Federal Intended Loss Sentencing
As a federal criminal lawyer, it is incredibly important to know the ins and outs of the Federal Sentencing Guidelines. Knowing how to argue within the nuances of the Sentencing Guidelines often separates the best federal criminal attorneys from the rest of the pack.
One issue that federal criminal lawyers regularly have to deal with is the intended loss commentary to the Federal Sentencing Guidelines. What is intended loss under the Sentencing Guidelines? How does intended loss change a Federal Sentencing Guideline range? How is intended loss different from “actual loss” under the Guidelines?
Read on to find out how the Third Circuit dealt with this thorny issue in a case that is a must-know for federal sentencing attorneys everywhere.
What do Federal Criminal Attorneys need to know about Guideline Loss Today?
The Third Circuit Court of Appeals recently handed down a blockbuster case for federal criminal attorneys across the country. The case was United States v. Banks, No. 21-5762 (3d Cir. Nov. 30, 2022) and is available for federal defense lawyers to read in full here. https://www2.ca3.uscourts.gov/opinarch/193812p.pdf
Background: Banks tries to crime and fails miserably
The facts underlying the case against Mr. Frederick H. Banks are honestly sad to recount. It is clear that Mr. Banks was suffering from severe mental illness and he was actually found incompetent to stand trial at one point (before the court changed course). However, the focus of this blog is on Mr. Banks’ crimes and how they impacted the appellate court decision.
Mr. Banks was indicted in 2016 for stalking, wire fraud, aggravated identity theft, and making false statements. The wire fraud charges were the most important for his appeal so that’s what we will cover in detail. The wire fraud charges were related to Mr. Banks’ scheme targeting FOREX.com which is an online business which allowed customers to invest in the foreign currency exchange market.
Mr. Banks’ grand idea was to open accounts with FOREX and make electronic deposits into the FOREX accounts; but Mr. Banks’ deposits were drawn on bank accounts with insufficient funds to cover the deposits.
Mr. Banks would then try to withdraw the funds from FOREX (the new accounts) with the goal being to get the money out before the lack of supporting funds in the original accounts was discovered. Mr. Banks lied to FOREX about his employment, his identity, his income, and net worth as part of the “scheme” here. Seems simple enough, right?
Mr. Banks was fooling no one. FOREX suffered no actual loss as a result of Mr. Banks’ wire fraud scheme. Mr. Banks made fraudulent deposits of $324,000 and “unsuccessfully executed 70 withdrawals/transfers totaling $264,000.00.” Banks, at 4. FOREX saw the scheme coming from a mile away and they did not transfer a single red cent to Mr. Banks before the feds stepped in.
Banks is convicted and his federal defense attorney raises good arguments at sentencing
Mr. Banks was convicted by a jury after a trial. That is when the judge ordered the preparation of a federal Presentence Investigation Report (PSR). The Presentence Investigation Report was prepared to help calculate the Sentencing Guidelines which produce an advisory sentencing range in every federal criminal case. It was the job of Mr. Banks’ federal criminal defense attorney to review the PSR, file objections to the conclusions, and present legal arguments for why Mr. Banks should receive a lower sentence.
Attempted Loss Enhancement Applied to Mr. Banks at Federal Sentencing
One of the most important issues in Mr. Banks’ Sentencing Guideline calculation was the issue of what “loss” amount to apply to his conduct. Remember, Mr. Banks was bad at crime.
When determining Mr. Banks’ offense level under the United States Sentencing Guidelines, the district court included an enhancement for the “attempted loss” Mr. Banks intended to cause FOREX to suffer from. Here is how the PSR discussed the attempted loss enhancement and how it applied to Mr. Banks:
The attempted loss, based on [Banks’s] fraudulent deposits, is $324,000. Therefore, the base offense level is increased by 12 because the attempted loss was greater than $250,000 but less than $550,000. USSG §2B1.1(b)(1)(G) (As a general rule, loss is the greater of actual loss or intended loss, pursuant to Application Note 3).
To put it simply, by using “attempted loss” instead of “actual loss” Mr. Banks’ Sentencing Guidelines went through the roof. By applying a 12-point increase for the attempted loss, Mr. Banks’ offense level under the federal criminal Sentencing Guidelines went from 7 to 19. Mr. Banks’ experienced federal defense attorney objected.
The federal criminal defense lawyer argued that only the actual loss of $0 should be used since “attempted loss” is not found in the Sentencing Guideline text, but rather in the non-binding commentary. The district court rejected the novel arguments put forward by Mr. Banks’ federal criminal defense attorney and sentenced Mr. Banks to 104 months in prison. Mr. Banks appealed.
What is loss enhancement under the United States Sentencing Guidelines?
On appeal, Mr. Banks argued that the 12-point loss enhancement for “attempted loss” found at U.S.S.G. § 2B1.1., should not apply because there was no actual loss in his case. See https://guidelines.ussc.gov/gl/%C2%A72B1.1 (fraud and theft guideline). Mr. Banks’ federal appeals attorney argued that the meaning of the word “loss” as used in Guideline § 2B1.1 should not include attempted loss. According to the argument from Mr. Banks federal criminal appeals lawyer, the application of the intended-loss enhancement hinged on the meaning of the word loss.
What does Guideline §2B1.1 actually say about loss?
The Third Circuit began its analysis by looking at the actual text of § 2B1.1 which you can review for yourself here: https://guidelines.ussc.gov/gl/%C2%A72B1.1. The Guideline provides a graduated scale based on the amount of monetary loss in a particular crime. Every top federal defense lawyer will tell you that when the victim’s monetary loss grows, so too does the enhancement of a defendant’s offense level under the federal Sentencing Guidelines.
The text of Sentencing Guideline §2B1.1 does not mention anywhere “actual” versus “intended” loss. This very important distinction is only found in the non-binding commentary to the federal criminal Sentencing Guidelines. According to the Third Circuit, this fact was enough to indicate that the meaning of “loss” in § 2B1.1 does not include intended loss.
The Court went on to discuss how there is a presumption that the words used in statutes, such as the Sentencing Guidelines, are presumed to carry their ordinary meaning. The Third Circuit discussed extensively the ordinary plain meaning of loss and how that dictionary definition would not include intended loss.
The Third Circuit made clear that the “plain and ordinary reading of § 2B1.1 confirms “loss” means “actual loss.” It is only when we turn to the commentary that the ambiguity of “actual” or “intended” loss is injected.” As a result, the Third Circuit agreed with the argument raised by the federal criminal appellate lawyer: the ordinary meaning of “loss” is the actual loss the victim suffered. Since the commentary tried to expand on this ordinary meaning, the commentary was invalid.
The Third Circuit threw out Mr. Banks’ sentence. His case will now go back to the trial court where his federal sentencing attorney can argue for a much lower sentence under the Guidelines using only the actual loss of $0.
Experienced federal sentencing lawyers can use this case to seek lower sentences
Moving forward, federal criminal defense attorneys will need to make the same arguments raised in Mr. Banks’ case in every federal sentencing involving intended loss. The Government has long used the intended loss definition to artificially increase the Sentencing Guideline range that federal courts use. In the Third Circuit as of today, your federal defense lawyer should know that intended loss cannot be used anymore.
We expect that many other federal courts will likely follow the reasoning from the Banks case. In particular, federal criminal attorneys in the 6th Circuit and D.C. Circuits should be raising these same arguments. There is already existing case law in these U.S. Courts of Appeals that make it likely they will follow the Banks decision to disregard the Guideline commentary for intended loss.
Do you have a federal case with intended or actual loss? If so, contact the experienced federal attorneys of Newland Legal at (303) 948-1489 or by email to zach@newlandlegal.com to discuss your case today.
Contact the attorneys at Newland Legal today if you have a federal criminal court case and want to discuss your case. The attorneys at Newland Legal are experienced federal criminal defense attorneys who are not afraid to fight in any federal courtroom across the United States.
