economic crimes - united states sentencing … embezzlement, theft; stolen property; ... •there...
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EconomicCrimesSeptember8,2016Minneapolis,MN
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PeterMadsenEducation andSentencingPracticeSpecialist
Presenter
www.ussc.gov (202)502‐4545 @theusscgov [email protected]
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§2B1.1Larceny,Embezzlement,Theft;StolenProperty;Fraud;Forgery
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Fraud Pointers• Theguidelineisdrivenlargelyby“loss”
• “Loss”definitionsof“actualloss”and“intendedloss”
• Specialrulesforcertaintypesofoffenses(e.g.,creditcardfraud)
• Determinationsastowhoqualifiesasa“victim”
• Guideline“loss”andrestitution“loss”aredistinct
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Relevant Conduct & Multiple Counts
•Actsinthesamecourseofconduct,commonschemeorplanastheoffense(s)ofconvictionwillbeincluded
• Therewillonlybeasingleapplicationofthemultiplecountsof§2B1.1,basedonallrelevantconduct
§§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)
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Scenario 1
•Defendantconvictedof18U.S.C.§ 371(Conspiracy)tocommitaviolationof18U.S.C.§ 1343(WireFraud)
•PerAppendixA,theapplicableguidelinefor§ 371is§2X1.1whichreferencesto§2B1.1
•Thestatutorymaximumfor§ 371is5years;thestatmaxfor§ 1343is20years
•Whichbaseoffenselevel(BOL)appliesat§2B1.1(a)?
Whichbaseoffenselevel(BOL)appliesat§2B1.1(a)?
A.BOL7B.BOL6
Yes No
50%50%
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Scenario 2
•Defendantconvictedof18U.S.C.§ 1956(MoneyLaundering)whichcarriesa20yearstatmax;applicableguideline§2S1.1
•Defendantwasinvolvedinawirefraudschemeandwaslaunderingproceedsfromthewirefraudscheme
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Scenario 2 (cont.)
• §2S1.1(a)(1)directstheuseoftheoffenselevelfortheunderlyingoffensefromwhichthelaunderedfundswerederived
•Whichbaseoffenselevel(BOL)appliesat§2B1.1(a)?
Whichbaseoffenselevel(BOL)appliesat§2B1.1(a)?
A.BOL7B.BOL6
Yes No
50%50%
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Numerous 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
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“Loss”
Usegreaterof:
“actual”or“intended”loss
ApplicationNote3(A)
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“Actual Loss”
ApplicationNote3(A)(i)
Causationstandard:“butfor”and“reasonablyforeseeable”
Reasonablyforeseeablepecuniaryharmthatresultedfromtheoffense
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“Intended Loss”
•Thepecuniaryharmthatwasintendedtoresultfromtheoffense
• Includesintendedpecuniaryharmthatwouldhavebeenimpossibleorunlikelytooccur(e.g.,governmentsting)
ApplicationNote3(A)(ii)
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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
ApplicationNote3(C)
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Exclusions from “Loss”
Lossdoesnotinclude:• emotionalstress• harmtoreputation• othernon‐economicharms• coststogovernmentorvictimsforinvestigationorprosecution• interest
ApplicationNote3(D)
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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)
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Special Rules in the Determination of Loss
• Stolen/counterfeitcreditcards•Governmentbenefitsfraud• Investmentschemes(e.g.,Ponzischemes)•Federalhealthcareoffenses
SampleofRules;ApplicationNote3(F)
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Special Rules in the Determination of Loss (cont.)
•FederalHealthCareOffensesInvolvingGovernmentHealthCarePrograms:
• Theaggregateamountoffraudulentbillssubmittedtothegovernmenthealthcareprogramisprimafacieevidenceoftheamountofintendedloss,ifnotrebutted
ApplicationNote3(F)(viii)
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Victims Table
•Revisesthetabletoincorporatesubstantialfinancialhardshiptovictims
• Asrevised,enhancementwillapplyifevenonevictimsuffersafinancialhardship
•Lessemphasisonthenumberofvictims• Eliminated4‐ and6‐ levelenhancementsbasedsolelyonthenumberofvictims;nowbasedonfinancialhardship
§2B1.1(b)(2)
2015 Amendment to §2B1.1
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Victims Table• §2B1.1(b)(2)a) 10ormorevictims;mass‐marketing;orresultedinsubstantialfinancialhardshiptooneormorevictims +2
b) Resultedinsubstantialfinancialhardshiptofiveormorevictims +4
c) Resultedinsubstantialfinancialhardshipto25ormorevictims +6
2015 Amendment to §2B1.1
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“Substantial Financial Hardship”
•Thecourtshallconsiderwhethertheoffenseresultedinthevictim:
• Becominginsolvent• Filingforbankruptcy• Sufferingsubstantiallossofaretirement,education,orothersavingsorinvestmentfund
•Makingsubstantialchangestoemployment•Makingsubstantialchangestolivingarrangements• Sufferingsubstantialharmtotheirabilitytoobtaincredit
ApplicationNote4(F)
2015 Amendment to §2B1.1
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General Definition of “Victim” for §2B1.1
•Anypersonwhosustainedanypartoftheactuallossdeterminedundersubsection(b)(1)
•Anyindividualwhosustainedbodilyinjuryasaresultoftheoffense
§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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•Defendantisconvictedofinterstatetheft
•Defendantstoleatotalof$110,000from12Walgreenstores
•Doesthedefendantreceiveanincreaseat§2B1.1(b)(2)fornumberofvictims?
Scenario 3
Doesthedefendantreceiveanincreaseat2B1.1(b)(2)fornumberofvictims?
A. YesB. No
Yes No
50%50%
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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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General Definition of “Victim” for §2B1.1
•Anypersonwhosustainedanypartoftheactuallossdeterminedundersubsection(b)(1)
•Anyindividualwhosustainedbodilyinjuryasaresultoftheoffense
§2B1.1,App.Note1
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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)
2015 Amendment to §2B1.1
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Scenario 4 – Sophisticated Means
•Defendantconvictedofbankfraudunder18U.S.C.§1344.
• Defendantusedforgedchecksandastolenidentitytoattemptbankfraud.
• Shouldthedefendantreceiveanenhancementforsophisticatedmeans?
Shouldthedefendantreceiveanenhancementforsophisticatedmeans?
A. YesB. No
Yes No
50%50%
39Departure 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)
45Scenario 5
•AandBwereconvictedofConspiracytoDefraudtheUnitedStateswithRespecttoClaims‐ §2B1.1•AstealspersonalidentifyinginformationfromalocalbusinessandsharesthemwithB.
•Bfilesthevastmajorityofthefalsetaxreturnslistingheraddressfortherefunds.Shecollectsover$500,000.
•Afilesahandfuloftaxreturnandcollects$20,000.
WhatamountoflossshouldDefendantAbeheldaccountablefor?
A. $500,000B. $20,000C. $0
$500
,000
$20,0
00 $033%33%33%
473-Part Analysis of (a)(1)(B)
1. Thescopeofthedefendant’sjointlyundertakencriminalactivity
2. Ifactsofotherswereinfurtheranceofthedefendant’sundertaking,and
3. Ifactsofotherswerereasonablyforeseeableinconnectionwiththedefendant’sundertaking
Determinationsrequiredforactsofotherstoberelevantconduct
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Determining Scope in a Conspiracy
Scopeofcriminalactivityjointlyundertakenbyadefendantisnot necessarilythesameasthescopeof
theentireconspiracy
§1B1.3,App.Note2
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Determining Scope in a Conspiracy (cont.)
Relevantconductdoesnotincludetheconductofmembersofaconspiracypriortothedefendantjoiningtheconspiracy,evenifthedefendantknowsofthatconduct.
“BrightLineRule”of§1B1.3,App.Note2
50Scenario 6
• DefendantpledguiltytoSecuritiesFraud(§2B1.1)andTaxEvasion(2T1.1).
• Thedefendantwasaninvestmentadvisorandoverthecourseof4years,thedefendantused$41millionofinvestormoneyforhisownpersonuse.HethenalsofailedtoreportallofhisincometotheIRS,resultinginanoutstandingtaxobligationof$75,000.
Shouldthesetwooffensesbegroupedtogetherandthelossamountsaggregatedoraretheycalculatedseparatelyandunitsassigned?
A. Yes– groupthemB. No– useunits
Yes No
50%50%
52Scenario 7
•DefendantconvictedofaFalseClaimsConspiracy‐§2B1.1•Thedefendantfilednumerousfalsetaxreturnsusingstolenorfraudulentlyobtainedidentificationinformation.Overthecourseof4yearsshemadefalseclaimsof$4,250,000,butonlyreceived$1,250,000fromtheIRS.
Whatistheamountofloss?
A. $4,250,000B. $1,250,000C. $3,000,000D. NoLoss
$4,25
0,000
$1,25
0,000
$3,00
0,000
No Lo
ss
25% 25%25%25%
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“Loss”
Usegreaterof:
“actual”or“intended”loss
ApplicationNote3(A)
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Definition of Intended Loss
•Amendsthedefinitiontobetterreflectadefendant’sculpability
• “(I)meansthepecuniaryharmthatwasintendedtoresultfromtheoffense thedefendantpurposefullysoughttoinflict and(II)includesintendedpecuniaryharmthatwouldhavebeenimpossibleorunlikelytooccur”
ApplicationNote3
2015 Guideline Definition §2B1.1
56Scenario 8 • Defendantisahomehealthcarenursewhopledguiltytohealthcarefraud
• Indictmentstatesthatthedefendantsubmitted$85,000infraudulentbillsfromMay2013– June2014
• Defendanthasrecordstoshowthat$30,000ofthe$85,000billedwereforlegitimateservices.
• PSIrevealsthatthedefendant,in2011and2012,submitted$40,000infraudulenthealthcarebills
Whatisthelossamount?
A. $55,000B. $85,000C. $95,000D. $125,000
$55,0
00
$85,0
00
$95,0
00
$125
,000
25% 25%25%25%
Whatistheamountofrestitution?
A. $55,000B. $85,000C. $95,000D. $125,000
$55,0
00
$85,0
00
$95,0
00
$125
,000
25% 25%25%25%
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“Loss”
Usegreaterof:
“actual”or“intended”loss
ApplicationNote3(A)
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“Actual Loss”ApplicationNote3(A)(i)
Causationstandard:“butfor”and“reasonablyforeseeable”
Reasonablyforeseeablepecuniaryharmthatresultedfromtheoffense
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Special Rules in the Determination of Loss
•FederalHealthCareOffensesInvolvingGovernmentHealthCarePrograms:
• Theaggregateamountoffraudulentbillssubmittedtothegovernmenthealthcareprogramisprimafacieevidenceoftheamountofintendedloss,ifnotrebutted
ApplicationNote3(F)(viii)