627, 633 (7th Cir.1995). Certain courts have construed the statutory exceptions to discharge “in favor of the debt- or” and have required that reasons supporting nondischargeability “be real and substantial, not merely technical and conjectural.” In re Tully, 818 F.2d 106, 110 (1st Cir.1987) (citation omitted). See also In re Miller, 39 F.3d 301, 304 (11th Cir.1994) (collecting authority). However, this interpretive gloss, whatever its pedigree in the statute’s legislative history, is insufficient to support a construction of § 523(a)(2)(B) that does not give due regard to the statute’s plain meaning, which is the starting point for our inquiry. See In re Witkowski, 16 F.3d 739, 745 (7th Cir.1994).

Ill

There are two causation requirements for nondischargeability of “an extension, renewal, or refinancing of credit” under § 523(a)(2)(B). The first is set forth in the “to the extent obtained by” language. The second causation element is incorporated in the requirement that the creditor rely on the materially false statement. See In re Goodrich, 999 F.2d 22, 24 (1st Cir.1993).

In our analysis and review, we cannot focus only on the former requirement and ignore the plain meaning of the language immediately preceding it. Such an approach would offend the venerable canon that one must read a statute as a whole and give meaning to each of its constituent parts. See United States v. Nordic Village, Inc., 503 U.S. 30, 35-36, 112 S.Ct. 1011, 1015, 117 L.Ed.2d 181 (1992); Trustees of the Chicago Truck Drivers, Helpers and Warehouse Workers Union (Independent) Pension Fund v. Leaseway Transp. Corp., 76 F.3d 824, 828 (7th Cir.1996).

Read as a contextual whole and as applicable to the facts of this case, § 523(a)(2)(B) provides that dischargeability is not available for “... an extension, renewal, or refinancing of credit, to the extent obtained by ... use of a written statement ... that is materially false.”

The May 1993 note was, in part, a refinancing of the May 1991 note: the proceeds of the McFarland’s May 1993 note were used to pay off her existing debt on the May 1991 note. See Webster’s ThiRD New INTERNATIONAL DICTIONARY 1908 (1986) (defining refinance); Blaok’s Law Dictionary 1281 (6th ed. 1990) (same). The May 1993 note extended the maturity date on the balance of the May 1991 note and concomitantly increased McFarland’s financial obligation on that balance by imposing the additional interest that would accrue over the term of the note. Absent compelling evidence to the contrary, we assume that words in a statute carry the weight of their ordinary, contemporary, and common meaning. Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 388, 113 S.Ct. 1489, 1495, 123 L.Ed.2d 74 (1993). The ordinary and common meaning of “refinance” in the context of § 523(a)(2)(B) requires that the portion of the May 1993 note constituting the balance previously due on the May 1991 note be nondischargeable.

It is clear that the Credit Union relied upon McFarland’s application not only in extending her $3,500 in additional credit but also in refinancing her existing debt. The Credit Union’s collections administrator testified that the Credit Union would not have written the May 1993 loan had it known of McFarland’s liability on the Overland note and indebtedness to the IRS.

One final point should be noted. The language of the district court’s order suggests that its analysis was premised upon a conclusion that the Credit Union was no worse off than it would have been had it not refinanced McFarland’s debt on the May 1991 note prior to her filing under Chapter 7. This implies the existence of a detriment requirement in the statute, but the text of § 523(a)(2)(B) contains no damage or detriment requirement, and the courts are not empowered to add one. See In re Norris, 70 F.3d 27, 29 n. 6 (5th Cir.1995) (noting that such a requirement would be surplusage in light of the two causation requirements in § 523(a)(2)(B)). For those who would resort to legislative history to reach this conclusion, the First and Tenth Circuits have concluded that the history attending the enactment of § 523(a)(2)(B) confirms our (and their) plain reading of the statute. See Goodrich, 999 F.2d at 25-27; In re Gerlach, 897 F.2d 1048, 1051 & n. 2 (10th Cir.1990). We do not reproduce their discussions here, for there is no need to examine legislative history where the words of a statute are clear. Barnhill v. Johnson, 503 U.S. 393, 401-02, 112 S.Ct. 1386, 1391, 118 L.Ed.2d 39 (1992); United States v. Hudspeth, 42 F.3d 1015, 1022 (7th Cir.1994) (en banc), cert. denied, — U.S. -, 115 S.Ct. 2252, 132 L.Ed.2d 260 (1995).

IV

The Credit Union reasonably relied upon McFarland’s materially false written statement in refinancing her balance of $5,757.17 on the May 1991 note and in extending her additional credit in the amount of $3,500. In accordance with § 523(a)(2)(B) the May 1993 note is nondischargeable in full.

The judgment of the district court is Reversed and this case is Remanded to the district court so that it may enter judgment consistent with this opinion.

      . The sum classified as “credited to account" on each promissory note were devoted to discharging McFarland's obligations on the preceding promissory note.

      . Following the Supreme Court's plurality opinion in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), the district courts retain “original and exclusive jurisdiction of all cases under title 11 [of the United States Code],” subject to the provisions of 28 U.S.C. § 1334(b). 28 U.S.C. § 1334(a). The district court is empowered to refer proceedings under Title 11 to a bankruptcy judge from the district pursuant to 28 U.S.C. § 157(a). The bankruptcy court is therefore an adjunct of the district court.


author: HARLINGTON WOOD, Jr., Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Adegboyega Ayorinde Oladapo Oladipo AKINDELE, also known as Garland Crum; and Babatunde Lawal, also known as Keith Woolsey, also known as Donald Nowak, also known as Donald Clayton, also known as Alan Bott, Defendants-Appellants.
    Nos. 95-1582, 95-1583.
    United States Court of Appeals, Seventh Circuit.
    Argued Dec. 6, 1995 .
    Decided May 23, 1996.

      Barry Rand Elden, Chief of Appeals, Gregory Mitchell (argued), Office of the U.S. Atty., Crim. Appellate Div., Chicago, IL, for Plaintiff-Appellee.
    John P. DeRose (argued), DeRose & Associates, Burr Ridge, IL, for Defendant-Appellant.
    Before POSNER, Chief Judge, and WOOD, JR., and EVANS, Circuit Judges.

       The appeal of Akindele was argued on December 6, 1995; the pro se appeal of Lawal was submitted for decision on the briefs and record on the same date.

   HARLINGTON WOOD, Jr., Circuit Judge.

Adegboyega Ayorinde Oladapo Oladipo Atóndele (“Atóndele”) and Babatunde Lawal (“Lawal”) appeal the sentences imposed by the district court following their guilty pleas to charges of mail fraud, credit card fraud, bank fraud, aiding and abetting, and unlawful use of social security numbers. We affirm the sentences imposed by the district court.

I. BACKGROUND

The intricate web of deceit and intrigue woven by Atóndele and Lawal first began to unravel in October 1993, when Atóndele was arrested for a traffic violation. The police officers on the scene noted that Atóndele, who claimed that his name was Garland Crum, had numerous documents in his possession bearing different social security numbers and names. Shortly thereafter, on November 26, 1993, Atóndele was arrested by federal officials as he attempted to execute a large withdrawal from an account that had been opened in the name of Garland Crum. Lawal was arrested on December 4, 1993, after officials investigating Akindele’s fraudulent schemes established Lawal’s involvement.

The fraudulent activities in question commenced shortly after Atóndele first moved to Chicago from New York in the spring of 1990. Falsely claiming that he was indigent, Atóndele used a variation of his name and a false social security number to begin receiving benefits from the Illinois Department of Public Aid. Using a different variation of his name and a different social security number, Atindele secured employment in the accounting department of the A.B. Dick Company a short while later. After working for a few months, Atóndele quit his job in January 1991, allegedly for the purpose of receiving unemployment compensation. Atóndele continued to employ false names and social security numbers to receive unemployment compensation and public assistance benefits up until the time of his arrest.

Lawal, whom Atóndele had first met in Nigeria several years before, moved to Chicago from New York around May 1992. Ak-indele and Lawal became reacquainted and eventually shared an apartment together. In June 1992, Atóndele advertised that his “business,” which he had recently incorporated under the name Addison Properties, Inc., was in the market to purchase mortgages. Akindele’s ploy was successful, and he received numerous completed mortgage applications from a mortgage loan company. Ak-indele and Lawal used the social security numbers and other personal information contained in these mortgage applications to fraudulently obtain credit cards and bank loans and to open checking accounts. Atón-dele and Lawal then used these credit cards, lines of credit, and checking accounts to obtain cash, goods, and services.

Around this time, Lawal established a sham business of his own, the Hawthorne Brokerage Company, which Lawal and Atón-dele used to process further fraudulent credit card and loan applications. . Atóndele also used the Hawthorne Brokerage Company as a personal reference in order to obtain an apartment under a false name and Atóndele then used this new mailing address to receive further credit cards and other loan documents.

Beginning in September 1992, Atóndele began using the name and social security number of Garland Crum. Unlike the other names and social security numbers which they had obtained, Atóndele and Lawal were careful to safeguard and enhance Crum’s credit history. Toward this end, Atóndele and Lawal opened several bank accounts under the Crum name, into which they tunneled much of their ill-gotten gains. The creditworthy Crum identity, and the several large bank accounts established under this name, were then used to secure further bank loans, including two car loans, personal loans, and a mortgage loan.

Atóndele and Lawal were initially indicted on January 26, 1994, and February 3, 1994, respectively. On June 29, 1994, a thirty-five count superseding indictment was returned, following the failed efforts of Atóndele and Lawal to negotiate a guilty plea. Lawal then moved for severance of the proceedings, and a second superseding indictment was returned shortly thereafter; the charges were reduced to twenty-one counts. The charges included mail, bank, and credit card fraud, aiding and abetting, and unlawful use of social security numbers.

After the defendants pleaded not guilty to the counts contained in the second superseding indictment, the district court set a trial date for October 3, 1994. Before this date, Atóndele twice informed the court that he intended to plead guilty, but his offers were rejected because they failed to encompass the entire indictment. On October 3, 1994, the jury was impaneled.

The next day, Atóndele and Lawal informed the court that they wished to plead guilty. After verifying that the defendants were willing to enter guilty pleas to the entire second superseding indictment, the district court accepted their pleas. The district court reviewed the nature of each of the counts, the defendants formally pleaded guilty, and sentencing was set for January 9, 1995.

In the interim, the U.S. Probation Office prepared a Presentenee Investigative Report (“PSI”) for each defendant. Both defendants objected to the government’s loss calculations. In addition, Lawal raised several pro se objections to the PSI which seemed to contradict his earlier guilty plea. Following a 3-day hearing, the district court rejected the defendants’ objections to the PSI and sentenced Atóndele to 58 months imprisonment, 5 years of supervised release, 500 hours of community service, and he was ordered to pay $50,700 in restitution; Lawal was sentenced to 30 months imprisonment, 2 years of supervised release, 300 hours of community service, and he was ordered to pay $25,000 in restitution. These sentences included a two-level increase for obstruction of justice for Atóndele under U.S.S.G. § 3C1.1 and an upward departure of two-levels for both defendants under U.S.S.G. § 5K2.0. No sentencing credit was granted to either defendant for acceptance of responsibility under U.S.S.G. § 3E1.1. These appeals followed.

II. DISCUSSION

Atóndele and Lawal raise a host of challenges to their sentences. We need only address the most meritorious of these arguments here.

A. Upward Departures

Atóndele and Lawal first challenge the district court’s decision to upwardly depart from their base offense levels pursuant to U.S.S.G. § 5K2.0. Section 5K2.0 states, in pertinent part:

[T]he sentencing court may impose a sentence outside the range established by the applicable guideline, if the court finds “that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described.”

(quoting 18 U.S.C. § 3553(b)). Acting under this authority, the district court increased each defendant’s offense level by two levels. The district court reasoned that the nature and degree of harm suffered by the individual victims of Atóndele and Lawal’s scheme had not been adequately considered by the Commission.

We employ a three-step approach in our review of a district court’s departure from the applicable guideline range:

(1) we review de novo whether a district court’s stated grounds for departure may be relied upon to justify the departure; (2) we review for clear error whether the facts that support the grounds for departure actually exist in the ease; and (3) we review deferentially whether the degree of departure is appropriate.

United States v. Seacott, 15 F.3d 1380, 1386 (7th Cir.1994) (citations omitted).

First, we must determine whether the Commission adequately considered the aggravating factor behind the departure. If the Commission has considered the factor, a departure is not justified. Atóndele and La-wal primarily challenge the departure on the BS round that it was based upon an improper analogy to the vulnerable victim classification of U.S.S.G. § 3A1.1. It is our conclusion that the sentencing court got this issue right — we agree that the Commission did not adequately consider the sort of harm suffered by the individual victims here.

We should initially note, however, that we do concur with the appellants insofar as we feel that a direct analogy to the vulnerable victim classification here would be improper. We readily acknowledge that the completion of a mortgage application places one in a vulnerable position-there on the page, most of that personal information which our modern society views as essential lies exposed. Moreover, these victims were targeted because they were susceptible. After all, Atóndele and Lawal could have cold-called random individuals and tried to wheedle pertinent credit information out of them, but this would have meant more work for less gain. A departure on this ground would be improper because vulnerability of this sort has already been adequately considered by the Commission, as evidenced by the existence of § 3A1.1.

The district court, however, was expressly swayed by the nature and degree of harm suffered by the appellants’ victims— not by their exceptional vulnerability. As the record indicates, the victims were caused a great deal of worry and inconvenience, their credit histories were tarnished, and criminal records were erroneously created in their names. The record reveals that the district court turned to § 3A1.1 only after it had decided that a departure was warranted; the court’s purpose at that time was limited to the determination of how large a departure to craft. This limited analogizing was not erroneous, in fact it was required under the Guidelines: “In departing the judge should compare the seriousness of the aggravating factors at hand with those the Commission considered.” United States v. Ferra, 900 F.2d 1057, 1062 (7th Cir.1990).

Thus, we may now reach the gist of the first step of our review — whether the type and degree of harm suffered by these victims is adequately considered in the Guidelines. The pertinent Guideline section for offenses involving fraud or deceit is § 2F1.1. A review of this section indicates that the Commission was most concerned with the amount of loss, the degree of premeditation, and the number of victims. The Background to § 2F1.1 confirms this limited focus:

Empirical analyses of pre-guidelines practice showed that the most important factors that determined sentence length were the amount of loss and whether the offense was an isolated crime of opportunity or was sophisticated or repeated. Accordingly, although they are imperfect, these are the primary factors upon which the guideline has been based.

Section 2F1.1 does expressly authorize a harm-based increase, but it is confined to victimized financial institutions. See § 2Fl.l(b)(6)(A). The facts of this case demonstrate, however, that individual victims of fraud may also be harmed in a fashion which transcends the mere amount of loss. As the Application Notes state, a departure is appropriate in such a situation: “In cases in which the loss determined under subsection (b)(1) does not fully capture the harmfulness and seriousness of the conduct, an upward departure may be warranted.” U.S.S.G. § 2F1.1, App. Note 10. Accordingly, we conclude that the district court did not err when it determined that a departure was justified under these facts.

This brings us to the second step of our review — whether the record adequately supports the conclusion that the individual victims of Atóndele and Lawal’s fraud were harmed in a manner more serious than the loss or intended loss to these victims would otherwise indicate. At the sentencing hearing, testimony was given by two of the approximately fifteen victims of the appellants’ scheme. Donald Nowak, who drove several hundred miles to attend the sentencing hearing, testified that he is unable to open a checking account and that the trouble he experienced in obtaining loans forced him to accept a loan with unfavorable terms. Sentencing Transcript, at 89-90. Peter Kennedy testified that the credit-related problems he encountered were aggravating, extremely time consuming, and necessitated the hiring of an attorney: “[W]e go for sixteen years working on a perfect [credit rating] and then someone comes along in a year and screws it up on you.” Sentencing Transcript, at 97. This testimony, and the other evidence of record, led the district court to conclude:

[I]t is an enduring victimization in that the persons subjected to it may never totally recover, because it is true that once your name is sullied, it’s very difficult to get everyone in the world to believe [the truth] ... and you are then subject continually all your life to the possibility of being blindsided, although now you might know where it originated, you don’t know how it has proliferated.... If you will, it’s like having adult chicken pox and always wondering whether you’re going to get shingles.

Sentencing Transcript, at 290. The appellants do not seriously challenge the district court’s findings regarding the hardships suffered by their victims. Accordingly, we find that the record adequately supports the district court’s factual findings on this subject.

Last, we ask whether the district court abused its discretion when it determined that a two-level departure was called for under these circumstances. As we have previously stated, a decision to depart must be linked to the rationale and methodology of the Guidelines. See, e.g., United States v. Thomas, 930 F.2d 526, 530-31 (7th Cir.) (citations omitted), cert. denied, 502 U.S. 857, 112 S.Ct. 171, 116 L.Ed.2d 134 (1991), overruled on other grounds, United States v. Canoy, 38 F.3d 893, 906 (7th Cir.1994). “The sentencing judge is thus required to articulate the specific factors justifying the extent of his departure and to adjust the defendant’s sentence by utilizing an incremental process that quantifies the impact of the factors eonsid-ered by the court on the defendant’s sentence.” Id. at 531.

We conclude that the district court correctly linked its departures here to the structure of the Guidelines. The court specifically explained its reason for departing — the unusual nature and degree of harm suffered by the individual victims of the fraud — and it then properly quantified the impact of this factor by comparing it to other aggravating factors which the Commission has considered. As discussed above, this comparison was the primary purpose behind the district court’s analogy to the vulnerable victim classification of § 3A1.1. Contrary to the appellants’ assertions, the court only turned to this classification in an effort to determine how large a departure was warranted, not to determine whether a departure was called for in the first place.

Thus, we conclude that the departures were consistent with the dictates of the Guidelines. Before moving on to the next issue, however, we must address the appellants’ final departure-related argument. Akindele and Lawal claim that they were not provided with sufficient notice that the district court was contemplating a departure from their respective Guideline ranges. It is well established that some prior notice of intent to depart is required. See, e.g., Burns v. United States, 501 U.S. 129, 135, 111 S.Ct. 2182, 2185-86, 115 L.Ed.2d 123 (1991).

Our review of the record reveals that Akin-dele and Lawal were provided with notice that a departure might be considered. The government expressly mentioned § 5K2.0 in its response to Akindele and Lawal’s objections to their PSIs. The government stated that it:

intend[ed] to make a motion for an upward departure pursuant to § 5K2.0, in that financial loss calculations do not adequately reflect the seriousness of harm caused to the individual victims ... whose credit history and good names have been immeasur-abl[y] damaged. Further, some of the victims suffered embarrassment, frustration, and other inconveniences, as well as, incurred legal debts in an effort to defend themselves from collection agencies and department stores as a result of defendants[’] fraud schemes.

Such a prehearing submission by the government is sufficient to put a defendant on notice. Burns, 501 U.S. at 138, 111 S.Ct. at 2187.

The government did, however, quite specifically condition its intention to seek a departure. The government initially averred that it would only request such a departure if the district court arrived at a lower loss calculation than the government believed was appropriate. Although the government was able to secure base offense levels for each defendant consistent with its wishes, it nevertheless decided to pursue departures.

We conclude that the appellants were not prejudiced by the government’s “broken promise.” After all, Akindele and Lawal did not learn that the district court would accept the government’s loss calculations until during the sentencing hearing. Faced with that uncertainty, the departure issue could and should have been thoroughly researched beforehand. The (albeit conditional) notice provided by the government contained all the information necessary for Akindele and La-wal to prepare and respond effectively. See Burns, 501 U.S. at 138-39, 111 S.Ct. at 2187 (holding that the requisite “notice must specifically identify the ground on which the district court is contemplating an upward departure”) (footnote omitted).

The appellants correctly note that no mention was made before the sentencing hearing that the district court might look to the vulnerable victim classification of § 3A1.1. As discussed above, however, the district court analogized the situation before it to the vulnerable victim classification only after it had decided that a departure was warranted. The analogy was employed for the limited purpose of determining the appropriate degree of departure.

Moreover, after the vulnerable victim analogy was raised, counsel for the appellants were able to research this issue during a lunch break. After the break, the court asked whether they required additional time: “Do you feel that you need more time or that you have been unfairly treated by this subject being raised in the fashion it has in the last couple of days, because I’ll give you more. time if need it.” Sentencing Transcript, at 286. Gerald Collins, counsel to Lawal and the defense attorney delegated to address the departure issue, replied: “I don’t feel I need more time.... [W]hy do I need more time to answer when [the government] doesn’t have a ground?” Id. at 286-87. Therefore, we conclude that the appellants were provided with sufficient notice of the contemplated departures.

B. The Denial of Reductions for Acceptance of Responsibility

Akindele and Lawal next argue that the district court improperly refused to grant them each a two-level decrease of their base offense levels for acceptance of responsibility pursuant to U.S.S.G. § 3E1.1. The district court’s acceptance of responsibility determination is a factual decision which we subject to clear error analysis. United States v. Townsend, 73 F.3d 747, 754 (7th Cir.1996) (citations omitted). See also U.S.S.G. § 3E1.1, App. Note 5 (“The sentencing judge is in a unique position to evaluate a defendant’s acceptance of responsibility. For this reason, the determination of the sentencing judge is entitled to great deference on review.”). Reviewing the record under this deferential standard, we cannot conclude that the district court has committed clear error here.

Under § 3El.l(a), a decrease may only be granted “[i]f the defendant clearly demonstrates acceptance of responsibility for his offense.” The Application Notes to § 3E1.1 list the following non-exclusive list of appropriate considerations for use in this regard:

(a) truthfully admitting the conduct comprising the offense(s) of conviction, and truthfully admitting or not falsely denying any additional relevant conduct for which the defendant is accountable under § 1B1.3 (Relevant Conduct)_;
(b) voluntary termination or withdrawal from criminal conduct or associations;
(c) voluntary payment of restitution pri- or to adjudication of guilt;
(d) voluntary surrender to authorities promptly after commission of the offense;
(e) voluntary assistance to authorities in the recovery of the fruits and instrumen-talities of the offense;
(f) voluntary resignation from the office or position held during the commission of the offense;
(g) post-offense rehabilitative efforts (e.g., counseling or drug treatment); and
(h) the timeliness of the defendant’s conduct in manifesting the acceptance of responsibility.

U.S.S.G. § 3E1.1, App. Note 1.

The burden rests upon the defendant to “clearly demonstrate” his entitlement to a reduction under § 3E1.1 and this showing must be made by a preponderance of the evidence. United States v. Morris, 76 F.3d 171, 175-76 (7th Cir.1996) (citations omitted). Akindele and Lawal claim that they clearly demonstrated their acceptance of responsibility by cooperating with the government, admitting their roles in the fraudulent scheme, and by pleading guilty. As the Application Notes expressly state, however, “[a] defendant who enters a guilty plea is not entitled to an adjustment under this section as a matter of right.” U.S.S.G. § 3E1.1, App. Note 3. That evidence of contrition which is established by a guilty plea “may be outweighed by conduct of the defendant that is inconsistent with such acceptance of responsibility.” Id.

The record reveals several actions by Ak-indele and Lawal which may be viewed as inconsistent with an affirmative acceptance of responsibility. We need only discuss two illustrative examples here. First, it is probative of appellants’ penitence that they did not enter their guilty pleas until after two days of jury selection. By this time, more than a year had passed since the grand jury returned its second superseding indictment. The Application Notes expressly mention “the timeliness of the defendant’s conduct in manifesting the acceptance of responsibility” as one factor to consider in the § 3El.l(a) determination. U.S.S.G. § 3E1.1, App. Note 1(h).

Practical concerns and common sense also dictate that defendants manifest their acceptance of responsibility in a timely fashion_ Last minute pleas contribute to the delays and backlog that plague federal and state court dockets. Not only are jurors and witnesses inconvenienced because they have been summoned at great expense to the public but also the trial court has allocated trial time that cannot be immediately filled by another ease because witnesses and counsel are not immediately available and cannot lay aside their other daily responsibilities and endeavors at the drop of a hat.

United States v. Tolson, 988 F.2d 1494, 1499 (7th Cir.1993). It is not clear error to view such a last minute plea as more indicative of a defendant’s wish to escape greater punishment than as a genuine expression of contrition.

Second, Akindele and Lawal both objected to the characterization of their activities as a conspiracy, going so far as to argue that they had actually acted “in spite of’ one another. The record, however, is replete with evidence indicating that a confederacy for the purpose of furthering the fraudulent scheme at issue did indeed exist between Akindele and La-wal. Among other examples of their joint efforts, Akindele shared the credit information that he obtained through the operation of his sham business, Akindele used Lawal’s sham business as a reference to obtain an apartment under a false name, and Akindele returned items purchased by Lawal with fraudulently obtained credit cards for cash or store credit.

We have previously observed that “[c]ontesting the veracity of the alleged relevant conduct is no doubt permissible and often perfectly appropriate. However, if a defendant denies the conduct and the court determines it to be true, the defendant cannot then claim that he has accepted responsibility for his actions.” United States v. Cedano-Rojas, 999 F.2d 1175, 1182 (7th Cir.1993). Whether the appellants’ denials of the existence of a conspiracy were fueled by their desire to secure a lesser sentence, or whether their denials primarily sprang from personal animosity between the two is of no account.

In the final analysis, “an appellate court is ill-equipped to assess whether a particular defendant is motivated by genuine acceptance of responsibility or by a self-serving desire to minimize his own punishment. Unlike the district court judge, we do not enjoy a ‘front row seat’ from which to assess [the defendant’s] statements and demeanor.” United States v. Taylor, 72 F.3d 533, 551-52 (7th Cir.1995) (quoting United States v. White, 993 F.2d 147, 151 (7th Cir.1993) (citation omitted)). From its superior vantage point, the district court concluded that Akin-dele and Lawal had not genuinely accepted responsibility for their actions. As the court stated at sentencing:

They have fought as hard as they could' to avoid responsibility for their actions in the opinion of the Court. Now they finally realize, to some extent with the advice, good advice of counsel, I suspect, they finally realize the smart thing for them to do is to plead, and they did, and since then they have had all sorts of remorse.... Lots of people get sorry when they’re facing the penalty. It’s human nature. I don’t accept it.

Sentencing Transcript, at 242. We conclude that this determination was not clearly erroneous.

C. The Increase of Akindele’s Offense Level for Obstruction of Justice

Akindele further argues that the district court erred when it increased his base offense level by two levels for obstruction of justice under U.S.S.G. § 3C1.1. Section, 3C1.1 provides: “If the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense, increase the offense level by 2 levels.” The sentencing court’s determination that a defendant has obstructed justice is a finding of fact which we review under the clearly erroneous standard. United States v. Casanova, 970 F.2d 371, 377 (7th Cir.1992) (citations omitted).

The record reveals that Akindele did attempt to conceal his identity when he was first arrested for a traffic offense in October 1993 by asserting that his name was Garland Crum. If this action constituted the entire extent of Akindele’s obstructive activities, he would likely prevail on this issue. Among the examples provided in the Application Notes of conduct which does not warrant the application of the § 3C1.1 enhancement is “providing a false name or identification document at arrest, except where such conduct actually resulted in a significant hinderance to the investigation or prosecution of the instant offense.” U.S.S.G. § 3C1.1, App. Note 4(a).

Akindele’s obstructive conduct was not limited to this single instance, however. Sometime after the October 1993 traffic arrest, Akindele incorporated the name Garland Crum. AMndele’s apparent motivation for this incorporation was revealed upon his arrest in November 1993, as he attempted to withdraw funds from an account opened under the Crum name. When questioned by a federal law enforcement official, Akindele again claimed that his name was Garland Crum. Akindele then quickly modified his story and maintained that he was, at least, entitled to use the Crum name in light of his recent act of incorporation. At the sentencing hearing, the court agreed with the government’s contention that Akindele incorporated the name Garland Crum in an effort to “legalize” it — and thereby keep his fraudulent scheme afloat — and to develop a defense in the event that he was apprehended.

The record also shows that, following his November 1993 arrest, Akindele instructed an acquaintance, Tonya Robinson, to complete a change of address form on Akindele’s behalf in order to redirect mail delivered to his residence to a post office box. The government charged that these actions were designed to prevent investigators from obtaining further information regarding AMndele’s activities. The Application Notes list, as illustrative of the type of conduct wMch the obstruction enhancement is designed to address, “destroying or concealing or directing or procuring another person to destroy or conceal evidence that is material to an official investigation or judicial proceeding.” U.S.S.G. § 3C1.1, App. Note 3(d).

We therefore conclude that the district court did not clearly err when it found that AMndele had obstructed, or attempted to obstruct, justice.

D. The Determination that Lawal was Accountable for Over $200,000 of Loss

Lawal also contests the district court’s finding that he is accountable for over $200,000 of loss. The district court reached this figure after it concluded that AMndele’s fraudulent procurement of certain bank loans constituted “relevant conduct” for purposes of determining Lawal’s base offense level. U.S.S.G. § 1B1.3. Where there is a “jointly undertaken criminal activity,” § lB1.3(a)(1)(B) directs the sentencing court to consider “all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity” when determining a defendant’s base offense level. The conclusion that conduct is “relevant” under § IB 1.3 is a factual finding wMch we review for clear error. United States v. Nunez, 958 F.2d 196, 198 (7th Cir.) (citation omitted), cert. denied, 506 U.S. 857, 113 S.Ct. 168, 121 L.Ed.2d 115 (1992).

No one disputes that Akindele committed the lion’s share of the fraudulent activities here in question. Moreover, it may well be time that Akindele concealed certain large bank loans from Lawal. It is also a fact, however, that Lawal pleaded guilty to all of the counts brought against him, including the bank fraud charges.

We conclude that the district court did* not clearly err when it found that Akindele’s fraudulent bank loans were reasonably foreseeable acts performed in furtherance of Ak-indele and Lawal’s jointly undertaken criminal activity. See U.S.S.G. § 1B1.3, Ulus. (c)(2). The Guidelines do not require that Lawal have been aware of the particulars of each and every action committed by Akin-dele. So long as AMndele’s actions were reasonably foreseeable and in furtherance of the jointly undertaken criminal activity, La-wal is as accountable as AMndele himself. The record indicates that Lawal knew that Akindele was purchasing properties; Lawal further knew that his activities would help Akindele accomplish tMs objective. In addition, Lawal’s arguments on this point- largely contravene his voluntary and knowing guilty plea and the district court correctly rejected Lawal’s efforts to re-litigate this issue.

We have also considered and rejected the other arguments raised by the appellants.

III. CONCLUSION

For the reasons provided above, we affirm the sentences imposed by the district court.

AFFIRMED.

      . Atóndele, a resident alien, was bom in London, England, to Nigerian parents; Lawal is a Nigerian national who is present illegally in the United States.

      . Atóndele later stated that he had found the social security card of Crum in an apartment building which he was renovating. The record indicates that the real Crum was serving a jail term during the relevant time period.

      . "In determining whether a circumstance was adequately taken into consideration, the court shall consider only the sentencing guidelines, policy statements, and official commentary of the Sentencing Commission.” 18 U.S.C. § 3553(b).

      . Section 3A1.1 states: “If the defendant knew or should have known that a victim of the offense was unusually vulnerable due to age, physical or mental condition, or that a victim was otherwise particularly susceptible to the criminal conduct, increase by 2 levels.”

      . As the court noted in response to an objection raised on this point by Akindele's attorney:
      It's a broader, more generic use that he is giving to [the vulnerable victim analogy] rather than a particular supportable argument. And you’re correct, it isn’t the same kind of vulnerable victim that the Guidelines discuss, but that is not what Mr. Mitchell says he intended to suggest_
      ... [H]e is trying to find values here that he suggests I might use as a benchmark or a touchstone or a comparative value to vulnerable victim. He didn’t say that I should enhance because they’re vulnerable victims.
      Sentencing Transcript, at 275-76.

      .As the district court noted: One's reputation is "the most easily lost and the hardest regained.” Sentencing Transcript, at 276.

      . Section 2F 1.1 (b)(6)(A) states: "If the offense— (A) substantially jeopardized the safety and soundness of a financial institution ... increase by 4 levels.”

      . One of the examples, provided in Application Note 10, of an instance where a departure may be warranted encompasses at least a portion of the harm at issue here: “Examples may include the following: ... (c) the offense caused reasonably foreseeable, physical or psychological harm or severe emotional trauma....” U.S.S.G. § 2F1.1, App. Note 10(c).

      . Gregory Mitchell, for the government, explained his actions on this subject as follows:
      I concur that I did not tell them affirmatively that I would be requesting an upward departure of two points or any points based on the evidence, and I can only state for the record that I could not make that motion or did not decide to make that motion until I had an opportunity to talk to the victims and that was not until the day before the sentencing ... first began.
      Sentencing Transcript, at 270.

      . Akindele, for example, asserts that he assisted the government by consenting to a search of a storage locker he had rented in the name of Garland Cram and by disclosing the location of two automobiles that he had purchased through his fraudulent scheme. The government, however, paints a less remorseful portrait of Akindele's conduct:

        [OJnly after Akindele was advised by the government that investigators had located a Public Storage locker in the name of Garland Cram ... and further advised that a search warrant would be obtained for the locker, did defendant admit that he had personal belongings stored in this locker and that some of the items stored in this locker belonged to Lawal.
      Government’s Response to Akindele’s Objections to the PSI, at 3.

      . Application Note 3 states:
      Entry of a plea of guilty prior to the commencement of trial combined with truthfully admitting the conduct comprising the offense of conviction, and truthfully admitting or not falsely denying any additional relevant conduct for which he is accountable under § IB 1.3 (Relevant Conduct) (see Application Note 1(a)), will constitute significant evidence of acceptance of responsibility....

      . It is true that Akindele did seek to plead guilty beforehand, but his offers were rejected on the ground that they did not encompass the entire indictment.

      . In his brief before this court, Akindele argues this point by glossing over certain facts of record:
      The Government asserted that when the scheme was first uncovered, Akindele was arrested under the name of Garland Crum rather than his actual name. The Government contended that the use of the name “Garland Crum" upon arrest was evidence of Akindele’s effort to continue his scheme. It was not until after his arrest on the traffic stop, that the Government first started to investigate his use of the identity of Garland Crum, his own several identities and social security numbers, and credit and loans he obtained through such use. He remained in custody throughout the pendency of the indictment in this cause....

        Obviously, while Akindele sat in custody no further action could be or was taken by him....
      Appellant Akindele’s Brief, at 24 (emphasis added). What Akindele omits to mention is the fact that more than a month passed between the time of “his arrest on the traffic stop” and the commencement of his period of "custody.” It was during this period that Akindele incorporated the Crum name and it was at the tail end of this time frame — upon his November 25, 1993 arrest — that Akindele again claimed falsely that his name was Garland Crum.

      . Akindele claims that his instructions to Robinson "were done not to obstruct justice but to protect the equity positions that had been established in the property.” Appellant Akindele’s Brief, at 25.

      . Pursuant to U.S.S.G. § 2Fl.l(b)(l)(I), the finding that Lawal’s offense involved a loss exceeding $200,000 added 8 levels to his base offense levél of 6.

      . Illustration (c)(2) closely parallels the circumstances of this case:
      Defendants F and G, working together, design and execute a scheme to sell fraudulent stocks by telephone. Defendant F fraudulently obtains $20,000. Defendant G fraudulently obtains $35,000. Each is convicted of mail fraud. Defendants F and G each are accountable for, the entire amount ($55,000). Each defendant is accountable for the amount he personally obtained under subsection (a)(1)(A). Each defendant is accountable for the amount obtained by his accomplice under subsection (a)(1)(B) because the conduct of each was in furtherance of the jointly undertaken criminal activity and was reasonably foreseeable in connection with that criminal activity.