                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 07a0213n.06
                            Filed: March 22, 2007

                                           No. 05-2664


                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

       Defendant-Appellant,

v.                                                    ON APPEAL FROM THE UNITED
                                                      STATES DISTRICT COURT FOR THE
TIMOTHY KOSINSKI,                                     EASTERN DISTRICT OF MICHIGAN

       Plaintiff-Appellee.

                                               /




BEFORE:        KEITH and CLAY, Circuit Judges; and MAYS, District Judge.*


       CLAY, Circuit Judge. Defendant, Timothy Kosinski, was convicted of one count of

conspiring to defraud the Internal Revenue Service (“IRS”) and to structure currency transactions

to evade IRS reporting requirements, in violation of 18 U.S.C. § 371; five counts of submitting false

federal income tax returns, in violation of 26 U.S.C. § 7206(1); and one count of structuring a

currency transaction to evade IRS reporting requirements, in violation of 31 U.S.C. §§ 5324(a)(3)

and 5324(d)(1). Defendant was sentenced to a term of three years under probation supervision, with



       *
        The Honorable Samuel H. Mays, Jr., United States District Judge for the Western District
of Tennessee, sitting by designation.
                                           No. 05-2664

the condition that the first six months be served in a halfway house and that the second six months

be served under home confinement. The government appeals the district court’s sentence. For the

following reasons, we VACATE the district court’s sentence and REMAND this case to the district

court for resentencing.

                                        BACKGROUND

       Defendant, a dentist, founded T.J. Construction (“T.J.”) in 1992. United States v. Kosinski,

127 F. App’x 742, 743-44 (6th Cir. 2005) (unpublished opinion). T.J. worked on construction

projects with Melvin Phillips (“Phillips”), Phillips Contracting and Thyssen Steel. Between 1996

and 1998, checks totaling $8,143,625 were drawn on T.J.’s business account and made payable to

Phillips, but were deposited in Defendant’s personal bank accounts. Defendant and his associates

withdrew money in cash, often engaging in multiple transactions on a single day. They concealed

the flow of this money by making numerous withdrawals of $9,500, an amount just under the IRS

reporting threshold of $10,000. Between January 1995 and May 1999, Defendant and his associates

withdrew $7,676,000 in cash from his various personal accounts. Although Defendant claimed tax

deductions for the full amount of $8,143,625, indicating that he paid Phillips and other contractors

in cash, at least $1,400,000 was never paid to Phillips Contracting.1

       Defendant used T.J.’s business account to pay for construction work performed at his

residence, his vacation home and his mother’s house between 1996 and 1998. Kosinski, 127 F.


       1
          Phillips and Phillips Contracting also appear to have engaged in a number of financial
irregularities. Payments Phillips made to his employees did not reflect any tax withholding and
Phillips Contracting did not file income tax returns with the IRS between 1995 and 1999. In
addition, Phillips maintained that he used cash to pay suppliers for construction material, but the
suppliers denied having ever received cash payments.

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                                           No. 05-2664

App’x at 744-45. Defendant claimed deductions for the construction work performed in his homes

and his mother’s house on T.J.’s business income tax return. On at least three occasions, Defendant

paid his construction manager $5,000 in cash. Id. at 745. Although the record is somewhat unclear

about the date of these payments, they appear to have been made during the period of the conspiracy:

1995 to 1999. The money was never reported to the IRS by any party.

       On June 20, 2002, a grand jury returned an indictment against Defendant charging him with

one count of conspiring to defraud the IRS and to structure currency transactions to evade IRS

reporting requirements, in violation of 18 U.S.C. § 371; five counts of submitting false federal

income tax returns, in violation of 26 U.S.C. § 7206(1); and three counts of structuring a currency

transaction to evade IRS reporting requirements, in violation of 31 U.S.C. §§ 5324(a)(3) and

5324(d)(1). On June 16, 2003, a jury found Defendant guilty on the first seven counts, but did not

find him guilty on two of the three structuring counts. On October 10, 2003, the district court

sentenced Defendant using the sentencing guidelines to calculate the applicable sentencing range.

The district court calculated the amount of Defendant’s tax loss by a preponderance of the evidence.

Kosinski, 127 F. App’x at 750. The district court found that the offense level corresponding to

Defendant’s tax loss amount was nineteen and that the applicable sentencing guideline range was

an imprisonment term of thirty to thirty-seven months. The district court awarded Defendant a

downward departure resulting in an offense level of eighteen and an imprisonment range of twenty-

seven to thirty-three months. Defendant was sentenced to two concurrent thirty month imprisonment

terms and was also ordered to pay a $7,000 assessment, a $60,000 fine, and incarceration costs.




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                                             No. 05-2664

        Defendant appealed his conviction to this Court on numerous grounds. See Kosinski, 127

F. App’x at 743-44. On March 22, 2005, this Court affirmed Defendant’s conviction, but vacated

the sentence because the district court used the sentencing guidelines as mandatory and “erroneously

sentenced him based on facts not found by the jury, in contravention of United States v. Booker, 543

U.S. 220 (2005).” Kosinski, 127 F. App’x. at 750. The Court held that Defendant’s sentence

violated Booker because Defendant “was sentenced based on the amount of tax loss determined by

the district court,” rather than an amount found by the jury. Id. at 751. The Court found that

“[w]ithout the district court’s factual determinations of tax loss, the offense level would be 10,

corresponding to a sentence of 6 to 12 months.” Id. This Court remanded the case to the district

court for resentencing.

        On September 16, 2005, the district court held a resentencing hearing. At the resentencing

hearing, the government argued that Defendant’s offense level should be eighteen. The district court

asked the government what the offense level would be if the Court was “limited to what was charged

and the jury found.” (J.A. 104) In its response, the government conceded that the offense level

would be ten, but argued that “after Booker . . . [the sentencing court] can still go ahead and calculate

a guideline range and guideline sentence, but its only advisory.” (J.A. 105) With respect to the tax

loss amount, the district court stated:

                I have read the Sixth Circuit opinion . . . . The Court certainly did say
                that [the district court’s] method of computation of the tax loss was
                not clear error, clearly erroneous, plain error. It was okay, but then
                [the Sixth Circuit] noted that under Booker [the district court]
                couldn’t consider that [tax loss] amount because . . . [the jurors]
                weren’t asked to find that specific amount.



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                                            No. 05-2664

(J.A. 122) (emphasis added). The district court declined to calculate or consider Defendant’s tax loss

amount. The district court concluded that it did not have authority to depart from the sentencing

guidelines and took offense level ten, “as [a] starting point and [found] that anything within [the

sentencing guideline range of] six to 12 months would be reasonable.” (J.A. 123) The district court

sentenced Defendant to three years of probation supervision, with the condition that the first six

months be served in a halfway house and that the second six months be served under home

confinement. The government objected at the resentencing hearing arguing that the sentence was

unreasonable.

        On November 4, 2005, Defendant’s counsel filed a motion to correct Defendant’s sentence.

At a hearing held on December 15, 2005, the district court acknowledged that it went over the

guidelines, which provide for a $20,000 fine, by sentencing Defendant to a $60,000 fine. The district

court also clarified its sentence:

                Defendant’s Counsel: I want to say that the Court actually decided
                that if [the offense level] were an 18 or it were a 10, that you were
                using the factors in 3553.

                The Court: That’s absolutely true. And just – I would – I have not
                reread the entire transcript. But I would hope that I had said that I
                give great weight to the guidelines and that’s a starting point, and
                then I use the factors, and then I come to a result.

                Defendant’s Counsel: The result is, however, within the guidelines,
                and –

                The Court: I understand that. But as far as I understand Booker,
                obviously if it’s within the guidelines, as I understand Booker, it’s
                per se reasonable. But it doesn’t mean that a sentence outside of the
                guidelines is per se unreasonable.



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                                             No. 05-2664

(J.A. 137-38) (emphasis added). The district court entered its judgment on October 31, 2005. The

government filed a timely notice of appeal on November 23, 2005.

        On appeal, the government argues that Defendant’s sentence is unreasonable. More

specifically, it contends that the district court improperly concluded that it could not consider a tax

loss amount that was not found by the jury in calculating Defendant’s sentencing guideline range.

The government maintains that the district court was required to determine the amount of tax loss

and to use it in sentencing, and asserts that the district court improperly followed the instructions of

the Sixth Circuit’s remand in calculating Defendant’s offense level and sentencing range.

                                            DISCUSSION

I.      Standard of Review

        This Court reviews a sentence imposed by a district court for reasonableness. Booker, 543

U.S. at 261-62; United States v. Harris, 397 F.3d 404, 409 (6th Cir. 2005); United States v. Cage,

458 F.3d 537, 540 (6th Cir. 2006). The Court reviews the district court’s interpretations of the

sentencing guidelines de novo and its factual finding for clear error. United States v. Williams, 411

F.3d 675, 677 (6th Cir. 2005); United States v. Burke, 345 F.3d 416, 428 (6th Cir. 2003). The Court

defers to the district court’s application of the sentencing guidelines to the facts. United States v.

Charles, 138 F.3d 257, 266 (6th Cir. 1998).

II.     The District Court Has Discretion to Calculate or Consider Defendant’s Tax Loss

        In the instant case, the applicable sentencing guideline is set forth in United States Sentencing

Guidelines (“U.S.S.G.”) § 2T1.9(a)(1). Section 2T4.1 of the sentencing guidelines sets forth offense

levels based on tax loss amounts. The express language of the relevant statutes indicates that offense


                                                   6
                                            No. 05-2664

levels are either calculated under § 2T4.1, based on the tax loss amount, or set at ten. U.S.S.G. §

2T1.9. A review of the relevant statues reveals that the amount of tax loss is not an element of

Defendant’s offense, but rather is relevant to Defendant’s sentence under the guidelines. See 18

U.S.C. § 371; 26 U.S.C. § 7206(1); 31 U.S.C. §§ 5324(a)(3) and 5324(d)(1).

       Admittedly, it may have been appropriate for a district court to calculate the amount of tax

loss and to use it in sentencing before Booker. See, e.g., United States v. Nash, 175 F.3d 429, 339-

440 (6th Cir. 1999) (finding that the district court properly calculated defendant’s tax liability); see

also United States v. Ghali, 47 F. App’x 281, 283 (6th Cir. 2002) (unpublished case). However, in

light of Booker, the overwhelming case law authority indicates that resentencing is appropriate if a

defendant is sentenced under a mandatory sentencing guideline regime and if the district court

enhances the defendant’s sentence based on factors not proven to a jury or admitted by the defendant.

See, e.g., United States v. Jones, 399 F.3d 640, 648-49 (6th Cir. 2005) (“[T]he Sixth Amendment

is violated where, under a mandatory sentencing scheme, judicial fact-finding, as opposed to facts

found by a jury, increases the sentence beyond the statutory maximum sentence which may be

imposed solely on the basis of the facts reflected in the jury verdict or admitted by the defendant.”)

(internal quotation marks omitted); United States v. Paz, 405 F.3d 946, 948 (11th Cir. 2005)

(“[U]nder Booker, the Sixth Amendment right to trial by jury is violated where under a mandatory

guidelines system a sentence is increased because of enhancement based on facts found by the judge

that were neither admitted by the defendant nor found by the jury.”) (emphasis in original). “The

district court’s reliance on judge-found facts to increase [a] defendant’s sentence under mandatory

guideline[s] violate[s] the Sixth Amendment.” United States v. Stephens, 148 F. App’x 385, 388


                                                   7
                                            No. 05-2664

(6th Cir. 2005) (unpublished case) (emphasis added); see also United States v. Pree, 408 F.3d 855,

874-75 (7th Cir. 2005) (“The Government concedes that the district court committed error that was

plain in treating the guidelines as mandatory and enhancing [defendant’s] sentencing range based

on the court’s findings of fact.”) (emphasis added); United States v. Harpole, 168 F. App’x 182, 185

(9th Cir. 2006) (unpublished case) (“Because [defendant] was sentenced under mandatory

Sentencing Guidelines, this judge-made finding of fact violated [defendant’s] Sixth Amendment

rights.”) (emphasis added).

       Thus, in enhancing defendant’s sentence based on factors not proven to a jury or admitted

by a defendant, “[t]he district court [does] not violate Booker [if] it considered the guidelines to be

advisory and not mandatory.” United States v. Redmond, 188 F. App’x 377, 381 (6th Cir. 2006)

(unpublished case); see also United States v. Anderson,187 F. App’x 517, 521 (6th Cir. 2006)

(unpublished case). Post-Booker, under the advisory sentencing guideline regime, a sentencing

enhancement is constitutional as long as it is based on reliable information and supported by a

preponderance of the evidence. Redmond, 188 F. App’x at 381.

       This is not the first time this Court is asked to make a determination with respect to

Defendant’s sentence. See Kosinski, 127 F. App’x at 751. This Court previously found that the

district court’s original sentence violated Booker because Defendant “was sentenced based on the

amount of tax loss determined by the district court,” rather than an amount found by the jury. Id.

It is important to note that Defendant was sentenced under a mandatory sentencing guidelines

regime. Thus, by making factual determinations, “the district court did exactly what the Supreme

Court found to be a violation of the Sixth Amendment in Booker: the district court engaged in


                                                  8
                                            No. 05-2664

independent fact-finding which enhanced Defendant’s sentence beyond the facts established by the

jury verdict or admitted by Defendant.” United States v. Davis, 397 F.3d 340, 350 (6th Cir. 2005).

In pertinent part, this Court found that:

               [t]his case is factually indistinguishable from Booker itself and thus
               resentencing is required. Booker was convicted by a jury of
               possessing at least 50 grams of cocaine. At sentencing, the district
               court determined that Booker possessed at least 616 grams of cocaine
               and sentenced him accordingly. Had Booker been sentenced on the
               jury’s finding alone, the Guideline range would have been 210 to 262
               months. Instead, based on the district court’s finding that Booker
               possessed more cocaine, Booker received a sentence of 360 months.
               The Supreme Court concluded that because only 50 grams was
               argued to the jury, the sentence exceeded that authorized by the jury
               verdict and thus violated the Sixth Amendment. In this case, Kosinski
               was sentenced based on the amount of tax loss determined by the
               district court. The jury was never asked to determine tax loss.
               Without the district court’s factual determination of tax loss, the
               offense level would be 10, corresponding to a sentence of 6 to 12
               month. U.S.S.G. § 2T1.9. Applying the reasoning of Booker, the 30-
               month sentence Kosinski received plainly went beyond that
               authorized by the jury. We therefore conclude that Kosinski was
               sentenced in violation of the Sixth Amendment.

Kosinski, 127 F. App’x at 751 (citations omitted). Since Defendant was sentenced under a

mandatory sentencing guidelines regime and the district court enhanced the sentence based on factors

not proven to a jury or admitted by Defendant, this Court vacated Defendant’s original sentence and

remanded for resentencing.

       At the resentencing hearing, the government asked the district court to 1) calculate

Defendant’s tax loss amount as a factual finding by a preponderance of the evidence, and 2) sentence

Defendant at offense level eighteen. In turn, the district court asked the government what the offense

level would be if the Court were “limited to what was charged and the jury found.” (J.A. 104) In


                                                  9
                                            No. 05-2664

its response, the government conceded that, under U.S.S.G. § 2T1.9, the offense level would be ten,

but argued that “after Booker . . . [the sentencing court] can still go ahead and calculate a guideline

range and guideline sentence, but its only advisory.” (J.A. 105) The district court found that it could

not consider the previously calculated tax loss to determine Defendant’s sentencing guideline range

because the tax loss amount was not charged in the indictment and was not found by the jury beyond

a reasonable doubt:

               [U]nder Booker [the district court] couldn’t consider [the amount of
               tax loss it had originally determined under the sentencing guidelines]
               because that’s more than the jury was asked to find; or, more
               accurately, they weren’t asked to find that specific amount.

(J.A. 122) Since the district court concluded that it could not calculate or consider the tax loss

amount, it took offense level ten, as set forth in U.S.S.G. § 2T1.9, “as [a] starting point and [found]

that anything within [the sentencing guideline range of] six to 12 months would be reasonable.”

(J.A. 123) The district court sentenced Defendant to three years of probation supervision, with the

condition that the first six months be served in a halfway house and that the second six months be

served under home confinement. The government objected at the resentencing hearing, arguing that

the sentence was unreasonable. We find that the district court erred in concluding that it could not

calculate or consider Defendant’s tax loss amount.

       “Booker did not eliminate judicial fact-finding.” United States v. Coffee, 434 F.3d 887, 898

(6th Cir. 2005). “It is clear under the law of this Circuit that a district court may make its own

factual findings regarding relevant sentencing factors, and consider those factors in determining a

defendant’s sentence[.]” United States v. Gardiner, 463 F.3d 445, 461 (6th Cir. 2006). In the instant

case, the district court erred in believing that considering Defendant’s tax loss amount would violate

                                                  10
                                            No. 05-2664

the Sixth Amendment. “[W]hen a trial judge exercises his discretion to select a specific sentence

within a defined range, the defendant has no right to a jury determination of the facts that the judge

deems relevant.” Booker, 543 U.S. at 233. Thus, Booker does not bar the district court from

calculating and considering the tax loss amount provided that the sentencing guidelines are used as

advisory and not mandatory. More specifically, post-Booker, a district court may enhance a

defendant’s sentence “based upon facts not found by a jury, provided they do not consider

themselves required to do so.” Davis, 397 F.3d at 352 (Cook, J., concurring); see also Anderson,

187 F. App’x at 521. Defendant’s sentence is, therefore, erroneous insofar as the district court

calculated Defendant’s sentence “while harboring the misapprehension that, under Booker, [it] could

not enhance [Defendant’s] sentence based upon factors that were not determined by the jury beyond

a reasonable doubt.” Gardiner, 463 F.2d at 461.

       Therefore, the district court has discretion to calculate and consider the tax loss amount for

sentencing purposes provided that 1) the district court does not consider itself required to do so, and

2) as long as the calculation is based on reliable information and supported by a preponderance of

the evidence. See United States v. Yagar, 404 F.3d 967, 972 (6th Cir. 2005). Since the district court

may – but is not required to – calculate or consider Defendant’s tax loss amount, this Court takes no

position as to the propriety of doing so in the instant case. Reversal here is required, not because the

district court failed to calculate or consider the tax loss amount, but because the district court was

under the misapprehension that it simply could not do so. In light of the district court’s discretion,

nothing in this opinion should be construed as an endorsement of tax loss calculation or




                                                  11
                                              No. 05-2664

consideration. At resentencing, the district court should recognize and exercise its discretion to

consider – or to not consider – Defendant’s tax loss.

II.    The District Court Failed to Consider the Sentencing Guidelines as Advisory

       We find that the district court erred in applying the sentencing guidelines as mandatory. “In

determining the sentence to be imposed, the district court must consider the advisory Guidelines

range and all relevant factors identified in 18 U.S.C. § 3553(a).” United States v. Jones, 445 F.3d

865, 869 (6th Cir. 2006); see also United States v. McBride, 434 F.3d 470, 476 (6th Cir. 2006);

Jackson, 408 F.3d 301, 304 (6th Cir. 2006) (“[D]istrict courts are required to consider the applicable

Guidelines sentencing range when arriving at a defendant's sentence, 18 U.S.C. § 3553(a)(4), but

only as one factor of several laid out in § 3553(a).”); Booker, 543 U.S. at 259 (“Without the

‘mandatory’ provision, the Act nonetheless requires judges to take account of the Guidelines together

with other sentencing goals”). “[T]he district court’s decision to deny a Guideline-based departure

. . . is not reviewable by this Court so long as the district court was aware of and understood its

discretion to make such a Guideline-based departure.” McBride, 434 F.3d at 476; see also Jones, 445

F.3d at 868; United States v. Stewart, 306 F.3d 295, 329 (6th Cir. 2002).     At the December 15,

2005 hearing, the district court noted that

               as far as I understand Booker, obviously if it’s within the guidelines, as I
               understand Booker, it’s per se reasonable. But it doesn’t mean that a sentence
               outside of the guidelines is per se unreasonable.

(J.A. 137-38) (emphasis added). This statement illustrates a fundamental misunderstanding of

Booker; nothing in Booker suggests that a sentence within the sentencing guideline range is per se

reasonable. The sentencing guidelines are to be consulted and appropriately taken into account, but


                                                  12
                                            No. 05-2664

a reasonable sentence requires consideration of the factors set forth in 18 U.S.C. § 3553. “‘A

sentence within the Guidelines carries with it no implication that the district court considered the

3553(a) factors if it is not clear from the record.’” United States v. Johnson, 467 F.3d 559, 563 (6th

Cir. 2006) (quoting United States v. Foreman, 436 F.3d 638, 644). “Absent [an] articulation on the

record that the § 3553(a) factors were considered, we are unable to review Defendant’s sentence for

reasonableness, and we decline to find that a sentence within the Guidelines range is reasonable.”

Id. at 564; see also United States v. Cage, 458 F.3d 537 (6th Cir. 2006). Therefore, the district court

simply cannot assume that a sentencing Defendant within the sentencing guidelines is per se reasonable.

       In the instant case, we find that the record indicates that the district court was not aware of

or did not understand its discretion to depart from the sentencing guidelines. The district court

concluded that it did not have authority to depart from the sentencing guidelines, and applied the

sentencing guidelines as mandatory, sentencing Defendant at offense level ten. The district court

was not bound to go to offense level ten because the sentencing guidelines are advisory. Booker, 543

U.S. at 259. Since the district court applied the sentencing guidelines as mandatory, the district

court’s sentence violated Booker.

       Furthermore, the district court failed to state facts which support its sentence. “The district

court must articulate the reasons for the particular sentence imposed in order to enable this Court to

engage in a meaningful reasonableness review of the sentence.” Jones, 445 F.3d at 869. In the

instant case, “the list [of characteristics] provided by the district court, without any accompanying

analysis, is insufficient to justify the sentence imposed, as it renders our reasonableness review

impossible.” Jackson, 408 F.3d at 305; see also United States v. Williams, 432 F.3d 621, 623-24


                                                  13
                                           No. 05-2664

(6th Cir. 2005) (affirming downward departure at sentencing where the district court followed

Jackson, considered the applicable sentencing guidelines, and provided a detailed analysis in support

of its decision to depart). On remand, the district court should use facts from the record to support

its sentence.



                                         CONCLUSION

       The district court erred in sentencing Defendant. For the foregoing reasons, we VACATE

the district court’s sentence and REMAND this case to the district court for resentencing.




                                                 14
                                              No. 05-2664

        MAYS, District Judge, concurring. I agree with the majority’s conclusion that the district

court’s sentence must be vacated and the case remanded for resentencing. I agree also with the well-

reasoned explanation for vacating the sentence. However, because I believe the majority erred in

explaining how the district court should determine Defendant’s sentence on remand, I respectfully

offer this concurrence.

        The majority has concluded that “the district court may – but is not required to – calculate

or consider Defendant’s tax loss amount” in sentencing. (Maj. opp., p. 11.) The Sentencing

Guidelines do not give the district court that discretion. Section 2T1.9(a) explicitly instructs the

judge to calculate a defendant’s base offense level by “apply[ing] the greater” of the numbers that

result from (1) using the tax table at § 2T4.1 to translate tax loss amount into an offense level, or (2)

setting the base offense level at 10. The application notes explain: “The base offense level is the

offense level [calculated using tax loss, if any] . . . if that offense level is greater than 10. Otherwise,

the base offense level is 10.” (USSG § 2T1.9 , comment (n.2).) Therefore, the trier of fact, here a

judge, is required to determine the defendant’s tax loss, and the judge must calculate a base offense

level based on that amount. If the resulting base offense level is greater than ten, the judge is

required to apply the greater base offense level. If the resulting base offense level is ten or less, the

judge is required to set the defendant’s base offense level at ten. In no circumstance is the judge free

to choose one method of determining base offense level; he must use both methods, compare the

results, and choose the greater.

        Certainly, the district court would not be bound by the resulting guidelines, but failure to

calculate the guidelines properly would be reversible error. United States v. Davis, 458 F.3d 491, 495


                                                    15
                                            No. 05-2664

(6th Cir. 2006). Having calculated the guidelines properly, the district court may then revisit the tax

loss amount in addressing the § 3553 factors and exercising its discretion.




                                                  16
