2017 national seminar on the federal sentencing guidelines · fraud quick notes 5 ... •10 or more...

EconomicCrimesMay1,2017Baltimore,MD

2

PeterMadsenEducation andSentencingPracticeSpecialist

Presenter

@theusscgov

www.ussc.gov helpline(202)502‐4545

[email protected]

CommissionResources

www.ussc.gov (202)502‐4545 @theusscgov [email protected]

4

§2B1.1Larceny,Embezzlement,Theft;StolenProperty;Fraud;Forgery

5

Fraud Quick Notes

• Theguidelineisdrivenlargelyby“loss”– whichincludes“actualloss”and“intendedloss”

• Specialrulesforcertaintypesofoffenses(e.g.,creditcardfraud)

• Determinationsastowhoqualifiesasa“victim”

• Guideline“loss”andrestitution“loss”aredistinct

6

Relevant Conduct & Multiple Counts

•Actsinthesamecourseofconduct,commonschemeorplanastheoffense(s)ofconvictionwillbeincluded

• Therewillonlybeasingleapplicationofthemultiplecountsof§2B1.1,basedonallrelevantconduct

• Lossalsoincludesunchargedandacquittedconduct

§§2B1.1&1B1.3(a)(2)&3D1.2(d)

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Alternative Base Offense Levels

BOL7,if• Stat.max.of20yearsormore

AND• ReferencedbyAppendixAor§2X1.1

BOL6,otherwise

§2B1.1(a)

BOL7 BOL6

50% 50%

1. Whichbaseoffenselevel(BOL)appliesat§2B1.1(a)?

A. BOL7B. BOL6

BOL7 BOL6

50% 50%


A.BOL7B.BOL6

Yes No

50% 50%


A.BOL7B.BOL6

11Numerous Specific Offense Characteristics

•Loss:(b)(1)

•Numberofvictims,massmarketing,orsubstantialfinancialhardship:(b)(2)

•Federalhealthcareoffense:(b)(7)

• Sophisticatedmeans:(b)(10)

• “Meansofidentification”:(b)(11)

Sampleof§2B1.1(b)SOCs

12

“Loss”

Usegreaterof:

“actual”or“intended”loss

ApplicationNote3(A)

13

“Actual Loss”

ApplicationNote3(A)(i)

Causationstandard:“butfor”and“reasonablyforeseeable”

Reasonablyforeseeablepecuniaryharmthatresultedfromtheoffense

$1.9million $1.4million Thereisnoloss,thestateofMNcan’tbeavictim

33% 33% 33%

4. Whatisthelossamount?

A. $1.9millionB. $1.4millionC. Thereisnoloss,

thestateofMNcan’tbeavictim

15

“Intended Loss”

•Thepecuniaryharmthatwasintendedtoresultfromtheoffense

• Includesintendedpecuniaryharmthatwouldhavebeenimpossibleorunlikelytooccur(e.g.,governmentsting)

ApplicationNote3(A)(ii)

$1.9million $4million Thereisnoloss

33% 33% 33%

5. Whatistheamountofloss?

A. $1.9millionB. $4millionC. Thereisnoloss

17

Definition of Intended Loss

•Amendedthedefinitiontobetterreflectadefendant’sculpability

• “(I)meansthepecuniaryharmthatwasintendedtoresultfromtheoffense thedefendantpurposefullysoughttoinflict and(II)includesintendedpecuniaryharmthatwouldhavebeenimpossibleorunlikelytooccur”

ApplicationNote3

2015 Amendment to §2B1.1

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Estimation of Loss

•Courtneedonlymakeareasonableestimateofloss

• Somefactorsinclude:• Fairmarketvalueofpropertyunlawfullytakenordestroyed

• Costofrepairs• Approximatenumberofvictimsmultipliedbyaveragelosstoeachvictim

§2B1.1,ApplicationNote3(C)

$57million $30million $27million $3.4million

25% 25% 25% 25%

6. Whatistheamountofloss?

A. $57millionB. $30millionC. $27millionD. $3.4million

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Exclusions from “Loss”

Lossdoesnotinclude:• emotionalstress• harmtoreputation• othernon‐economicharms• coststogovernmentorvictimsforinvestigationorprosecution• interest

ApplicationNote3(D)

Yes No Ihavenoidea

33% 33% 33%

7. Cantheseadditionallossesbeincludedinthetotallossdetermination?

A. YesB. NoC. Ihavenoidea

22

Credits Against Loss

Lossmaybereducedby:• certainbenefitstransferred• collateralpledgedtothevictimpriortothedetectionoftheoffense

ApplicationNote3(E)

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Valuation and Timing of Credits

•Transferredbenefits:• Fairmarketvalue ofservicesorpropertyreturnedasofdateofdetectionofoffense

•Pledgedcollateral:• Amountrecovered upondisposition;• Ifnotdisposed,fairmarketvalue asofdateofsentencing

ApplicationNote3(E)

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Mortgage Fraud

•Providesarebuttablepresumptionthat,ifthepropertyisnotdisposedofbythetimeofsentencing,themostrecenttaxassessmentatthetimeofpleaisthefairmarketvalue

§2B1.1,App.Note3(E)(iii)

Yes No Ihavenoidea

Whyprosecuteifthereisnoloss?

25% 25% 25% 25%

8. Couldyouhaveamortgagefraudcasewith$0lossdetermination?

A. YesB. NoC. IhavenoideaD. Whyprosecuteif

thereisnoloss?

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Special Rules in the Determination of Loss

• Stolen/counterfeitcreditcards•Governmentbenefitsfraud• Investmentschemes(e.g.,Ponzischemes)•Federalhealthcareoffenses

SampleofRules;ApplicationNote3(F)

27Special Rules in the Determination of Loss (cont.)

•FederalHealthCareOffensesInvolvingGovernmentHealthCarePrograms:

• Theaggregateamountoffraudulentbillssubmittedtothegovernmenthealthcareprogramisprimafacieevidenceoftheamountofintendedloss,ifnotrebutted

ApplicationNote3(F)(viii)

$350,000 $300,000 $150,000 $500,000

25% 25% 25% 25%


A.$350,000B.$300,000C. $150,000D.$500,000

$350,000 $300,000 $150,000 $500,000

25% 25% 25% 25%

10. Whatistheamountofrestitution?

A.$350,000B.$300,000C. $150,000D.$500,000

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Victims Table

•Revisesthetabletoincorporatesubstantialfinancialhardshiptovictims

• Asrevised,enhancementwillapplyifevenonevictimsuffersafinancialhardship

•Lessemphasisonthenumberofvictims• Eliminated4‐ and6‐ levelenhancementsbasedsolelyonthenumberofvictims;nowbasedonfinancialhardship

§2B1.1(b)(2)


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Victims Table• §2B1.1(b)(2)a) 10ormorevictims;mass‐marketing;orresultedinsubstantialfinancialhardshiptooneormorevictims +2

b) Resultedinsubstantialfinancialhardshiptofiveormorevictims +4

c) Resultedinsubstantialfinancialhardshipto25ormorevictims +6


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“Substantial Financial Hardship”

•Thecourtshallconsiderwhethertheoffenseresultedinthevictim:

• Becominginsolvent• Filingforbankruptcy• Sufferingsubstantiallossofaretirement,education,orothersavingsorinvestmentfund

•Makingsubstantialchangestoemployment•Makingsubstantialchangestolivingarrangements• Sufferingsubstantialharmtotheirabilitytoobtaincredit

ApplicationNote4(F)


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General Definition of “Victim” for §2B1.1

•Anypersonwhosustainedanypartoftheactuallossdeterminedundersubsection(b)(1)

•Anyindividualwhosustainedbodilyinjuryasaresultoftheoffense

§2B1.1,App.Note1

Yes No

50% 50%

11. Didthevictimssufferasubstantialfinancialhardship?

A. YesB. No

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Definition of “Victim” inMeans of Identification Cases

•Forsubsection(b)(2),inacaseinvolvingmeansofidentification,“victim”means:

(i)AnyvictimasdefinedinApplicationNote1

(ii)Anyindividualwhosemeansofidentificationwasusedunlawfullyorwithoutauthority

§2B1.1(b)(2),App.Note4(E)

OR

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§2B1.1,App.Note1

Yes No

50% 50%

12. Doesthedefendantreceiveanincreaseat2B1.1(b)(2)fornumberofvictims?

A.YesB.No

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Number of Victims or Mass Marketing Specific Offense Characteristic

•10ormorevictims,mass‐marketing,orsubstantialfinancialhardshipforoneormorevictims +2

§2B1.1(b)(2)

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§2B1.1,App.Note1

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Definition of “Victim” inMeans of Identification Cases

•Forsubsection(b)(2),inacaseinvolvingmeansofidentification,“victim”means:

(i)AnyvictimasdefinedinApplicationNote1

(ii)Anyindividualwhosemeansofidentificationwasusedunlawfullyorwithoutauthority

§2B1.1(b)(2),App.Note4(E)

OR

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“Means of Identification”

• “Meansofidentification”• Hasthemeaninggiventhetermin18U.S.C.§ 1028(d)(7),except thatthemeansofidentificationshallbeofanactual(i.e.,notfictitious)individual,otherthanthedefendantorapersonforwhoseconductthedefendantisaccountableunder§1B1.3(RelevantConduct)

§2B1.1,App.Note1

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Sophisticated Means

•NarrowsthescopeoftheSOCtobemoredefendant‐specific

• “(C)theoffenseotherwiseinvolvedsophisticatedmeansandthedefendantintentionallyengagedinorcausedtheconductconstitutingsophisticatedmeans”

§2B1.1(b)(10)


Yes No

50% 50%

13. Shouldthedefendantreceiveanenhancementforsophisticatedmeans?

A.YesB.No

44Departure Provisions

•Listanumberoffactorsacourtmayconsiderindeterminingwhetheranupwarddepartureiswarranted,e.g.,

• Offensecausedsubstantialnon‐monetaryharm• Substantialamountofinterest

•Downwarddepartureprovision• Offenselevelsubstantiallyoverstatestheseriousnessoftheoffense

§2B1.1,App.Note20

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Aggravated Identity Theft

•18U.S.C.§ 1028Arequiresamandatoryconsecutivetwo‐yearsentence

•AnSOCfortransfer,possession,oruseofameansofidentificationforan“underlyingoffense”willnotbeapplied

• E.g., §2B1.1(b)(11)attheFraudguideline

§2B1.6

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Means of Identification SOC & Aggravated Identity Theft

Count1:§2B1.1

Fraud

7+12+2=19(BOL+loss+IDSOC)

OffenseLevel=19

Count2:§2B1.6

AggravatedIDTheft

18USC§ 1028A

24mos.consecutive

Count2ConsecutivetoCount1

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§ 1028A PLUS the Application of the SOC at §2B1.1(b)(11)

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§2B1.6,App.Note2and§2B1.1(b)(11)

Issue:Ifanoffenseinvolvesboth ameansofidentification,addressedby§2B1.1(b)(11)(C), andotherfactorsaddressedby(b)(11)(e.g.,device‐makingequipmentat(b)(11)(A)), canboth theconsecutivesentenceunder§ 1028A,and the(b)(11)SOCapply?

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§ 1028A PLUS Application of the SOC at §2B1.1(b)(11) (cont.)

•Canapplyboth• U.S.v.Cruz,713F.3d600(11th Cir.2013)• U.S.v.Taylor,2016WL1179745(11th Cir.2016)

Inanunpublishedopinion,the4thCircuitsaidyoucannotapplyboth

§2B1.6,App.Note2and§2B1.1(b)(11)

$212,500– all425creditcard

numbers

$133,500– 267cards

$0– hedidnotuseanyoftheCC

#’s

33% 33% 33%

14. Whatamountofloss?

A. $212,500– all425creditcardnumbers

B. $133,500– 267cardsC. $0– hedidnotuse

anyoftheCC#’s

Yes– groupthem No– useunits

50% 50%

15. Shouldthesetwooffensesbegroupedtogetherandthelossamountsaggregatedoraretheycalculatedseparatelyandunitsassigned?

A. Yes– groupthemB. No– useunits

Yes No

50% 50%

16. Wasthecourt’slosscalculationcorrect?

A. YesB. No

$575,000 $550,000 $545,000 Ihavenoidea

25% 25% 25% 25%


A. $575,000B. $550,000C. $545,000D. Ihaveno

idea

$350,000 $300,000 $150,000 $500,000

25% 25% 25% 25%

18. Whatisamountofrestitution?

A. $575,000B. $550,000C. $545,000D. Ihaveno

idea

www.ussc.gov (202)502‐4545 @theusscgov [email protected]

54Thankyou

Questions?

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