UNITED STATES of America, Plaintiff-Appellant, v. Edward R. VRDOLYAK, Defendant-Appellee, 593 F.3d 676

POSNER, Circuit Judge. Edward Vrdolyak pleaded guilty to conspiracy to commit mail and wire fraud and agreed in the plea agreement that the loss intended by his fraud was between $1 million and $2.5 million. He was sentenced to five years of probation, with a community-service obligation but no confinement, and to pay a $50,000 fine (a modest amount, because the defendant has a high income, and a net worth in excess of $1 million if his large loans to members of his family are included).

The government appeals, contending that the judge miscalculated the sentencing-guidelines range applicable to the defendant’s crime and committed other errors. Although a judge is no longer required to give a guidelines sentence, he is required to make a correct determination of the guidelines sentencing range as the first step in deciding what sentence to impose. Gall v. United States, 552 U.S. 38, 50, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007); United States v. Gibbs, 578 F.3d 694, 695 (7th Cir.2009).

The Chicago Medical School (as it was then known) wanted to sell a property in Chicago that it owned consisting of a lot with a building on it. Stuart Levine was a trustee of the medical school and the chairman of the board’s real estate committee, and he agreed with the defendant to use his position as a trustee to steer the sale of the property to a buyer of the defendant’s choice. The defendant lined up Smithfield Properties to be the favored buyer in exchange for a $1.5 million fee that Smith-field agreed to pay him, and he in turn agreed to give Levine half the fee.

The medical school was not told about this corrupt arrangement. Levine like the defendant has pleaded guilty to his

part in the fraud and has agreed not to contest a prison sentence of up to 67 months that the sentencing judge might impose. Smithfield’s initial offer for the building—$9.5 million—was lower than two other potential buyers'—'the Farley Group and Loyola University—were willing to pay. The defendant advised Smithfield to up its offer, and it did, to $15 million. Farley and Loyola remained interested in buying the property. To head them off, Levine arranged for an “emergency” meeting of the medical school’s board of trustees to consider offers for the property.

At the meeting, although Farley had offered $15 million and Loyola $15.5 million for the property, the board, persuaded by Levine, decided to accept Smithfield’s offer and negotiate no further with Farley or Loyola. The board discounted Loyola’s bid because Loyola had not actually inspected the property before bidding—Levine had seen to that. The board rejected Farley’s bid because Levine strongly urged approval of Smithfield’s bid, noting that Farley’s was lower because it included a 4 percent brokerage fee that would be deducted from the amount paid to the school.

This was misleading, because Smithfield’s bid was contingent on obtaining zoning approvals and Farley’s was not. And a week later Farley upped its bid to $16 million, which in pure dollar terms was higher than Smithfield’s even after deduction of the brokerage fee. Farley was told that it was too late. The government was prepared to offer an affidavit from Loyola’s broker that Loyola would have increased its offer had it been given an opportunity to do so. And a representative from Farley was prepared to testify that if necessary Farley would have increased its offer to somewhere between $18 and $20 million.

By convening the emergency meeting Levine had made sure that Smithfield’s bid would be accepted and that he and the defendant would split the finder’s fee. Although we use “bid” and “bidder” as synonyms for “offer” and “offeror,” no formal auction was ever contemplated and so there was no reason to consider Farley’s higher bid untimely. The district judge concluded that the defendant’s fraud had inflicted neither actual nor intended loss on the medical school. His finding that it had inflicted no actual loss was based on the fact that Smithfield’s bid was the highest one considered at the “emergency” meeting.

The judge gave no weight to Farley’s week-later offer of $16 million and refused to consider the evidence that Farley would have bid $18 million to $20 million if given the chance and that Loyola was also prepared to offer more than $15.5 million. These rulings were erroneous. No emergency required the medical school’s board of trustees to act with haste to award the sale contract. The “emergency” was a ruse to preclude competition with Smith-field.

The judge’s refusal to consider the evidence of what Loyola or Farley would have done if given the chance to sweeten their bids was based on his belief that uncommunicated intentions are unworthy of consideration by a finder of fact. That is not correct. No rule of evidence or principle of common sense makes a person’s testimony about his own intentions—testimony uniquely based on his personal knowledge—inadmissible in a sentencing proceeding any more than in any other proceeding in which intention is material. United States v. Young, 247 F.3d 1247, 1252-53 (D.C.Cir.2001).

Who better than a potential buyer knows what he would bid for a property? The judge himself speculated at the sentencing hearing about the defendant’s uncommunicated intentions in conspiring with Levine to defraud the medical school—that he had acted out of friendship for Levine. A defendant’s testimony about his uncommunicated intentions is no more credible than the testimony of an honest third party about his uncommunicated intentions. To believe the former and refuse even to listen to the latter is error.

The weight to be given a piece of evidence is one thing, and is ordinarily within the discretion of the trier of fact to determine. Admissibility is another matter. A judge is not permitted to have his own rules of admissibility-to say for example that “[i]n my court no exceptions to the hearsay rule will be recognized.” As we shall be emphasizing throughout this opinion, our concern is not with the leniency of the defendant’s sentence as such but with procedural errors committed by the judge en route to the determination of the sentence.

The judge’s refusal to listen to the evidence of the potential buyers was an egregious error because the evidence was corroborated. The medical school’s property had recently been appraised for $15 million on the assumption that its best use was as a luxury residential development, a use that would require tearing down the building on the property. If the building was not torn down (an expensive undertaking), the land alone, according to the appraisal, was worth $16.5 million. Loyola didn’t want to tear the building down; it wanted to use it for student housing.

It had every reason therefore to offer more than Smith-field. Farley had no intention of demolishing the building either, and its intention to top Smithfield’s bid was corroborated by the $16 million offer that it made for the property. The judge was impressed by the fact that the defendant had told Smithfield that $9.5 million was too low an offer. By doing so, the judge reasoned, he had conferred a benefit on the school. But that was not the defendant’s intention. His intention was to make sure that Smithfield was the winning bidder, since the finder’s fee was contingent on Smithfield’s getting the property.

Whether in an honest bidding process the school would have obtained more than $15 million from Farley or Loyola or perhaps from some other potential buyer can’t be determined with certainty because Levine prevented Farley and Loyola from keeping the bidding going and prevented everyone else who had expressed interest from even making offers. The judge thought the defendant’s interests perfectly aligned with the school’s— thought that the more Smithfield bid, the more the school would receive, as well as the defendant. That is not true.

The defendant did want Smithfield to be the high bidder, but he also wanted the bidding process to be rigged, to make sure Smithfield was the high bidder so that he would get his fee. The result of the rigging was to prevent the medical school from considering higher bids from Farley and Loyola and perhaps others. In determining pecuniary loss for purposes of calculating a sentencing-guidelines range, the judge is required to determine the loss that the defendant “reasonably should have known, was a potential result of the offense.” U.S.S.G. § 2B1.1, Application Note 3(A)(iv).

That potential loss in this case was the amount above $15 million that another bidder might have decided to pay for the property had the bidding been fair and open. As an experienced lawyer and businessman, the defendant must have known that a fair and open bidding process might well yield a higher price than Smithfield offered. In fact he knew that both Loyola and Farley wanted to pay more than Smithfield, which made sense because, as we said, both bidders wanted to use the building on the property rather than tear it down.

The judge’s finding that the defendant had caused no loss blocked the alternative measure of loss in cases in which there is a loss but the precise amount of the loss cannot be determined: in such a case the criminal’s gain is treated as the measure of loss. U.S.S.G. § 2B1.1, Application Note 3(B); United States v. Serpico, 320 F.3d 691, 698 (7th Cir.2003); United States v. Bhutani, 266 F.3d 661, 668 (7th Cir.2001); United States v. Chatterji, 46 F.3d 1336, 1340 (4th Cir.1995). That makes good sense in this case.

Smithfield was willing to pay $1.5 million to the defendant to obtain the property, and it must have thought that if it didn’t pay that amount it would have to up its bid by at least that much to win an unrigged bidding contest. Only on that assumption did the kickback make sense from Smithfield’s standpoint. From the defendant’s standpoint, the more Smithfield paid, the better; but from Smithfield’s standpoint, the goal of paying a finder’s fee was to enable Smithfield to obtain the property for a smaller total outlay (price plus finder’s fee) than it would have had to pay otherwise.

There was at the very least a probable loss, and that is “loss” within the meaning of the guideline. United States v. Johnson, 16 F.3d 166, 170 (7th Cir.1994); United States v. Schneider, 930 F.2d 555, 558 (7th Cir.1991); United States v. Stanley, 12 F.3d 17, 21 (2d Cir.1993). It is true that cases involving probable loss usually are ones in which the illegal scheme is interrupted, so that its consequences cannot be determined with certainty. Here it was not interrupted.

But the consequences still cannot be determined with certainty, and it would be even more anomalous to give the defendant a sentencing break when there is no interruption by some outside force but instead the very nature of the scheme precludes a certain determination of loss. The gain (and thus alternative measure of the loss) was the $1.5 million finder’s fee. It is true that when originally negotiated, the fee was contingent on certain factors.

But by the time of the defendant’s sentencing, the contingencies had been dispelled and the defendant would have been entitled, had the scheme not been detected, to the full $1.5 million. That the fee was to be split with a coconspirator is of no significance. U.S.S.G. § lB1.3(a); United States v. Thomas, 199 F.3d 950, 952-54 (7th Cir.1999); United States v. Boatner, 99 F.3d 831, 834-37 (7th Cir.1996). Dividing the gain by the number of conspirators would mean that the larger the conspiracy, the milder the punishment of each one. Anyway the defendant stood to gain $750,000 from his crime—not a negligible haul.

The zero loss found by the district judge created a guidelines sentencing range of zero to six months in prison; the correct loss figure of $1.5 million (which incidentally was within the range that the defendant agreed in the plea agreement was the intended loss attributable to his crime) ups the sentencing range to 33 to 41 months. Ordinarily we would stop here and remand for resentencing.

But the judge went on to rule that if he was wrong and there was a loss of $500,000, which would create a guidelines range of 27 to 33 months in prison, he would give the defendant a below-guidelines sentence of no prison—in fact the identical sentence that he imposed on the assumption of zero loss. But $500,000 was also error. And while a judge can give a below-guidelines sentence, the sentence cannot stand if it is based on a legal, factual, or analytic (connecting law and fact) error that is not harmless.

The court of appeals must “ensure that the district court committed no significant procedural error, such as failing to calculate (or improperly calculating) the Guidelines range, treating the Guidelines as mandatory, failing to consider the § 3553(

a) factors, selecting a sentence based on clearly erroneous facts, or failing to adequately explain the chosen sentence—including an explanation for any deviation from the Guidelines range.” Gall v. United States, supra, 552 U.S. at 51, 128 S.Ct. 586. “The allowable band of variance [in sentencing] is greater after Booker than before, but intellectual discipline remains vital.” United States v. Kirkpatrick, 589 F.3d 414, 416 (7th Cir.2009); see also United States v. Peña-Hermosillo, 522 F.3d 1108, 1112 (10th Cir.2008). The judge committed three errors in his alternative ruling.

First, the $500,000 figure was erroneous for the reasons we’ve given already. The correct figure was $1.5 million and the guidelines range was therefore higher than the judge thought. Second, repeating an error in his computation of loss, the judge thought that the defendant deserved leniency because he had intended no harm to the medical school, but on the contrary had intended a benefit—that the school should receive the highest bid from Smithfield.

Notice the equivocation implicit in “highest bid from Smithfield.” The highest bid from Smith-field is the bid that gets Smithfield the property; it is not the highest bid the seller would have obtained had the bidding process not been contaminated by the defendant’s kickback. The judge’s third error was to give, without adequate articulated consideration, enormous weight to letters urging leniency for the defendant, while virtually ignoring the evidence that tugged the other way.

There were 48 letters in all, some from members of the defendant’s family and others from persons for whom he had done favors of a charitable nature, including gifts of money. The judge committed three errors en route to deciding that the letters weighed more heavily in favor of leniency than the defendant’s ethical violations as a lawyer, pointed out by the government, weighed in favor of severity. One error was his failure to discuss any of the evidence that showed the defendant’s character in a bad light.

A sentencing judge is not required to mention every bit of evidence presented in the sentencing hearing, but an arbitrarily one-sided commentary on the evidence raises a warning flag. The judge did not remark the defendant’s discussing the kickback scheme with Levine and telling him, “If two fucking schemers like you and I can’t figure this out, then we got a problem.” He did not mention the conspirators’ decision to evade taxes by the defendant’s giving Levine’s wife a “loan” at a very high interest rate with the understanding that that there was no obligation to repay; Levine’s cut would come from the loan.

He did not mention Ridge Chrysler Jeep, LLC v. DaimlerChrysler Financial Services Americas LLC, 516 F.3d 623 (7th Cir.2008), where our defendant assisted in a fraud by litigants who had, we said, “behaved like a pack of weasels.” Id. at 627. He did not mention the lie that the defendant had told a district judge in 2002 when he was class counsel in a successful case and the judge had asked him whether he would be collecting any fees other than those set aside in a special lawyer’s fund and he replied he would not—despite collecting $150,000 from the named plaintiffs under his contingency-fee agreement with them.

The defendant had a history of ethical misconduct to which the judge without explanation gave negligible weight. Official judgments of misconduct were discounted in favor of letters procured by the defendant. Second, the judge appears to have given no weight to the fact that the defendant is by normal standards (not Warren Buffett or Bill Gates standards) wealthy; his annual income in recent years has sometimes exceeded $1 million. Wealthy people commonly make gifts to charity. They are to be commended for doing so but should not be allowed to treat charity as a get-out-of-jail card. United States v.

Repking, 467 F.3d 1091, 1095-96 (7th Cir.2006) (per curiam); United States v. Ali 508 F.3d 136, 149 (3d Cir.2007); United States v. Cooper, 394 F.3d 172, 176-77 (3d Cir.2005). As the court in Repking put it (quoting Cooper), “charitable works must be exceptional before they will support a more-lenient sentence, for ... ‘it is usual and ordinary, in the prosecution of similar white-collar crimes involving high-ranking corporate executives ... to find that a defendant was involved as a leader in community charities, civic organizations, and church efforts.’ ” 467 F.3d at 1095.

People “who donate large sums because they can should not gain an advantage over those who do not make such donations because they cannot.” United States v. Thurston, 358 F.3d 51, 80 (1st Cir.2004), vacated on other grounds, 543 U.S. 1097, 125 S.Ct. 984, 160 L.Ed.2d 988 (2005); cf. United States v. Stefonek, 179 F.3d 1030, 1038 (7th Cir.1999). “To allow any affluent offender to point to the good his money has performed and to receive a downward departure from the calculated offense level on that basis is to make a mockery of the Guidelines.

Such accommodation suggests that a successful criminal defendant need only write out a few checks to charities and then indignantly demand that his sentence be reduced. The very idea of such purchases of lower sentences is unsavory, and suggests that society can always be bought off, even by those whose criminal misconduct has shown contempt for its well-being.” United States v. McHan, 920 F.2d 244, 248 (4th Cir.1990). Third, the judge ignored the fact that the defendant was for many years an influential Chicago alderman.

Politicians are in the business of dispensing favors; and while gratitude like charity is a virtue, expressions of gratitude by beneficiaries of politicians’ largesse should not weigh in sentencing. See United States v. Wright, 363 F.3d 237, 248-49 (3d Cir.2004); United States v. Serafini 233 F.3d 758, 773 (3d Cir.2000); cf. United States v. Morken, 133 F.3d 628, 630 (8th Cir.1998). We are not laying down rules of sentencing.

The sentencing discretion of federal judges is broad and our concern is not with the judge’s having taken account of the defendant’s good works but with his failure to consider the full range of evidence pertinent to a just sentence. That was an error, just like the judge’s erroneous calculation of the applicable guidelines sentencing range. Appellate review of errors committed in sentencing is plenary. Gall v. United States, supra, 552 U.S. at 51, 128 S.Ct. 586; United States v. Gibbs, supra, 578 F.3d at 695 (“we review the procedures followed by the district court de novo”).

Review turns deferential when the issue is the substantive reasonableness rather than the procedural regularity of the sentencing determination. The cascade of errors and omissions that we have identified cannot be dismissed as harmless, and so requires that the defendant be re-sentenced.

And in fairness to the government, which is entitled to the same consideration as other litigants, the resentencing should be by a different judge. (The government did not ask us to order the case remanded to a different judge; repeat litigants—litigants who expect to appear before the same judge in the future—are for obvious reasons reluctant to request such relief.

We commonly issue such orders, as we are authorized by our Circuit Rule 36 to do, without a request by a litigant.) One cannot read the 168-page transcript of the sentencing hearing, and the two memoranda attempting to justify the sentence that the judge issued after he had announced the sentence at the conclusion of the hearing, without sensing that the judge had committed himself irrevocably to a noncustodial sentence for the defendant.

He pretty much announced this at the outset of the hearing, and he repeatedly expressed his anger with the government’s lawyers over matters that did not warrant anger, such as the government’s reference to the fraud as having been conducted by “insiders” (plural—Levine and the defendant). The judge said that Levine was indeed an insider by virtue of being a member of the fraud victim’s board of trustees but that the defendant was not, and he excoriated the government’s lawyer for calling him an insider.

But all the lawyer had meant was that the defendant is a prominent “insider” in the Chicago, legal, business, and political communities. For the lawyer had merely said “I will use the term insider for Mr. Vrdolyak, in the sense of someone who is connected in this City to people who are in power.” And the judge kept hectoring the government’s lawyers about what he viewed as their misunderstanding of the real estate business; but we cannot fathom what that misunderstanding was.

Despite patient explanation by the government’s lawyers, the judge would not waver in his conviction that the defendant had acted with the best interests of the medical school in mind—which is untrue because the school’s interest was to have an honest bidding process and the defendant knew it—and that the defendant had acted out of friendship for Levine, who had financial problems. (That was the Robin Hood defense.) The defendant could have assisted Levine financially without defrauding a medical school.

Given the defendant’s prominence, his affluence, and his professional status as a lawyer, his crime was especially gratuitous. When Levine asked for assistance in defrauding the medical school, the defendant did not hesitate and was quickly able to find a company willing to pay the kickback. He did not cooperate with the government in the investigation of the crime and did not plead guilty until the eve of trial. The gratuity of the crime suggests that there can be no assurance that if let off with a slap on the wrist, the defendant will not commit a future crime.

He has lost his law license, but the crime of which he has been convicted did not require a law license. He did not benefit from the crime—but only because he was caught. The judge’s errors in calculating the guidelines range are indicative of an idée fixe that the defendant was not to receive a custodial sentence, even (as the government urged in the alternative) home confinement. In United States v.

Peña-Hermosillo, supra, 522 F.3d at 1117, the Tenth Circuit held that “imposing] the same sentence under an alternative rationale” had been a “procedural error,” explaining that “it is hard for us to imagine a case where it would be procedurally reasonable for a district court to announce that the same sentence would apply even if correct guidelines calculations are so substantially different, without cogent explanation. In the absence of explanation, we might be inclined to suspect that the district court did not genuinely ‘consider’ the correct guidelines calculation in reaching the alternative rationale.” Id.

See also our decision in United States v. Anderson, 517 F.3d 953, 965-66 (7th Cir.2007), where we expressed concern with “blanket” sentences. The judgment is reversed and the case remanded for resentencing before a different judge, pursuant to 7th Cir. Rule 36. We intimate no view on what a proper sentence would be. Reversed and Remanded.