United States v. Kasali

Case: 21-20681 Document: 289-1 Page: 1 Date Filed: 08/02/2024

United States Court of Appeals

for the Fifth Circuit

____________ United States Court of Appeals

Fifth Circuit

FILED

No. 21-20681

August 2, 2024

____________

Lyle W. Cayce

United States of America, Clerk

Plaintiff—Appellee,

versus

Lola Shalewa Barbara Kasali,

Defendant—Appellant.

______________________________

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:21-CR-54-1

______________________________

Before Barksdale, Southwick, and Graves, Circuit Judges.

Leslie H. Southwick, Circuit Judge:

In April 2022, Lola Kasali was convicted of four counts of fraud based

on her submission of two federal loan applications. Kasali made numerous

pretrial motions to substitute counsel, which were all denied by the district

court. The district court then conducted the first day of trial in Kasali’s

absence after concluding she had voluntarily waived her right to be present.

She was present at all other trial proceedings. Kasali now appeals that

judgment and her sentence. We AFFIRM.

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FACTUAL AND PROCEDURAL BACKGROUND

Congress authorized the temporary Paycheck Protection Program

(“PPP”) to provide forgivable loan assistance to small businesses that

suffered during the COVID-19 pandemic. Coronavirus Aid, Relief, and

Economic Security Act, Pub. L. No. 116-136, § 1102, 134 Stat. 281, 286–94

(2020) (codified as amended at 15 U.S.C. § 636(a)(36)). Businesses could

apply for a PPP loan from participating lenders who, upon approval of their

application by the Small Business Administration (“SBA”), would fund the

loans. 1 13 C.F.R. §§ 120.190–192; see generally 15 U.S.C. § 636(a)(36). The

SBA fully guaranteed the loans and reimbursed the lenders if a borrowing

business defaulted. 15 U.S.C. § 636(a)(2)(F), (36)(B). As part of their

applications, businesses were required to state their average 2019 monthly

payroll expenses and the number of employees. PPP First Draw Borrower

Application Form, supra note 1; see also § 636(a)(36)(D)(i), (E), (G). This

information was then used to calculate the size of their PPP loan. §

636(a)(36)(E).

In June 2020, Kasali submitted two PPP loan applications for the two

businesses she operated: Lola’s Level and Charm Hair Extensions.

According to the indictment, Kasali in her applications “knowingly

misrepresented the number of employees and payroll expenses” of each

business and “made numerous other false and misleading statements.”

Kasali requested $1,937,500 for Lola’s Level and $1,875,944 for Charm Hair

Extensions, but she could not provide any IRS records, bank statements, or

_____________________

1

The SBA Form 2483 PPP loan application is available on the SBA’s website and

details the specific requirements for each small business that applies. See PPP First Draw

Borrower Application Form, U.S. SMALL BUS. ADMIN.,

https://www.sba.gov/document/sba-form-2483-ppp-first-draw-borrower-application-

form (last visited June 19, 2024).

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employment records to support the information provided in her applications.

As a result, one application was denied, and the approved funds from the

other were frozen and seized before Kasali obtained the money.

In 2022, Kasali was convicted of two counts of making false

statements to a financial institution in violation of 18 U.S.C. § 1014 and two

counts of bank fraud in violation of 18 U.S.C. § 1344. During the course of

the prosecution, Kasali was represented by five separate attorneys. Kasali’s

first two attorneys had only limited roles. Kasali’s attorney-client conflicts

began when her third attorney was appointed.

Kasali’s third attorney moved to withdraw after six months, stating

the attorney-client relationship deteriorated and Kasali refused to assist him

in preparing a defense. The district court granted the motion and appointed

a fourth attorney for Kasali. That attorney represented Kasali for two

months before she moved to withdraw as counsel because of lack of trust,

attorney-client relationship deterioration, and an inability to communicate

with Kasali regarding her case. The district court granted the motion.

Kasali’s fifth appointed attorney was James Stafford, who requested

appointment of a female co-counsel to protect himself against Kasali’s

potential allegations and to help in trial preparation. The district court

appointed Kasali’s fourth attorney, Ashley Kaper, as co-counsel. Several

problems then arose. Kasali objected to Kaper as her counsel and testified at

a motion hearing that Kaper was withholding emails, refusing to obtain

evidence, and questioning Kasali about things an “attorney should know.”

The district court then questioned Kasali on whether it was true that she

refused to discuss the case and provide needed information to attain relevant

evidence. Kasali would not answer the questions but argued Stafford and

Kaper were not her attorneys because she had retained a different attorney.

The district court described Kasali’s testimony as “frivolous and fanciful”

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and stated that Kasali’s failure “to even assist [her] counsel [was] not a basis

for disqualifying [said] counsel.”

Kasali was then ordered to attend a meeting only with Stafford to

review case documents and answer questions for her defense in an effort to

balance her mistrust of Kaper. Stafford presented Kasali with a plea offer and

attempted to discuss the evidence, but Kasali “refused to review any

discovery, refused to listen to [phone] recordings, proclaimed that [Stafford]

was not her attorney,” and ended the meeting. When asked by the district

court if this was true, Kasali testified that Stafford said he would have her

convicted and that her motion to disqualify counsel was meritless. Kasali

continued to argue with the district court during the hearing. The court

described Kasali as “very difficult to deal with” and explained that she could

be removed if her conduct persisted. The district court then denied Kasali’s

renewed motion to substitute counsel.

On December 6, 2021, the district court announced prior to jury

selection that Kasali refused to change out of her jail clothes into street

clothes and participate because she did not accept Stafford as her counsel.

Stafford suggested the district court bring Kasali in before the start of trial

and outside the presence of potential jurors so she could state on the record

that she refused to be in the courtroom during trial. Stafford stated he hoped

Kasali did not want to be present, expressing concern about the possibility of

her “act[ing] up” in front of the jury. Once in the courtroom, Kasali insisted

that Stafford and Kaper were not her attorneys.

The district court repeatedly asked Kasali to choose between changing

into street clothes or remaining in a holding cell. Kasali responded each time

the issue was not her clothes, but her attorneys. Stafford then stated they

would “select the jury without [Kasali] being present.” The district court

determined it would likely be prejudicial for Kasali to remain in jail clothes in

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front of the jury and there was a possibility she would “act out during voir

dire.” Kasali was therefore ordered to listen to the voir dire from a law

clerk’s office.

Upon completion of voir dire, Stafford and the district court again

questioned Kasali on whether she would dress in street clothes and

participate in trial. Kasali avoided the question and repeatedly renewed her

objections to her attorneys. The district court determined Kasali had waived

her right to be present at trial and would remain outside the courtroom.

Kasali responded that she did “not waive [her] appearance,” but she

remained in a private room outside the courtroom listening to the first-day

proceedings.

Another discussion about Kasali changing into street clothes and

participating occurred the morning of the second day of trial. Kasali stated

she would change into street clothes but was entitled to her attorney of

choice. The district court deemed Kasali’s answers nonresponsive and again

concluded she voluntarily waived her right to be present at trial in street

clothes. After being assured her participation in the trial did not waive her

ability to appeal, Kasali changed into street clothes and participated in the

remainder of the trial.

The jury found Kasali guilty on all four counts of the indictment.

Once the district court accepted the verdict, the Government sought

clarification on the district court’s conclusion that Kasali had voluntarily

waived her right to be present. The district court explained Kasali was

present by audio on the first day but “not in the courtroom physically . . .

because of her desire not to dress out and not to be present.”

At sentencing, the district court accepted the initial Presentence

Report’s (“PSR”) conclusion that the intended loss associated with Kasali’s

fraud was $3,813,444, which required an 18-level sentencing enhancement.

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Accordingly, the district court determined a low-end “[G]uideline sentence

[wa]s appropriate” and sentenced Kasali to 70 months of imprisonment and

five years of supervised release on each count to run concurrently. Kasali

was also ordered to pay $2,027,686.64 in restitution to the SBA. Kasali

timely appealed.

DISCUSSION

Kasali asserts the district court erred in (1) denying her motions to

substitute counsel, (2) conducting the first day of her trial in her absence,

(3) applying a sentencing enhancement under intended loss, and

(4) awarding restitution to the SBA when no actual loss occurred. We

analyze the arguments in that order.

I. Motions to substitute counsel

We review a district court’s denial of a motion to substitute counsel

for abuse of discretion. United States v. Jones, 733 F.3d 574, 587 (5th Cir.

2013). Kasali contends the district court here abused its discretion when it

denied her numerous motions to substitute counsel in two ways: (1) its

inquiry into her dissatisfaction with her attorneys was insufficient, and

(2) the record established clear conflicts of interest and a complete

breakdown in communication with her attorneys. Kasali argues the district

court failed to “adequately inquire into the conflict and break-down in

communication that existed” and instead focused “on the counsel’s

abilit[ies].” Further, even if the inquiry is deemed adequate, she argues the

irreconcilable conflicts and complete breakdowns in communication

constituted good cause to substitute counsel.

“[T]he Sixth Amendment guarantees a defendant the right to be

represented by [a] . . . qualified attorney.” United States v. Gonzalez-Lopez,

548 U.S. 140, 144 (2006) (citation omitted). This includes a right to retained

counsel of choice, but not a right to appointed counsel of choice. United

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States v. Conlan, 786 F.3d 380, 391 (5th Cir. 2015). A court is required to

substitute appointed counsel “only if there is a substantial conflict or

problem affecting the ability to represent the defendant,” meaning either “a

conflict of interest” or “a complete breakdown in communication.” Id.

(quotation marks and citation omitted). This means the defendant must

show “good cause” for substitute counsel. United States v. Young, 482 F.2d

993, 995 (5th Cir. 1973).

When faced with a motion for substitution of counsel, a court has a

duty to make an adequate inquiry into the alleged conflicts and their potential

impacts on the defendant’s representation to determine whether good cause

exists. United States v. Fields, 483 F.3d 313, 352 (5th Cir. 2007). This duty,

however, “is not so formalistic as to require affirmative questioning when

such is rendered unnecessary because the parties have volunteered all the

relevant information for a court to determine that no substantial conflict

exists.” Id.

Kasali argues the district court improperly focused on Stafford’s and

Kaper’s abilities instead of asking “probing and specific questions”

regarding the communication and quality of the attorney-client relationship.

Id. Relying on Ninth Circuit caselaw, Kasali contends the district court’s

improper decision to ask “only open-ended questions and put the onus on

[her] to articulate why appointed counsel could not provide competent

representation” was a clear abuse of discretion. See United States v. Adelzo-

Gonzalez, 268 F.3d 772, 777 (9th Cir. 2001). According to Kasali, her clear

distrust and dissatisfaction with Kaper and Stafford based on their actions

throughout their representation of her was a blatant conflict of interest

warranting substitution. See Brown v. Craven, 424 F.2d 1166, 1169 (9th Cir.

1970).

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The Government argues Fifth Circuit precedent provides that a

difference in the defendant’s trial strategy and that of counsel does not signify

a conflict of interest. See Fields, 483 F.3d at 353. Kasali’s “[m]ere

disagreement about strategic litigation decisions” — like presenting futile

challenges to Kasali’s pretrial release revocation and refusing to provide or

discuss evidence — “is not a conflict of interest.” Id. The Government

further argues that, even if Kasali had presented a reasonable conflict, the

district court’s inquiry was sufficient.

The district court questioned Kasali at two ex parte hearings. During

the first hearing, the court addressed Kasali’s motions to substitute counsel

by questioning Kasali about her concerns, questioning Stafford about her

allegations, and determining that Kasali’s concerns were “nonsensical” and

that she had “excellent counsel.” During the second hearing, the district

court learned Kasali refused to cooperate with her attorneys, terminated a

court-ordered meeting, and insisted her attorneys were ineffective because

they failed to resolve her detention issue, which was not before the court.

These hearings, according to the Government, “provided the district court

with an ample basis for evaluating the extent of and reasons for the attorney-

client breakdown.” See id. at 352.

The court “paid close attention to the supposed source” of Kasali’s

distrust and dissatisfaction, United States v. Simpson, 645 F.3d 300, 309 n.6

(5th Cir. 2011), such that the Government argues there was no need for

“probing and specific questions,” Fields, 483 F.3d at 352. The district court,

however, did ask targeted questions about Kasali’s concerns with her

counsel, the bases for those concerns, her understanding of her charges, and

Kaper’s and Stafford’s explanations for their actions. Thus, it is clear the

court directly inquired into “the asserted cause for [Kasali’s] complaint[s],”

and into Kasali’s “own responsibility, if any, for th[e] conflict[s]” when it

denied her motions. Martel v. Clair, 565 U.S. 648, 663 (2012).

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“Because a [district] court’s decision on substitution [of counsel] is

so fact-specific, it deserves deference.” Id. at 663–64. To overcome that

deference, Kasali was required to show either a conflict of interest or a

complete breakdown in communication. See United States v. Gentry, 941 F.3d

767, 776–77 (5th Cir. 2019). A conflict of interest warranting substitution will

arise when a defendant shows “‘that counsel’s performance was deficient’

and ‘that the deficient performance prejudiced the defense.’” Id. at 776

(quoting Strickland v. Washington, 466 U.S. 668, 687 (1984)). A complete

breakdown in communication between an attorney and defendant can also

constitute good cause unless “the breakdown can be attributed to the

defendant’s intransigence, and not to the neglect of defense counsel or the

trial court.” Id. at 777 (quoting Simpson, 645 F.3d at 308).

Kasali failed to make either showing. Regarding a conflict of interest,

she did not explain how any of Stafford’s or Kaper’s actions were deficient

other than to continuously reiterate that they had yet to resolve the non-issue

of her pretrial confinement. Kasali also failed to explain how her distrust of

either Stafford or Kaper prejudiced her defense or affected their

representation. In fact, counsel pursued Kasali’s requested motions despite

thinking they were futile. As for a complete breakdown in communication,

Kasali’s actions show her unwillingness to cooperate, rather than Stafford’s

or Kaper’s neglect, caused the breakdown.

Because Kasali’s intransigence was the root cause of the attorney-

client communication issues, the district court did not abuse its discretion in

finding Kasali capable but unwilling to cooperate and denying her motions to

substitute counsel.

II. Voluntary waiver of presence at trial

This court generally reviews a district court’s determination that a

defendant was voluntarily absent under Federal Rule of Criminal Procedure

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43 for clear error and its decision to proceed with the trial for abuse of

discretion. United States v. Edwards, 303 F.3d 606, 627 (5th Cir. 2002). In

the absence of a contemporaneous objection, however, our review is for plain

error. United States v. Thomas, 724 F.3d 632, 641 (5th Cir. 2013).

The parties dispute which is the appropriate standard of review and

whether Kasali contemporaneously objected when the district court initially

decided to proceed in her absence. Kasali seemingly argues plain error,

harmless error, and abuse of discretion all apply because each of the district

court’s findings were separate constitutional violations subject to different

standards of review. The Government asserts neither Kasali nor her counsel

objected when the district court decided to proceed with jury selection, so

plain error is the only appropriate review standard. It further argues Kasali

concedes plain error is the applicable standard.

We pretermit this question and apply de novo review because, as

explained below, we conclude the district court’s actions were appropriate

and Kasali’s arguments fail under any standard. See United States v. Pursley,

22 F.4th 586, 591 (5th Cir. 2022); United States v. Haggerty, 997 F.3d 292,

296–97 (5th Cir. 2021); United States v. Rodriguez, 523 F.3d 519, 525 (5th Cir.

2008).

a. Commencement of trial pursuant to Rule 43

A defendant has a constitutionally protected right to be present “at all

stages of the trial where [her] absence might frustrate the fairness of the

proceedings.” Thomas, 724 F.3d at 642 (citations omitted). In other words,

a defendant has “the right to be present at any [critical] stage of the criminal

proceeding.” Kentucky v. Stincer, 482 U.S. 730, 745 (1987). Rule 43

articulates this right and requires a defendant “be present at . . . every trial

stage, including jury impanelment.” FED. R. CRIM. P. 43(a)(2). Rule 43

then explains the circumstances when a defendant may waive this right.

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FED. R. CRIM. P. 43(c). “A defendant who was initially present” may

waive her right to be present either by being “voluntarily absent after the trial

has begun,” or by being removed “for disruptive behavior.” FED. R.

CRIM. P. 43(c)(1)(A), (C).

For purposes of whether she was initially present under Rule 43,

Kasali contends that the December 6, 2021, pretrial conference when her

refusal to change out of her jail clothes caused her to be removed was not a

part of the trial. She argues it was only when the voir dire of the jury began

that the trial itself began, and she was not present in the courtroom at that

time. The Government argues trial did begin with the pretrial conference

when Kasali was present.

We recognize that, for purposes of Rule 43, the first critical stage of a

trial that requires the defendant’s presence will usually be jury selection.

Thomas, 724 F.3d at 642. During jury selection, a defendant’s “presence has

a relation, reasonably substantial, to the ful[l]ness of [her] opportunity to

defend against the charge.” Stincer, 482 U.S. at 745 (citation omitted). We

have yet to articulate, though, when jury selection itself starts. The only two

circuits to do so concluded trial begins when court is called to order on the

day jury selection begins. See United States v. Sterling, 738 F.3d 228, 236 (11th

Cir. 2013); United States v. Benabe, 654 F.3d 753, 771–72 (7th Cir. 2011).

Both the Eleventh and Seventh Circuits have held that court was

called to order and trial began under Rule 43 when a defendant was brought

to a conference with the judge, counsel, and a court reporter following the

defendant’s refusal to participate. See Sterling, 738 F.3d at 233, 236–37;

United States v. Shanks, 962 F.3d 317, 322–23 (7th Cir. 2020). The circuits

considered otherwise requiring a “combative defendant” be brought into the

courtroom just to satisfy Rule 43’s “initially present” requirement

“absurd.” Sterling, 738 F.3d at 236; see also Shanks, 962 F.3d at 323.

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We agree with that reasoning. Here, the district court held a

conference before jury selection to resolve potential prejudice resulting from

Kasali’s refusal to participate in trial or to remove her jail clothes. The judge,

counsel for both Kasali and the Government, and a court reporter met

outside the jury room for the conference. The judge then brought Kasali in

to establish a clear record of her unwillingness to proceed with voir dire and

to inform her of her options to proceed.

Kasali’s presence at the December 6, 2021, conference had a

“reasonably substantial” relation to her defense, making it a sufficiently

significant event to indicate the start of trial. Stincer, 482 U.S. at 745. Thus,

for purposes of Rule 43, trial had indeed commenced.

b. Rule 43(c) waiver provisions

Kasali also argues the district court erroneously concluded she

voluntarily waived her right to be present and proceeded to trial in her

absence. Kasali insists she did not waive her right to be present because she

neither voluntarily left the courtroom nor was so continuously disruptive as

to justify removal.

Under Rule 43(c)(1)(A), a defendant’s voluntary absence after trial

has begun does not have a “stringent waiver requirement,” and a court does

not “need any type of waiver to exist on the record. Mere voluntary absence

is sufficient to waive a Rule 43 right to be present.” Thomas, 724 F.3d at 644

(quotation marks and citation omitted). This voluntariness can even “be

implied from [a defendant’s] actions.” United States v. Davis, 61 F.3d 291,

302 (5th Cir. 1995).

Prior to proceeding with trial in a defendant’s absence, however, “the

district court must [first] determine . . . whether the defendant’s absence is

knowing and voluntary” by “inquir[ing] into the reason for the defendant’s

absence.” Id. If it is knowing and voluntary, the court must then consider

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“whether the public interest in the need to proceed clearly outweighs” the

defendant’s voluntary absence. Id. In doing so, the district court must

“balanc[e] the likelihood that the trial could soon take place with the

defendant’s presence against the undue inconvenience or prejudice

occasioned by a slight delay or a rescheduling of the trial.” United States v.

Beltran-Nunez, 716 F.2d 287, 291 (5th Cir. 1983).

Here, the district court determined Kasali waived her right to be

present because she refused to change into street clothes, refused to answer

the court’s questions, refused to be present with her attorneys, and posed a

risk of acting out during or interrupting the proceedings. Kasali contends this

was error because she never suggested she did not want to be present, just

that she wanted the court to consider her issues with her attorneys. In fact,

she specifically stated she did “not waive [her] appearance” and was only

protesting her specific counsel. Kasali further argues the district court failed

to conduct its required Beltran-Nunez inquiry.

The Government asserts Kasali’s refusal to change clothes and

avoiding direct answers to the district court’s questions “align[] with

analogous case law” from other circuits such that she voluntarily waived her

right to be present despite any “defiant statements” to the contrary. One

such case is the Second Circuit’s United States v. Lucky, 569 F.3d 101 (2d Cir.

2009) opinion. There, the defendant refused to participate in jury selection

or change into civilian clothing, instead insisting the magistrate judge rule on

certain pretrial motions. Id. at 104. When the judge refused, the defendant

told the court it could “proceed without [his] presence,” but he was “not

waiving anything,” despite leaving the courtroom. Id. The court repeatedly

told the defendant that if he left, he would be waiving his presence and

ultimately concluded he voluntarily waived his presence. Id. at 104–05.

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The Seventh Circuit similarly concluded two district courts properly

found defendants had waived their right to be present at trial. See Shanks,

962 F.3d at 323–24; Benabe, 654 F.3d at 767–71. In Shanks, the defendant

“repeatedly refused” to answer the judge’s questions, continued to protest

a separate unrelated issue, and tried to resurrect a dead argument before the

court. 962 F.3d at 324. The district court then considered the factors of

rescheduling a trial the day witness testimony was to begin and the

defendant’s unwillingness to cooperate. Id. The circuit court held that the

district court’s subsequent conclusion that the defendant waived his

presence was proper. Id.

The Benabe defendants continued a “tandem campaign of

obstreperous interruptions and frivolous legal arguments,” which resulted in

a knowing and voluntary waiver of their presence. 654 F.3d at 769. They

made repeated outbursts during the proceedings and refused to answer the

district court’s request that they behave in front of the jury. Id. at 769–70.

The district court removed the defendants but clarified they were welcome

to return to the proceedings if they acted appropriately. Id. at 770. The

district court also considered the factors of delay and difficulty in

rescheduling the trial, ultimately concluding the factors weighed in favor of

moving the trial forward. Id. The Seventh Circuit found no constitutional

error in this exclusion. Id.

Though we are not bound by these decisions, we find them sufficiently

persuasive considering this record. Kasali refused to cooperate with the

district court by not answering its questions and not changing into street

clothes so she could participate in voir dire. She instead attempted to reraise

and reargue issues not before the court and continued to protest Stafford and

Kaper as her counsel. Although the district court neither repeatedly

conveyed Kasali’s actions could waive her presence nor explicitly stated

Kasali could return to the proceedings once she acted accordingly, the

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court’s asking Kasali again after voir dire if she would cooperate

communicated the court’s desire to honor Kasali’s right to be present. See

Illinois v. Allen, 397 U.S. 337, 343 (1970) (clarifying that “the right to be

present can . . . be reclaimed as soon as the defendant is willing to conduct

himself . . . with . . . respect”).

Further, the district court explained how it considered the Beltran-

Nunez factors when it concluded Kasali’s waiver was voluntary. It

articulated each factor, provided counsel for both sides the opportunity to be

heard on the issue, and concluded the factors supported a voluntary waiver.

Although Kasali did not say the district court could proceed without her, the

district court explained its decision to proceed was because of Kasali’s

unwillingness to cooperate. The court made the explicit finding that Kasali

waived her presence at trial after voir dire was conducted in her absence.

We conclude Kasali’s actions and continued misconduct were

sufficient for the district court to imply a voluntary waiver of Kasali’s

presence under Rule 43(c)(1)(A). The district court’s subsequent weighing

of the Beltran-Nunez factors, including Kasali’s unwillingness to cooperate,

favored proceeding with voir dire in her absence. Because we find the district

court’s exclusion proper under Rule 43(c)(1)(A), we need not reach whether

the exclusion was also justified under Rule 43(c)(1)(C).

The district court therefore did not err in proceeding with a portion of

Kasali’s trial in her absence.

III. Sentence enhancement and restitution

Kasali’s final claims of error concern the district court’s sentence

enhancement calculation under United States Sentencing Guidelines § 2B1.1

and its restitution order. Kasali argues intended loss was an insufficient basis

for both her 18-level sentence enhancement and the restitution amount

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ordered. The Government asserts neither order is clearly erroneous under

this circuit’s precedent, and they should both be affirmed.

We generally review both a district court’s application of the

Sentencing Guidelines and the legality of restitution de novo. United States v.

McGavitt, 28 F.4th 571, 575 (5th Cir. 2022); United States v. Maturin, 488

F.3d 657, 659 (5th Cir. 2007). Plain-error review will apply, however, if the

defendant’s objections to her sentence on appeal are based on different

grounds than those in district court, McGavitt, 28 F.4th at 575, and if a

defendant fails to object to the restitution amount in district court, Maturin,

488 F.3d at 659–60.

First, we consider Kasali’s sentencing calculation. Kasali’s objection

in district court was to the amount of loss calculated, but she now objects to

the type of loss upon which the district court relied. We thus apply plain-

error review. Section 2B1.1 refers to “the loss,” without ever defining the

term, but the Guidelines commentary goes on to define “loss [a]s the greater

of actual loss or intended loss.” U.S.S.G. § 2B1.1 cmt. n.3(A). A “court’s

loss determination is entitled to appropriate deference.” § 2B1.1 cmt. n.3(C).

The Guidelines commentary interpreting or explaining a Guideline

has for 30 years been binding on courts, and a failure to follow such

commentary can constitute error. 2 Stinson v. United States, 508 U.S. 36, 42–

_____________________

2

In her initial brief, Kasali argued the Supreme Court’s recent Kisor v. Wilkie, 588

U.S. 558, 574–77 (2019), decision replaced Stinson’s deferential standard and now

mandates that “courts should not defer to the commentary [G]uidelines unless there is

genuine ambiguity in the [G]uidelines.” Our court recently clarified, however, that the

Stinson standard requiring “us to follow the [Guidelines] commentary” “has not been

overruled or modified.” United States v. Vargas, 74 F.4th 673, 678, 680 (5th Cir. 2023) (en

banc). Thus, a court’s failure to follow the Guidelines commentary continues to be an

incorrect and reversible application of the Guidelines. Id. at 680. In her reply brief, Kasali

recognizes this court’s Vargas decision, which was decided after she filed her initial brief,

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43 (1993). Importantly, U.S.S.G. § 2B1.1 cmt. n.3(A) allows intended loss to

be used to increase an offense level if the intended loss is greater than the

actual loss. Such is the case here. The district court did not make an actual

loss determination but found the specific intended loss of Kasali’s crimes to

be $3,813,444. Giving this loss determination the proper deference, we

conclude the district court’s Guidelines calculation based on intended loss

and application of the 18-level enhancement was not plain error.

Next, we consider Kasali’s restitution order. Kasali asserts the

district court erred in awarding restitution to the SBA. Specifically, she

argues there is no basis for a restitution order, and it is improper to allow the

Government double recovery in the form of restitution and forfeiture of the

loan amount. The Government argues that Kasali forfeited her arguments,

and actual loss was inferred from the district court’s granting the

Government’s objection.

“Restitution is remedial in nature; its goal is to make the victim whole.

Forfeiture is punitive; it seeks to disgorge any profits or property an offender

obtains from illicit activity.” United States v. Sanjar, 876 F.3d 725, 751 (5th

Cir. 2017) (citing United States v. Taylor, 582 F.3d 558, 566 (5th Cir. 2009)).

These are two distinct remedies. Id. Relying on this court’s Sanjar decision,

the Government contends that forfeiture and restitution can both be ordered

as remedies in the same case. The sole issue in Sanjar, however, was whether

a district court could properly offset a restitution amount with any amount

collected pursuant to a forfeiture order. Id. at 750. We concluded that a

district court does not have the statutory authority to offset restitution with

_____________________

forecloses her contention that Stinson no longer applies. Accordingly, she presents the

argument only to preserve it for possible further review.

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forfeiture amounts; that is the Attorney General’s responsibility. Id. at 750–

51.

Improper offset is not Kasali’s argument. She asserts that the district

court erroneously ordered restitution because the Government cannot be

allowed a windfall by receiving both restitution and forfeiture of assets. In

2009, however, we held that district courts can order both restitution and

forfeiture without it constituting double recovery. Taylor, 582 F.3d at 565–

66.

Under the Mandatory Victim Restitution Act (“MVRA”), restitution

must be ordered to an “identifiable victim” “directly and proximately

harmed as a result” of certain defendant conduct, including fraud. 18 U.S.C.

§ 3663A(a)(2), (c)(1)(A)(ii), (c)(1)(B). The MVRA further clarifies

restitution will be ordered in the full amount without consideration of

whether the victim received compensation from “insurance or any other

source.” § 3664(f)(1)(B). If such compensation is received, restitution will

be ordered to be “paid to the person who provided or is obligated to provide

the compensation.” § 3664(j)(1).

Both the MVRA and 28 U.S.C. § 2461(c) contain mandatory language

that requires a district court to order full restitution and the forfeiture of

property. Taylor, 582 F.3d at 565. The MVRA states a district court “shall

order, in addition to[] . . . any other penalty authorized by law, that the

defendant make restitution to the victim of the offense.” 18 U.S.C.

§ 3663A(a)(1) (emphasis added). The forfeiture statute states “[i]f the

defendant is convicted of the offense giving rise to the forfeiture, the [district]

court shall order the forfeiture of the property as part of the sentence.” 28

U.S.C. § 2461(c) (emphasis added).

“The MVRA does not permit restitution awards to exceed a victim’s

loss. . . . The court may not award the victim a windfall.” United States v.

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Williams, 993 F.3d 976, 980 (5th Cir. 2021) (quoting United States v. Beydoun,

469 F.3d 102, 107 (5th Cir. 2006)). We interpret the MVRA to be limited

“to the actual loss directly and proximately caused by the defendant’s offense

of conviction,” not the intended loss. Id. (quoting United States v. Sharma,

703 F.3d 318, 323 (5th Cir. 2012)). The MVRA places “[t]he burden of

demonstrating the amount of the loss sustained by a victim as a result of the

offense” on the Government and “[t]he burden of demonstrating such

other” appropriate matters on the party designated by the court. 18 U.S.C.

§ 3664(e). This establishes “a burden-shifting framework for loss-amount

calculations.” Williams, 993 F.3d at 980. The Government must first

establish actual loss to one or more victims by a preponderance of the

evidence, and the defendant can then attempt to rebut that evidence. Id. at

980–81.

Here, the district court made no explicit finding of actual loss. Kasali

argues the failure to do so paired with the PSR’s statement that “no

restitution is outstanding in this case” proves the district court could not

order restitution. The Government contends the district court “necessarily

found actual loss in the amount the [G]overnment urged” when it sustained

the Government’s objections to the PSR regarding restitution and the

intended loss amount.

It is unrefuted that the SBA guaranteed the loan approved for Lola’s

Level in the amount of $1,937,500; the loan amount was deposited in Kasali’s

accounts; and the full loan amount was frozen and recovered prior to Kasali’s

obtaining the money. The PSR equates the seizure of these funds to an offset

of the restitution because the loan was “ultimately recovered in full.” The

Government objected to this classification, asserting the SBA was entitled to

restitution because seeking forfeiture does not bar an additional restitution

amount; restitution is a mandatory component of sentencing; and the SBA

was the victim of Kasali’s crime. In support of the sought-after restitution

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amount, the Government provided an SBA Certified Statement of Account

record establishing the total debt owed on the loan plus interest. Despite the

lack of “actual loss” language, this loan documentation mirrors evidence

relied on by other district courts when making actual loss determinations. See

id. at 981; Sharma, 703 F.3d at 323–24. The district court agreed with the

Government’s objection and ordered restitution.

It is a common practice to order both restitution and forfeiture. See

generally Sharma, 703 F.3d at 322–27; Sanjar, 876 F.3d at 748–51; Taylor, 582

F.3d at 565–68. These cases focused on whether restitution and forfeiture

were properly calculated or offset, not whether allowing both remedies was

proper. Indeed, the latter is a non-issue here. In fact, the Department of

Justice Asset Forfeiture Policy Manual explains how the separate remedies

interconnect. See U.S. Dep’t of Just., Asset Forfeiture Policy Manual (2023).

An entire chapter is dedicated to the process for seizure and restraint of

property, which occurred here when the loan was seized from the bank prior

to Kasali’s obtaining it. Id. at ch. 2. Another chapter then explains the

separate forms of victim compensation. Id. at ch. 14.

Forfeiture of assets by the Government is part of the recovery process

of fraud crimes, and the DOJ seeks eventually to return those forfeited assets

to victims. Id. at ch. 14, § I. One of the three primary ways to pay victims is

restitution, which is “the process of determining victim losses for purposes

of sentencing and paying victims in criminal cases.” Id. It is “a court-

ordered equitable remedy intended to make crime victims whole and prevent

unjust enrichment.” Id. The DOJ explains how “restitution and forfeiture

are mandatory and independent parts of a criminal sentence, [and] the

forfeited assets may not be used to satisfy the restitution order if other assets

are available for that purpose.” Id. at ch. 14, § II.B.2.

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There are special considerations, however, when the victim is a

federal government entity, like the SBA, which often suffer pecuniary losses

from fraud crimes dealing with funded programs like the PPP loan program.

Id. at ch. 14, § II.D. “The act of forfeiting the seized assets and depositing

the proceeds into the Assets Forfeiture Fund (AFF) . . . does not mean that

the seizing agency has received victim compensation. Rather, the victim

agency should either (1) be included in the restitution order, with a specified

pecuniary loss amount, for restoration request purposes, or (2) file a petition

for remission requesting compensation for its losses from the proceeds of the

forfeited assets.” Id. (emphasis and footnote omitted).

Because the forfeited $1,937,500 given to the DOJ to deposit into the

AFF did not provide restitution to the SBA or make it whole in this instance,

the district court properly included the SBA in the restitution order. It is the

DOJ’s policy, if the SBA does not receive the required restitution amount

from Kasali, to transfer funds to the SBA upon petition to the court.

AFFIRMED.

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