Federal criminal defense lawyers are often faced with the issue of “double counting” when dealing with white-collar crimes sentencing. Double counting occurs when “one part of the [Sentencing] Guidelines is applied to increase a defendant’s punishment on account of a kind of harm that has already been fully accounted for by application of another part of the [Sentencing] Guidelines.” U.S. v. Pena, 339 F.3d 715, 719 (8th Cir. 2003) (quoting U.S. v. Hipenbecker, 115 F.3d 581, 583 (8th Cir. 1997)). However, a trial court does not double count for purposes of the Sentencing Guidelines by enhancing an offense level for two or more reasons when those reasons “address conceptually separate sentencing notions.” U.S. v. Phillips, 506 F.3d 685, 688 (8th Cir. 2007).
Loss is broadly defined as the greater of actual loss or intended loss. U.S.S.G. § 2B1.1 commentary 3(A). Actual loss is “the reasonably foreseeable pecuniary harm that resulted from the offense.” Id. Intended loss is (1) “the pecuniary harm that was intended to result from the offense” and (2) “includes intended pecuniary harm that would have been impossible or unlikely to occur.” Id.
The commentary to U.S.S.G. § 2B1.1 defines “gross receipts from the offense” to include all property, real or personal, tangible or intangible, which is obtained directly or indirectly as a result of such offense. See 18 U.S.C. § 982(a)(4) which defines “gross receipts from the offense” in the context of criminal forfeiture. The commentary also explains that “for purposes of subsection (b)(14)(A), the defendant shall be considered to have derived more than $1,000,000 in gross receipts if the gross receipts to the defendant individually, rather than to all participants, exceeded $1,000,000.” Specifically, the defendant is only liable for gross receipts that the defendant, himself, received as a result of the criminal activity.
In general, punishing for gain is only an alternative to punishing for loss. The comment to (b)(1) states that “the court shall use the gain that resulted from the offense as an alternative measure of loss only if there is a loss but it reasonably cannot be determined.” U.S.S.G. § 2B1.1 commentary 3(B). It is unclear whether “gain” is distinguishable from “gross receipts.” If gain and gross receipts are equivalent, then an enhancement for gross receipts is improper when there is a loss that can be reasonably calculated. While the aforementioned definition of “gross receipts” does not specifically reference “gain,” it seems reasonable that any sort of property obtained as a result of the criminal offense could be categorized as being gained from the criminal offense. The Fourth Circuit in a FDA regulatory fraud case held that “gain is only an alternative measure of some actual, probable, or intended loss; it is not a proxy for loss when there is none.” U.S. v. Chatterji, 46 F.3d 1336 (4th Cir. 1995).
The commentary to § 2B1.1 defines a financial institution broadly as “any institution described in 18 U.S.C. § 20, § 656, § 657, § 1005, § 1006, § 1007, or § 1014, any state or foreign bank, trust company, credit union, insurance company, investment company, mutual fund, savings (building and loan) association, union or employee pension fund; any health, medical, or hospital insurance association; brokers and dealers registered, or required to be registered, with the Securities and Exchange Commission; futures commodity merchants and commodity pool operators registered or required to be registered, with the Commodity Futures Trading Commission; and any similar entity, whether or not insured by the federal government.”
While not governing the U.S. District Court for the District of Maryland or the Court of Appeals for the Fourth Circuit, a Second Circuit case, which was amended to comply with U.S. v. Booker, held that applying the enhancement for more than $1,000,000 in gross receipts from one or more financial institutions in addition to an enhancement for loss was allowable and not impermissible double counting. U.S. v. Lauerson, 348 F.3d 329 (2d Cir. 2003). The court stated that using both enhancements is not double counting because the dollar-amount enhancement and the “financial institution” enhancement serve different purposes and “double counting is legitimate where a single act is relevant to two dimensions of the [Sentencing] Guidelines analysis.” Id. (quoting U.S. v. Campbell, 967 F.2d 20, 25 (2d Cir. 1992). Because of the substantial overlap between the two enhancements, however, a defendant facing such enhancements might qualify for a downward departure that is within the discretion of the trial court, especially when the enhancements put the defendant at the upper ranges of the sentencing table. Nevertheless, the Fourth Circuit has yet to adopt the rationale adopted by the Second Circuit in Lauerson as to both the permissible use of both enhancements and the possibility of a downward departure.
In Lauerson, the Court sentenced the defendant under an old version of the sentencing guidelines where there was a four level enhancement if the offense “affected a financial institution and the defendant derived more than $1,000,000 in gross receipts from the offense.” U.S.S.G. § 2F1.1(b)(8)(B)(2000). U.S.S.G. § 2F1.1 has been replaced by U.S.S.G. § 2B1.1 as of November 1, 2001, but many defendants were sentenced after November 1, 2001 under U.S.S.G. § 2F1.1 under ex post facto considerations. The current sentencing guidelines dictate a two level enhancement if “the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense” and a four level enhancement if “the offense (i) substantially jeopardized the safety and soundness of a financial institution; (ii) substantially endangered the solvency or financial security of an organization that, at any time during the offense, (I) was a publicly traded company; or (II) had 1,000 or more employees, or (iii) substantially endangered the solvency or financial security of 100 or more victims.” U.S.S.G. § 2B1.1(b)(14)(A) & (B).
In U.S. v. Allen, the Court of Appeals for the Fourth Circuit stated that the Second Circuit’s decision in Lauerson does not apply to the Fourth Circuit. 491 F.3d 178 (4th Cir. 2007). Nevertheless, the court rejected the defendant’s argument relying on Lauerson that the district court enhanced the defendant’s sentence to an impermissible degree because the defendant’s sentence and enhancements were based on the sentencing guidelines and it was within the trial court’s discretion to deny the defendant’s pleas for a downward adjustment. Id. at 195. While Lauerson was decided based on an old Sentencing Guideline, the current Sentencing Guidelines are substantially similar, so it is likely that the Fourth Circuit decision in Allen still dictates that it is within the trial court’s discretion to sentence with two enhancements and deny a request for a downward departure.
Nevertheless, the Fourth Circuit has also held that measuring gain is only appropriate where there is some reasonably measureable loss and that punishing for gain is only appropriate as an alternative to punishing for loss. Additionally, the court has the discretion to sentence with a downward departure as the Sentencing Guidelines are not mandatory after Booker. U.S. v. Booker, 543 U.S. 220 (2005). Therfore all of the above guidlines by the court can be argued in the context of Booker.
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