Why the “Loss Amount” Is Often the Key Factor
When someone is under investigation or charged with a federal fraud offense, one number that will be of vital importance is what is known as the “loss amount.” Oftentimes, this figure will matter more than any individual’s background or their underlying conduct/motivation for their alleged transgression. In fact, depending on the case, this “loss amount” can be the single most important factor at sentencing, more than how the scheme worked, and more than whether an individual ever saw a dollar of the money. Understanding how that number is built, and how it can be fought, can be the single most important thing a person facing a federal fraud charge can do before sentencing.
Federal fraud, theft, and embezzlement cases, are sentenced under U.S. Sentencing Guidelines, generally beginning with section 2B1.1. We have previously given an overview of what the federal sentencing guidelines are and how they generally apply here, but this will provide another general overview in these specific types of cases as they relate to sentencing. Often the starting “offense level” is low, a 6 or 7, but a tiered loss table can add up to 30 levels on top of it depending on what the “loss” amount is calculated to be, a table of which can be found here. Whatever that amount is ultimately calculated to be can add years or even decades to any starting advisory guideline range. As an example, a defendant with a base level of 7 and a $2 million loss figure receives a 16-level enhancement, jumping to level 23 before any other factor is even considered. For someone with no criminal history, this alone elevates an advisory guideline sentence from 0-6 month range (and probation eligible) to a 46-57 month custodial sentencing range alone. This is why, in fraud cases, the fight over the loss amount is very often the most crucial sentencing factor when determining the advisory sentencing guideline range. The good news for anyone facing sentencing is that the guidelines are advisory, the government’s loss figure is frequently inflated, and an experienced criminal defense lawyer can often drive those numbers much lower before even considering and addressing other mitigating factors.
The Difference Between Actual Loss and Intended Loss
As the guidelines are currently written and enforced, in the vast majority of cases, the loss figure is calculated as the greater of “actual loss” or “intended loss.” “Actual loss” is the real, foreseeable financial harm caused in any fraud scheme, whereas “intended loss” is the harm the defendant attempted to cause through various methods, even if the loss ultimately never materialized, was impossible, or the defendant knew it was highly unlikely to occur at the time of the alleged transgression. In practice, this means by way of example, that a scheme designed to obtain $2 million in fraudulent earnings that was stopped through law enforcement intervention or only ended up with an actual loss of $400,000, will still be sentenced on the full $2 million in most instances, greatly increasing the base level offense. For years, defendants argued that “loss” should mean only actual loss, and in certain situations have persuaded some judges to agree, although recent changes have made those arguments harder, but not foreclosed based on the right facts and persuasive advocacy. Moreover, if the actual or intended loss is too difficult to determine, the Court can sentence a defendant based on the gain to the defendant.
Because the loss figure often carries so much weight, it is often where skilled defense work can pay the largest dividends. The government bears the burden of proving loss by a preponderance of the evidence, and the sentencing court needs only a reasonable estimate and not mathematical certainty, but “reasonable” leaves enormous room to push back, particularly in fraud cases where the final number can be more difficult to calculate. Furthermore, since the Supreme Court’s decision in United States v. Booker, the guidelines are advisory, not mandatory. The judge must calculate the range correctly to begin a sentencing hearing, but then must weigh the other sentencing factors accordingly in arriving at a just sentence that is not greater than necessary. This matters enormously in fraud cases, where the loss table has long been criticized for producing ranges that overstate a defendant’s real culpability and can help lead to below guideline sentences. While sentences in fraud cases are often highly influenced by the loss calculation and the advisory guideline range, a proper investigation that begins long before sentencing, and zealous advocacy can result in below guideline and even non-custodial sentences like probation. A well-supported and detailed sentencing memorandum and meaningful investigation into a defendant’s background and circumstances that led to the commission of the crime are what frequently separates the advisory guideline number from the sentence ultimately imposed. If you have received a target letter, a grand jury subpoena, or have been charged with a federal financial crime, the time to build a strategy around a potential “loss” figure is now.
