United States v. Dowl

Case: 09-31041 Document: 00511231413 Page: 1 Date Filed: 09/13/2010

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

September 13, 2010

No. 09-31041 Lyle W. Cayce

Clerk

UNITED STATES OF AMERICA,

Plaintiff - Appellee

v.

BARBARA SIMMONS DOWL, also known as Barbara Simmons, also known

as Barbara Lee Dowl, also known as Barbara Dowl,

Defendant - Appellant

Appeal from the United States District Court

for the Eastern District of Louisiana

Before KING, HIGGINBOTHAM, and GARZA, Circuit Judges.

PER CURIAM:

Following Hurricane Katrina, Barbara Dowl applied for and received

funds from the Government to rebuild a home in New Orleans, Louisiana.

However, Dowl did not own the property, and she used the money for non-

rebuilding expenditures. The Government charged Dowl with five counts related

to this fraud, and a jury found her guilty on all counts. Dowl was sentenced to

69 months’ imprisonment and ordered to pay $156,761 in restitution. On appeal,

she challenges both her conviction and sentence. We AFFIRM.

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I. BACKGROUND

A. Factual Background

1. The Zimple Street Property

In 1992, Barbara Dowl (“Dowl”) and her then-husband Nathaniel Dowl,

Jr., purchased a home and property located at 8633 Zimple Street in New

Orleans, Louisiana (the “Zimple Property” or “Property”). The Dowls failed to

keep up with their property taxes, and the Zimple Property was adjudicated to

the City of New Orleans in 1997.1

In 2004, the City of New Orleans sold the Zimple Property to Robinson

Ventures, LLC, a small real-estate company owned by Michelle and Braden

Robinson.2 The Dowls sought to annul this sale, and the Robinsons sought to

evict the Dowls from the Property. The state trial court granted the eviction,

and the Dowls filed a writ for review by the Louisiana Supreme Court. This writ

and the Dowls’ petition to annul the sale of the Zimple Property were pending

when Hurricane Katrina struck in August 2005, severely damaging the home on

the Property. In January 2006, the Louisiana Supreme Court declined to hear

the Dowls’ writ for review and subsequently denied their motion for

reconsideration in March 2006. Then, in January 2007, the state trial court

granted the City’s “exception of no cause of action,” effectively terminating the

Dowls’ challenges to the sale of the Zimple Property.

2. Dowl’s Loan Applications

i. The Small Business Administration Loan

In October 2005, Dowl applied to the United States Small Business

1

However, the city did not take possession of the property, and the record does not

clearly indicate whether the Dowls continued to live at the property.

2

We refer to Robinson Ventures, LLC, and Michelle and Braden Robinson collectively

as the “Robinsons,” unless otherwise noted or made apparent from context.

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Administration (the “SBA”) for a “disaster assistance loan” to rebuild a home on

the Zimple Property. As part of her application, Dowl claimed to own the Zimple

Property, and in support of this claim, she provided the 1992 act of sale

documents. The SBA, on the basis of Dowl’s application and her supporting

documents, approved a $105,000 loan to be disbursed in installments.

Following the initial disbursement, the SBA requested additional

information in order to verify that Nathaniel no longer had an interest in the

property. In response, Dowl filed a false quitclaim deed, stating that the City of

New Orleans had sold the Zimple Property to her for the payment of back taxes.

Additionally, she supplied a “conveyance certificate,” which indicated that she

had not sold the property since 1992, and a document from the City tax

assessor’s office showing that all taxes on the property were current. The

Government showed at trial that the City knew nothing of the quitclaim deed;

the conveyance certificate did not indicate any other transactions because it was

pulled from the transaction system using a different name for the property; and

the property taxes had been paid by the Robinsons, not Dowl. In total, the SBA

disbursed $75,000 to Dowl. Dowl did not use these funds to rebuild a home at

the Zimple Property, though she made regular monthly payments on the loan.

ii. The Louisiana Road Home Program Grant

In November 2006, Dowl also applied for a grant from the Louisiana Road

Home program (“Road Home”).3 Dowl submitted an application claiming that

she was the owner of the Zimple Property and that the home on the property was

her primary residence when Hurricane Katrina struck. In support of these

claims, Dowl provided the 1992 act of sale and the false quitclaim deed she had

presented to the SBA. Dowl also listed the SBA loan on her Road Home

3

“[T]he SBA and Road Home programs are government incentives to return to New

Orleans” following Hurricane Katrina. Bradley v. Allstate Ins. Co., 606 F.3d 215, 229 n.10 (5th

Cir. 2010).

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application. On the basis of Dowl’s application and supporting documents, Road

Home approved Dowl for a $132,000 grant to rebuild her home at the Zimple

Property. However, following a determination that Dowl had previously received

SBA funds for rebuilding her house, the Road Home program wired $46,000 to

the SBA, reducing the amount outstanding on Dowl’s SBA loan. Dowl

acknowledged the transmission of funds to the SBA and received an $85,930

Road Home grant check to rebuild a home at the Zimple Property; she did not

use these funds for that purpose.

B. Indictment, Trial, and Sentencing

In June 2008, a federal grand jury returned an indictment charging Dowl

with one count of wire fraud, in violation of 18 U.S.C. § 1343,4 and one count of

theft of Government funds, in violation of 18 U.S.C. § 641.5 And in early 2009,

4

Section 1343 provides:

Whoever, having devised or intending to devise any scheme or artifice to

defraud, or for obtaining money or property by means of false or fraudulent

pretenses, representations, or promises, transmits or causes to be transmitted

by means of wire, radio, or television communication in interstate or foreign

commerce, any writings, signs, signals, pictures, or sounds for the purpose of

executing such scheme or artifice, shall be fined under this title or imprisoned

not more than 20 years, or both. If the violation occurs in relation to, or

involving any benefit authorized, transported, transmitted, transferred,

disbursed, or paid in connection with, a presidentially declared major disaster

or emergency (as those terms are defined in section 102 of the Robert T.

Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. § 5122)), or

affects a financial institution, such person shall be fined not more than

$1,000,000 or imprisoned not more than 30 years, or both.

18 U.S.C. § 1343.

5

Section 641 provides, in relevant part:

Whoever embezzles, steals, purloins, or knowingly converts to his use or the use

of another, or without authority, sells, conveys or disposes of any record,

voucher, money, or thing of value of the United States or of any department or

agency thereof, or any property made or being made under contract for the

United States or any department or agency thereof . . . .

Shall be fined under this title or imprisoned not more than ten years, or both;

but if the value of such property in the aggregate, combining amounts from all

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the grand jury returned superseding indictments, which further charged Dowl

with two counts of making false statements to the Government in violation of 18

U.S.C. § 10016 and another count of theft of Government funds.

Before trial, Dowl moved to dismiss the wire fraud count, arguing, inter

alia, that the wire transmission alleged by the Government—the transfer of

funds from Road Home to the SBA—was insufficient to sustain the charge. The

district court denied this motion, finding that the wire transmission charged was

sufficient because “the completion of [Dowl’s] scheme depended in part on the

wire transfer, [and thus] the transfer was ‘incident to an essential part of the

scheme.’”

During trial, the Government presented evidence showing that Dowl

falsely claimed to own the Zimple Property; made false applications to other

entities for assistance following Hurricane Katrina; filed false deeds and real

the counts for which the defendant is convicted in a single case, does not exceed

the sum of $1,000, he shall be fined under this title or imprisoned not more than

one year, or both.

18 U.S.C. § 641.

6

Section 1001 provides, in relevant part:

(a) Except as otherwise provided in this section, whoever, in any matter within

the jurisdiction of the executive, legislative, or judicial branch of the

Government of the United States, knowingly and willfully —

(1) falsifies, conceals, or covers up by any trick, scheme, or device a

material fact;

(2) makes any materially false, fictitious, or fraudulent statement or

representation; or

(3) makes or uses any false writing or document knowing the same to

contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title, imprisoned not more than 5 years or, if the

offense involves international or domestic terrorism (as defined in section 2331),

imprisoned not more than 8 years, or both. If the matter relates to an offense

under chapter 109A, 109B, 110, or 117, or section 1591, then the term of

imprisonment imposed under this section shall be not more than 8 years.

18 U.S.C. § 1001(a).

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estate documents concerning the Zimple Property; and used the court system to

file frivolous litigation challenging the ownership of the Zimple Property,

including a suit that alleged corruption against the Robinsons. The Government

also detailed the specifics of Dowl’s fraudulent applications to the SBA and Road

Home and showed that Dowl had used assistance funds for non-rebuilding

expenditures.

Following the close of the Government’s case, Dowl moved under Federal

Rule of Criminal Procedure 29 for acquittal on the theft of the Government funds

from the SBA charge. She argued that the Government had not shown any

intent to deprive the Government of funds because she intended to pay back the

loan and that thus the Government had not shown “theft” in violation of 18

U.S.C. § 641. The district court denied this motion, finding that there was

enough evidence to submit the case to the jury. Dowl then presented witness

testimony purporting to show that she had rights in the Zimple Property. Dowl

failed to renew her Rule 29 motion at the close of all evidence.

The case was submitted to the jury, which found Dowl guilty on all

charged counts and also determined that $156,761 should be forfeited to the

Government as restitution. Following the verdict, a United States Sentencing

Guidelines (“Guidelines”) range of 46–57 months’ imprisonment was calculated.

During sentencing, Dowl argued that the Guidelines’ intended loss calculation

of $237,000 did not properly credit her for the $46,000 repayment of her SBA

loan by Road Home. The district court overruled this objection, concluding

that the loan applications established the intended loss and that no credit should

be given for the Government’s detection of the overlapping funds.

The Government moved for an upward departure from the Guidelines

range because it did not accurately reflect the impact on the Robinsons as

victims. The district court agreed, finding that Dowl’s frauds and use of the

court and property filing systems had imposed hardships on the Robinsons. The

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court upwardly departed by 12 months and sentenced Dowl to 69 months’

imprisonment. Dowl timely appealed.

II. DISCUSSION

A. Conviction

On appeal, Dowl raises two challenges to her conviction: (1) whether the

wire of funds from Road Home to the SBA was sufficient to bring Dowl’s

fraudulent scheme within the scope of the wire fraud statute and (2) whether

there was sufficient mens rea evidence produced by the Government to sustain

Dowl’s conviction on the theft of SBA funds. We address each in turn.

1. Wire Transfer

“‘To prove wire fraud under 18 U.S.C. § 1343, the government must prove:

(1) a scheme to defraud and (2) the use of, or causing the use of, wire

communications in furtherance of the scheme.’” United States v. Stalnaker, 571

F.3d 428, 436 (5th Cir. 2009) (quoting United States v. Ingles, 445 F.3d 830, 838

(5th Cir. 2006)). Here, the Government charged that the relevant wire was the

transmission of $46,000 from Road Home in Louisiana to the SBA’s account in

New York, following the discovery of the overlapping funds. Dowl contends that

this wire was “not for the purpose of executing the alleged scheme to defraud”

and thus cannot support her wire fraud conviction. We disagree.

“We review [a] conviction de novo and ask ‘whether a reasonable jury could

conclude that the relevant evidence, direct or circumstantial, established all of

the essential elements of the crime beyond a reasonable doubt when viewed in

the light most favorable to the verdict.’” Id. (quoting United States v. Loe, 262

F.3d 427, 432 (5th Cir. 2001)). The use of wire communications “need not be an

essential element of [a scheme to defraud]” but may instead “be incident to an

essential part of the scheme, or a step in the plot.” Schmuck v. United States,

489 U.S. 705, 710–11 (1989) (citations, alterations, and quotation marks omitted)

(discussing the mail fraud statute requirements); accord United States v. Mills,

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199 F.3d 184, 188 (5th Cir. 1999) (per curiam) (“Interstate wire communications

[a]re used to further the fraudulent scheme, and federal jurisdiction attaches,

if the use of the wires by the banks [i]s incident to an essential part of the

scheme.”). “To show that a [wire] is incident to an essential part of the scheme,

the government must demonstrate that completion of the alleged scheme

depended in some way on the information . . . that passed through the [wire].”

Ingles, 445 F.3d at 835 (quotation marks and alterations omitted) (discussing the

mail fraud statute).

The alleged wire supports the wire fraud count, and the evidence

presented at trial supports Dowl’s wire fraud conviction. Dowl knew that she

might have to use some of her Road Home money to pay down her SBA loan.

She agreed to this condition through signing her applications, explicitly agreeing

to any necessary transfer. Cf. Mills, 199 F.3d at 190 (“[Defendant] was not

indifferent as to when the scheme was discovered . . . because the continuation

of the scheme depended upon the successful deception of [all] parties.”). Because

Road Home discovered that the SBA loan funds overlapped with its grant, the

transfer from Road Home to the SBA was necessary to obtain the balance of the

Road Home funds. Dowl accepted this transfer, acknowledging that $46,000

would be remitted to the SBA to pay down her loan, and received the balance of

the Road Home funds, $86,000. This transfer of funds was accomplished via an

interstate wire transfer.

Dowl’s scheme was not complete until she approved the transfer of funds

and Road Home distributed the funds to Dowl and SBA. See United States v.

Arledge, 553 F.3d 881, 892 (5th Cir. 2008) (“[A] scheme to defraud is complete

when the persons intended to receive the money had received it.” (alterations

and quotation marks omitted) (quoting United States v. Maze, 414 U.S. 395, 400

(1974))); cf. Mills, 199 F.3d at 190 (“[S]uccess of the . . . fraudulent venture

depended upon continued harmonious relations among [various entities].”). As

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such, the wire transfer from Road Home to the SBA was, at the least, an

incidental part of Dowl’s scheme to defraud. See Arledge, 553 F.3d at 892

(finding that documents that had to be sent prior to release of funds were sent

“pursuant to the scheme to defraud”); cf. Mills, 199 F.3d at 190 (finding that the

wire communications to sustain a fraudulent scheme “were at the heart of the

scheme [to defraud]”). The wire transfer was sufficient to support Dowl’s wire

fraud conviction.

2. Mens Rea Evidence

Dowl next challenges her conviction for theft of SBA funds, arguing that

she lacked the requisite mens rea for conviction. Dowl moved for a judgment of

acquittal at the beginning of trial, but she failed to renew this motion at the

close of evidence. Therefore, we review for a “manifest miscarriage of justice”

and will reverse only if “the record is devoid of evidence pointing to guilt or

contains evidence on a key element of the offense that is so tenuous that a

conviction would be shocking.” United States v. Burton, 324 F.3d 768, 770 (5th

Cir. 2003) (alteration and quotation marks omitted).

Dowl specifically argues that the Government alleged a form of “theft,”

larceny by trick, that required an intent to permanently deprive the Government

of its funds. Dowl contends that the Government did not prove that she

intended to permanently deprive the Government because she intended to repay

the loans, and thus the Government failed to prove theft of its property under

§ 641. We are unpersuaded.

In Morissette v. United States, the Supreme Court outlined the breadth of

18 U.S.C. § 641, noting that it was enacted “to collect from scattered sources

crimes so kindred as to belong in one category.” 342 U.S. 246, 266–67 (1952).

The Court further recognized that “[t]he history of § 641 demonstrates that it

was to apply to acts which constituted larceny or embezzlement at common law

and also acts which shade into those crimes but which, most strictly considered,

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might not be found to fit their fixed definitions.” Id. at 266 n.28 (emphasis

added).

Following on this broad construction, we have determined that the

requisite “intent” under § 641 is “the intent to deprive the owner of the use or

benefit of the property.” United States v. Dien Duc Huynh, 246 F.3d 734, 745

(5th Cir. 2001); see also United States v. Jones, 217 F. App’x 333, 336 (5th Cir.

2007) (per curiam) (“The jury instructions defined the term ‘steal’ as the

wrongful taking of money or property belonging to another with the intent to

deprive the owner of its use or benefit either temporarily or permanently. The

intent required in § 641 is the intent to appropriate the government property to

a use inconsistent with the owner’s rights and benefits.” (quotation marks and

alterations omitted)).

And in United States v. Aguilar, we favorably quoted a district court’s

inclusion of temporary takings within the ambit of “stealing” under § 641: “The

district court defined the term ‘steal’ as ‘the wrongful taking of money or

property belonging to another with intent to deprive the owner of its use or

benefit either temporarily or permanently.’” 967 F.2d 111, 112 (5th Cir. 1992).

Further, in United States v. Sparkman, an unpublished opinion which, though

non-precedential, is nonetheless persuasive, we rejected the defendant’s

“argument that the evidence failed to show that he intended to deprive the

Government of the funds permanently . . . because the Government was not

required to prove a permanent deprivation; a temporary taking also violates the

statute.” 112 F. App’x 358, 360 (5th Cir. 2004) (per curiam) (citing the F IFTH

C IRCUIT P ATTERN J URY I NSTRUCTIONS (Criminal Cases) § 2.33 (2001) (the

“P ATTERN J URY I NSTRUCTIONS”)). Our sister circuits are in accord with this

construction of § 641’s required intent. See United States v. Rehak, 589 F.3d

965, 973–74 (8th Cir. 2009) (“In Morissette, the Supreme Court recognized that

section 641 intended to fill the gaps or crevices on the law on larceny-type

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offenses. The statute reaches all instances where one may obtain wrongful

advantages from another’s property [and] prohibits both permanent and

temporary takings.” (citations and quotation marks omitted)); United States v.

Howard, 30 F.3d 871, 875 (7th Cir. 1994) (“There are three elements to the crime

of conversion under section 641: ‘(1) that the money or property belonged to the

government; (2) that the defendant fraudulently appropriated the money or

property to his own use or the use of others; (3) and that the defendant did so

knowingly and willfully with the intent either temporarily or permanently to

deprive the owner of the use of the money or property.’” (emphasis added) (quoting

United States v. McRee, 7 F.3d 976, 980 (11th Cir. 1993))); McRee, 7 F.3d at 980

(allowing for intent to deprive either “temporarily or permanently” (citing United

States v. Lanier, 920 F.2d 887, 895 n.62 (11th Cir. 1991))); Lanier, 920 F.2d at

895 (“Defendants’ intention to repay the $1.8 million, even actual repayment, is

not a defense to a charge of embezzlement under section 641, so long as the

money was the property of the United States when it was taken.”).

We think the district court’s use of the P ATTERN J URY I NSTRUCTIONS here

was correct: It was not error to define “steal,” for the purposes of § 641, to mean

“the wrongful taking of money or property belonging to another with intent to

deprive the owner [here, the Government] of its use or benefit either temporarily

or permanently.” P ATTERN J URY I NSTRUCTIONS § 2.33. Further, we conclude

that the Government submitted ample evidence at trial to support the jury’s

determination that Dowl intended such a deprivation and did “steal”

Government property. Dowl submitted fraudulent applications to obtain the

Government’s funds and proceeded to use the funds inconsistently with their

intended use; this scheme deprived the Government of the funds’ economic value

for aiding homeowners’ rebuilding efforts after Hurricane Katrina. Cf. United

States v. Barnes, 761 F.2d 1026, 1032 (5th Cir. 1985) (finding sufficient taking

of Government funds where Government loan “funds were obtained as a result

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of misrepresentations[ by several] borrowers [who] were not qualified for these

loans and . . . [who] utilized [the funds] for purposes other than those for which

they were intended”). We find no error—much less a “manifest miscarriage of

justice”—in Dowl’s conviction for violating 18 U.S.C. § 641.

B. Sentence

Regarding her sentence, Dowl challenges only the district court’s intended

loss calculation. Dowl argues that if we uphold her conviction on the wire fraud

count—finding, in her words, “that Road Home’s return of the funds was

accomplished jointly with Dowl”—then her “intended loss of $105,000 [regarding

the SBA funds] should be reduced by $46,000,” thus bringing her total loss under

$200,000 and reducing her offense level. We find no sentencing error.

“Calculation of the loss amount and other factual determinations are

reviewed for clear error; legal questions about the interpretation of the

Guidelines are reviewed de novo.” United States v. Setser, 568 F.3d 482, 496 (5th

Cir. 2009) (citing United States v. Tedder, 81 F.3d 549, 550 (5th Cir. 1996)).

Section 2B1.1(b)(1)(G) of the Guidelines provides for a 12 level offense level

increase “[i]f the loss exceeded . . . $200,000.” The application note to this

section, which is authoritative, see Stinson v. United States, 508 U.S. 36, 38

(1993), states that “loss is the greater of actual loss or intended loss.” U.S.S.G.

§ 2B1.1 cmt. n.3(A). The application note further provides that “‘[i]ntended loss’

(I) means the pecuniary harm that was intended to result from the offense; and

(II) includes intended pecuniary harm that would have been impossible or

unlikely to occur (e.g., as in a government sting operation, or an insurance fraud

in which the claim exceeded the insured value).” Id. cmt. n.3(A)(ii).

Here, Dowl submitted false applications for $237,000 in loans; this

intention to divert funds from the Government for unintended uses qualifies the

loan application amounts as “intended losses.” See id. cmt n.3(F)(ii) (“In a case

involving government benefits (e.g., grants, loans . . . ), loss shall be considered

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to be not less than the value of the benefits obtained by unintended recipients

or diverted to unintended uses.”); accord United States v. Miller, 316 F.3d 495,

500 (4th Cir. 2003) (“[I]n cases involving government program benefits, loss is

the value of the benefits diverted . . . .”); United States v. Kosth, 257 F.3d 712,

722 (7th Cir. 2001) (district court properly used loan commitment amounts from

SBA in calculating whether those funds were “diverted” from intended

recipients); see also United States v. Lane, 323 F.3d 568, 585 (7th Cir. 2003)

(“[I]ntended loss is the amount of money that the defendant places at risk as a

result of the fraudulent loan application.” (citing United States v. Downs, 123

F.3d 637, 643–44 (7th Cir. 1997)).

However, comment 3(E) to the § 2B1.1 application note requires a

reduction in the loss amount for funds returned “by the defendant or other

persons acting jointly with the defendant, to the victim before the offense was

detected.” U.S.S.G. § 2B1.1 cmt. n.3(E)(i).7 In United States v. Austin, the

defendant argued that assets pledged as collateral after detection of a fraud

could reduce the loss amount. 479 F.3d 363, 369 (5th Cir. 2007). In rejecting

this argument, we discussed the import of comment 3(E), recognizing a “long-

standing, well-recognized rule that post-detection repayments or pledges of

collateral do not reduce the loss. Such payments and pledges are considered at

sentencing, but with regard to restitution and acceptance-of-responsibility

7

Specifically, the comment provides that:

Loss shall be reduced by the following . . . . The money returned, . . . by the

defendant or other persons acting jointly with the defendant, to the victim

before the offense was detected. The time of detection of the offense is the

earlier of (I) the time the offense was discovered by a victim or government

agency; or (II) the time the defendant knew or reasonably should have known

that the offense was detected or about to be detected by a victim or government

agency.

U.S.S.G. cmt. n.3(E)(i).

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reductions.” Id. (footnotes omitted) (collecting cases). We further noted in

Austin that:

The Guidelines use loss as a proxy for the seriousness of the fraud.

An offense is generally less serious if the defendant “transfers

something of value to the victim(s).” But that “something of value”

must be transferred before the fraud is detected. Otherwise, as the

Sentencing Commission noted, “it would be inappropriate to credit

the defendant” with the value of the transferred assets.

Id. (footnotes omitted). Accordingly, we concluded that “assets pledged up until

the time the offense is discovered . . . are referable to the context of the

transaction because the pledge of assets is not an attempt to buy a sentence

reduction or continue the fraud, but instead to effectuate a reduction of the

actual or intended loss.” Id. (emphasis added).

Here, as discussed above, we view the return of funds to the SBA as, at the

least, incident to Dowl’s continuation of her fraud; Dowl had to repay the SBA

in order to receive the balance of her Road Home funds. However, the fact that

Dowl had to release the funds to continue her fraud is not dispositive. In Setser,

we noted that this commentary also applied to Ponzi schemes,8 concluding that

the application note “permitted offsetting of payments to investors up to the

amount they had invested.” 568 F.3d at 497. Accordingly, we concluded that the

defendant “was [properly] given credit for money that was returned to investors

[in the Ponzi scheme].” Id.

The question then is whether to treat the money transferred by Road

Home to SBA as an offset to Dowl’s intended loss comparable to either amounts

repaid by a defendant before a fraud is detected or investment money returned

in a Ponzi scheme. We decline to do so.

8

“A Ponzi scheme is an investment swindle in which some early investors are paid off

with money put up by later ones in order to encourage more and bigger risks.” Columbia Mut.

Ins. Co. v. Fiesta Mart, Inc., 987 F.2d 1124, 1125 n.2 (5th Cir. 1993) (citation and quotation

marks omitted); Setser, 568 F.3d at 486 (“As in a classic Ponzi scheme, as new investments

came in . . . , some of the new money was used to pay earlier investors.”).

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First, as distinguished from cases where credit is given to the defendant

for the return of funds, Dowl did not herself return the funds to the SBA. The

application note gives credit for funds returned “by the defendant or other

persons acting jointly with the defendant, to the victim before the offense was

detected.” U.S.S.G. § 2B1.1 cmt. n.3(E)(i). “The determination of intended loss

under the . . . Guidelines . . . focuses on the conduct of the defendant . . . .” Lane,

323 F.3d at 590; accord United States v. Geeslin, 447 F.3d 408, 410–11 (5th Cir.

2006) (quoting § 2B1.1 cmt. n.3(E) and declining to give “loss” credit to defendant

for services rendered by co-conspirator when co-conspirator could also be

considered a victim). Dowl concedes that she did not return the $46,000 to the

SBA, instead arguing that she acted “jointly” with Road Home for the return of

these funds. But though Dowl declared the SBA loan on her Road Home grant

application, she did not herself remit the Road Home funds to the SBA, instead

accepting that some of her stolen Road Home funds had to be used to repay some

of her stolen SBA loan funds once the Government detected the overlap. We

cannot accept such an interpretation that would permit a fraudfeasor to benefit

from the return of funds detected and retrieved largely by the efforts of a

defrauded party. See Austin, 479 F.3d at 367–69 (“When interpreting the

[Guidelines] commentary, we apply ordinary rules of statutory construction. . . .

Ordinarily, we will not interpret [the Guidelines] to achieve . . . absurd results.”);

cf. Geeslin, 447 F.3d at 411 (“[Co-conspirator]’s agreement to participate in

[defendant]’s scheme to defraud the City does not preclude the district court’s

determination that [the co-conspirator] was a victim because it was not entirely

voluntary.”).

Second, we think the fact that Dowl would have received all the funds, had

the Government not detected the overlap, distinguishes Dowl’s scheme from a

Ponzi scheme. To operate a Ponzi scheme, some subsequent investor money

must be returned to the initial investors. Thus, in such a scheme, the “loss”

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Case: 09-31041 Document: 00511231413 Page: 16 Date Filed: 09/13/2010

No. 09-31041

calculation is offset by the returned investor funds to better reflect the actual

harm imposed on the investors by the scheme. See Setser, 568 F.3d at 497

(explaining the sentencing commission’s rationale for comment 3(e) as it

pertained to Ponzi schemes); contra, e.g., Lane, 323 F.3d at 590 (“[T]he

unsecured portion of a loan is a common-sense estimate of the interim risk faced

by the lending institution . . . . The intended loss therefore is . . . the amount of

the . . . loan . . . less the [assets pledged to secure the loan].” “This determination

also applies even when the amount at risk was not lost.” (citation and quotation

marks omitted)).

Dowl’s scheme, on the other hand, did not, in its design, necessarily

require the funds transfer from Road Home to the SBA. Instead, Dowl applied

for $132,000 in Road Home funds with the knowledge that she might have to

repay overlapping funds to previous funding sources; the fact that the

Government did detect this overlap and did require the transfer of funds does

not ameliorate the scope of Dowl’s intended fraud. Cf. Austin, 479 F.3d at 369

(“[There is a] long-standing, well-recognized rule that post-detection repayments

. . . do not reduce the loss.”). We will not construe the Guidelines to give credit

to Dowl for the detection and required repayment of overlapping funds by the

Government—the defrauded party. We discern no error in Dowl’s sentence.

III. CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of conviction and

sentence.

AFFIRMED.

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