Sentencing Guidelines for United States Courts
Federal RegisterJan 6, 1998
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SUMMARY: Pursuant to section 994(a), (o), and (p) of title 28, United
States Code, and other provisions of law, the Commission is considering
promulgating certain amendments to the sentencing guidelines, policy
statements, and commentary. This notice sets forth the proposed
amendments and, for each proposed amendment, a synopsis of the issues
addressed by that amendment. The Commission seeks comment on the
proposed amendments, alternative proposed amendments, and any other
aspect of the sentencing guidelines, policy statements, and commentary.
The Commission may submit amendments to the Congress not later than May
1, 1998.
The proposed amendments are presented in this notice in one of two
formats. First, some of the amendments are proposed as specific
revisions to a guideline or commentary. Bracketed text within a
proposed amendment indicates alternative proposals and that the
Commission invites comment and suggestions for appropriate policy
choices; for example, a proposed enhancement of [3-5] levels means a
proposed enhancement of either three, four, or five levels. Similarly,
a proposed enhancement of [4] levels indicates that the Commission is
considering, and invites comment on, alternative policy choices.
Second, the Commission has highlighted certain issues for comment and
invites suggestions for specific guideline language.
DATES: Written public comment should be received by the Commission not
later than March 12, 1998, in order to be considered by the Commission
in the promulgation of amendments and in the possible submission of
those amendments to the Congress by May 1, 1998.
The Commission has scheduled a public hearing on the proposed
amendments for March 12, 1998, at the Thurgood Marshall Federal
Judiciary Building, One Columbus Circle, N.E., Washington, D.C. 20002-
8002. An additional public hearing focusing primarily on proposed
amendments to the theft, fraud, and tax guidelines is scheduled for
March 5, 1998, at the Parc Fifty-Five Hotel in San Francisco, CA, in
conjunction with the American Bar Association's 1998 National Institute
on White Collar Crime.
A person who desires to testify at the public hearing in
Washington, D.C., should notify Michael Courlander, Public Information
Specialist, at (202) 273-4590, not later than February 26, 1998.
Written testimony for that hearing must be received by the Commission
not later than March 5, 1998. Timely submission of written testimony is
a requirement for testifying at the public hearing.
A person who desires to testify at the public hearing in San
Francisco, CA, should notify Michael Courlander, Public Information
Specialist, at (202) 273-4590, not later than February 19, 1998.
Written testimony for that hearing must be received by the Commission
not later than February 26, 1998. Timely submission of written
testimony is a requirement for testifying at the public hearing.
ADDRESSES: Public comment should be sent to: United States Sentencing
Commission, One Columbus Circle, N.E., Suite 2-500, Washington, D.C.
20002-8002, Attention: Public Information.
FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Information
Specialist, Telephone: (202) 273-4590.
SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is
an independent agency in the judicial branch of the United States
Government. The Commission promulgates sentencing guidelines and policy
statements for federal sentencing courts pursuant to 28 U.S.C. 994(a).
The Commission also periodically reviews and revises previously
promulgated guidelines pursuant to 28 U.S.C. 994(o) and submits
guideline amendments to the Congress not later than the first day of
May each year pursuant to 28 U.S.C. Sec. 994(p).
Authority: 28 U.S.C. 994(a), (o), (p), (x); Pub. L. 105-101, 2,
Nov. 19, 1997, 111 Stat. 2202; Pub. L. 105-147, Sec. 2(g), 111 Stat
2678, Dec. 16, 1997.
Richard P. Conaboy,
Chairman.
Fraud, Theft, Tax, and Related Offenses
Chapter Two
1. Synopsis of Proposed Amendment
During the 1997-98 amendment cycle, the Sentencing Commission has
identified as a priority issue for consideration the definition of
``loss'' and the weight it is given in the theft, fraud, and tax
guidelines. The following are two proposed options for revising the
loss tables for the theft, fraud, and tax guidelines. The purpose of
both options is to raise penalties for economic offenses that have
medium to high dollar losses in order to achieve better proportionality
with the guideline penalties for other offenses of comparable
seriousness. With the exception of the proposed tax tables at low
dollar losses, each of the proposed tables uses two-level incremental
increases in offense levels.
Option 1
(A) Sec. 2B1.1 (Theft): The proposed loss table incorporates the
two-level ``more than minimal planning'' (MMP) enhancement currently
treated as a separate specific offense characteristic in the theft
guideline. The first level from that enhancement is built in at amounts
exceeding $10,000; the second level from that enhancement is built in
at amounts exceeding $20,000. In addition, beginning at amounts
exceeding $40,000, the severity of the offense levels in the proposed
theft loss table is greater than the severity of the offense levels in
the current theft loss table, plus an enhancement for MMP.
(B) Sec. 2F1.1 (Fraud): The proposed change provides for an initial
increase in the loss table from a base offense level of 6 to an offense
level of 8 at more than $5,000, whereas the initial increase in the
current fraud loss table is an increase from a base offense level of 6
to an offense level of 7 at more than $2,000. The proposed loss table
incorporates the MMP enhancement currently treated as a separate
specific offense characteristic in the fraud guideline. The first level
of that enhancement is built in at amounts exceeding $10,000; the
second level from that enhancement is built in at amounts exceeding
$20,000. In addition, beginning at $40,000, the severity of the offense
levels in the proposed fraud loss table is greater than the severity of
the offense levels in the current fraud loss table, plus an enhancement
for MMP.
(C) Sec. 2T4.1 (Tax): For tax losses of $40,000 or less, the
offense levels of the proposed tax loss table are the same as the
current tax loss table. For losses of more than $40,000, the proposed
increases in offense levels are the same as the increases in offense
levels in the proposed theft and fraud loss tables for like monetary
amounts.
Option 2
(A) Sec. 2B1.1 (Theft): The proposed loss table incorporates the
two-level MMP enhancement currently treated as a
[[Page 603]]
separate specific offense characteristic in the theft guideline. The
first level from that enhancement is built in at amounts exceeding
$2,000; the second level from that enhancement is built in at amounts
exceeding $5,000. (Because the proposed table also changes a ``cutting
point'' from $10,000 to $12,500, only one level for more than MMP is
built in for amounts between $10,000 and $12,500.) In addition,
beginning at amounts exceeding $12,500, the severity of the offense
levels in the proposed theft loss table is greater than the severity of
the offense levels in the current theft loss table, plus an enhancement
for MMP.
(B) Sec. 2F1.1 (Fraud): The proposed loss table provides for an
initial increase from a base offense level of 6 to an offense level of
8 at more than $2,000, whereas the initial increase under the current
fraud loss table increases the base offense level of 6 to an offense
level of 7 at more than $2,000. The proposed loss table incorporates
the MMP enhancement currently treated as a separate specific offense
characteristic in the fraud guideline. The first level of that
enhancement is built in at amounts exceeding $2,000; the second level
from that enhancement is built in at amounts exceeding $5,000. (Because
the proposed table also changes a ``cutting point'' from $10,000 to
$12,500, only one level for MMP is built in for amounts between $10,000
and $12,500.) In addition, beginning at $12,500, the severity of the
offense levels in the proposed fraud loss table is greater than the
severity of the offense levels in the current fraud loss table, plus an
enhancement for MMP.
(C) Sec. 2T4.1 (Tax): The proposed increases in offense levels are
the same as the increases in offense levels in the proposed fraud loss
tables for like monetary amounts.
Proposed Amendment:
[Option 1
[Section 2B1.1(b)(1) is amended by striking:
------------------------------------------------------------------------
``Loss (Apply the Greatest) Increase in Level
------------------------------------------------------------------------
(A) $100 or less......................... no increase
(B) More than $100....................... add 1
(C) More than $1,000..................... add 2
(D) More than $2,000..................... add 3
(E) More than $5,000..................... add 4
(F) More than $10,000.................... add 5
(G) More than $20,000.................... add 6
(H) More than $40,000.................... add 7
(I) More than $70,000.................... add 8
(J) More than $120,000................... add 9
(K) More than $200,000................... add 10
(L) More than $350,000................... add 11
(M) More than $500,000................... add 12
(N) More than $800,000................... add 13
(O) More than $1,500,000................. add 14
(P) More than $2,500,000................. add 15
(Q) More than $5,000,000................. add 16
(R) More than $10,000,000................ add 17
(S) More than $20,000,000................ add 18
(T) More than $40,000,000................ add 19
(U) More than $80,000,000................ add 20.'',
-------------------------------------------------------------------
and inserting:
------------------------------------------------------------------------
``Loss Amount (Apply the Greatest) Offense Level Increase
------------------------------------------------------------------------
(A) $2,000 or less....................... no increase
(B) More than $2,000..................... add 2
(C) More than $5,000..................... add 4
(D) More than $10,000.................... add 6
(E) More than $20,000.................... add 8
(F) More than $40,000.................... add 10
(G) More than $80,000.................... add 12
(H) More than $200,000................... add 14
(I) More than $500,000................... add 16
(J) More than $1,200,000................. add 18
(K) More than $2,000,000................. add 20
(L) More than $7,500,000................. add 22
(M) More than $20,000,000................ add 24
(N) More than $50,000,000................ add 26
(O) More than $100,000,000............... add 28.''.
------------------------------------------------------------------------
Section 2F1.1(b)(1) is amended by striking:
------------------------------------------------------------------------
``Loss (Apply the Greatest) Increase in Level
------------------------------------------------------------------------
(A) $2,000 or less....................... no increase
(B) More than $2,000..................... add 1
(C) More than $5,000..................... add 2
(D) More than $10,000.................... add 3
(E) More than $20,000.................... add 4
(F) More than $40,000.................... add 5
(G) More than $70,000.................... add 6
(H) More than $120,000................... add 7
(I) More than $200,000................... add 8
(J) More than $350,000................... add 9
(K) More than $500,000................... add 10
(L) More than $800,000................... add 11
(M) More than $1,500,000................. add 12
(N) More than $2,500,000................. add 13
(O) More than $5,000,000................. add 14
(P) More than $10,000,000................ add 15
(Q) More than $20,000,000................ add 16
(R) More than $40,000,000................ add 17
(S) More than $80,000,000................ add 18.''.
------------------------------------------------------------------------
and inserting:
------------------------------------------------------------------------
``Loss Amount (Apply the Greatest) Offense Level Increase
------------------------------------------------------------------------
(A) $5,000 or less....................... no increase
(B) More than $5,000..................... add 2
(C) More than $10,000.................... add 4
(D) More than $20,000.................... add 6
(E) More than $40,000.................... add 8
(F) More than $80,000.................... add 10
(G) More than $200,000................... add 12
(H) More than $500,000................... add 14
(I) More than $1,200,000................. add 16
(J) More than $2,500,000................. add 18
(K) More than $7,500,000................. add 20
(L) More than $20,000,000................ add 22
(M) More than $50,000,000................ add 24
(N) More than $100,000,000............... add 26.''.
------------------------------------------------------------------------
Section 2T4.1 is amended by striking:
------------------------------------------------------------------------
``Tax Loss (Apply the Greatest) Offense Level
------------------------------------------------------------------------
(A) $1,700 or less....................... 6
(B) More than $1,700..................... 7
(C) More than $3,000..................... 8
(D) More than $5,000..................... 9
(E) More than $8,000..................... 10
(F) More than $13,500.................... 11
(G) More than $23,500.................... 12
(H) More than $40,000.................... 13
(I) More than $70,000.................... 14
(J) More than $120,000................... 15
(K) More than $200,000................... 16
(L) More than $325,000................... 17
(M) More than $550,000................... 18
(N) More than $950,000................... 19
(O) More than $1,500,000................. 20
(P) More than $2,500,000................. 21
(Q) More than $5,000,000................. 22
(R) More than $10,000,000................ 23
(S) More than $20,000,000................ 24
(T) More than $40,000,000................ 25
(U) More than $80,000,000................ 26.'',
------------------------------------------------------------------------
and inserting:
------------------------------------------------------------------------
``Loss Amount (Apply the Greatest) Offense Level Increase
------------------------------------------------------------------------
(A) $1,700 or less....................... no increase
(B) More than $1,700..................... add 1
(C) More than $3,000..................... add 2
(D) More than $5,000..................... add 3
(E) More than $8,000..................... add 4
(F) More than $13,500.................... add 5
(G) More than $23,500.................... add 6
(H) More than $40,000.................... add 8
(I) More than $80,000.................... add 10
(J) More than $200,000................... add 12
(K) More than $500,000................... add 14
(L) More than $1,200,000................. add 16
(M) More than $2,500,000................. add 18
(N) More than $7,500,000................. add 20
(O) More than $20,000,000................ add 22
(P) More than $50,000,000................ add 24
(Q) More than $100,000,000............... add 26.''.]
------------------------------------------------------------------------
[Option 2:
[Section 2B1.1(b)(1) is amended by striking:
------------------------------------------------------------------------
``Loss (Apply the Greatest) Increase in Level
------------------------------------------------------------------------
(A) $100 or less......................... no increase
(B) More than $100....................... add 1
(C) More than $1,000..................... add 2
(D) More than $2,000..................... add 3
(E) More than $5,000..................... add 4
(F) More than $10,000.................... add 5
(G) More than $20,000.................... add 6
(H) More than $40,000.................... add 7
[[Page 604]]
(I) More than $70,000.................... add 8
(J) More than $120,000................... add 9
(K) More than $200,000................... add 10
(L) More than $350,000................... add 11
(M) More than $500,000................... add 12
(N) More than $800,000................... add 13
(O) More than $1,500,000................. add 14
(P) More than $2,500,000................. add 15
(Q) More than $5,000,000................. add 16
(R) More than $10,000,000................ add 17
(S) More than $20,000,000................ add 18
(T) More than $40,000,000................ add 19
(U) More than $80,000,000................ add 20.'',
------------------------------------------------------------------------
and inserting:
------------------------------------------------------------------------
``Loss Amount (Apply the Greatest) Offense Level Increase
------------------------------------------------------------------------
(A) $100 or less......................... no increase
(A) More than $100....................... add 1
(C) More than $1,000..................... add 2
(D) More than $2,000..................... add 4
(E) More than $5,000..................... add 6
(F) More than $12,500.................... add 8
(G) More than $30,000.................... add 10
(H) More than $70,000.................... add 12
(I) More than $150,000................... add 14
(J) More than $350,000................... add 16
(K) More than $800,000................... add 18
(L) More than $2,500,000................. add 20
(M) More than $7,500,000................. add 22
(N) More than $20,000,000................ add 24
(O) More than $50,000,000................ add 26
(P) More than $100,000,000............... add 28.''.
------------------------------------------------------------------------
Section 2F1.1(b)(1) is amended by striking.
------------------------------------------------------------------------
''Loss (Apply the Greatest) Increase in Level
------------------------------------------------------------------------
(A) $2,000 or less....................... no increase
(B) More than $2,000..................... add 1
(C) More than $5,000..................... add 2
(D) More than $10,000.................... add 3
(E) More than $20,000.................... add 4
(F) More than $40,000.................... add 5
(G) More than $70,000.................... add 6
(H) More than $120,000................... add 7
(I) More than $200,000................... add 8
(J) More than $350,000................... add 9
(K) More than $500,000................... add 10
(L) More than $800,000................... add 11
(M) More than $1,500,000................. add 12
(N) More than $2,500,000................. add 13
(O) More than $5,000,000................. add 14
(P) More than $10,000,000................ add 15
(Q) More than $20,000,000................ add 16
(R) More than $40,000,000................ add 17
(S) More than $80,000,000................ add 18.''.
------------------------------------------------------------------------
and inserting:
------------------------------------------------------------------------
``Loss Amount (Apply the Greatest) Offense Level Increase
------------------------------------------------------------------------
(A) $2,000 or less....................... no increase
(B) More than $2,000..................... add 2
(C) More than $5,000..................... add 4
(D) More than $12,500.................... add 6
(E) More than $30,000.................... add 8
(F) More than $70,000.................... add 10
(G) More than $150,000................... add 12
(H) More than $350,000................... add 14
(I) More than $800,000................... add 16
(J) More than $2,500,000................. add 18
(K) More than $7,500,000................. add 20
(L) More than $20,000,000................ add 22
(M) More than $50,000,000................ add 24
(N) More than $100,000,000............... add 26.''.
------------------------------------------------------------------------
Section 2T4.1 is amended by striking:
------------------------------------------------------------------------
``Tax Loss (Apply the Greatest) Offense Level
------------------------------------------------------------------------
(A) $1,700 or less....................... 6
(B) More than $1,700..................... 7
(C) More than $3,000..................... 8
(D) More than $5,000..................... 9
(E) More than $8,000..................... 10
(F) More than $13,500.................... 11
(G) More than $23,500.................... 12
(H) More than $40,000.................... 13
(I) More than $70,000.................... 14
(J) More than $120,000................... 15
(K) More than $200,000................... 16
(L) More than $325,000................... 17
(M) More than $550,000................... 18
(N) More than $950,000................... 19
(O) More than $1,500,000................. 20
(P) More than $2,500,000................. 21
(Q) More than $5,000,000................. 22
(R) More than $10,000,000................ 23
(S) More than $20,000,000................ 24
(T) More than $40,000,000................ 25
(U) More than $80,000,000................ 26.'',
------------------------------------------------------------------------
and inserting:
------------------------------------------------------------------------
``Loss Amount (Apply the Greatest) Offense Level Increase
------------------------------------------------------------------------
(A) $2,000 or less....................... no increase
(B) More than $2,000..................... add 2
(C) More than $5,000..................... add 4
(D) More than $12,500.................... add 6
(E) More than $30,000.................... add 8
(F) More than $70,000.................... add 10
(G) More than $150,000................... add 12
(H) More than $350,000................... add 14
(I) More than $800,000................... add 16
(J) More than $2,500,000................. add 18
(K) More than $7,500,000................. add 20
(L) More than $20,000,000................ add 22
(M) More than $50,000,000................ add 24
(N) More than $100,000,000............... add 26.''.]
------------------------------------------------------------------------
Issues for Comment
(A) The Commission invites comment on suggested constructions of
the loss tables for the theft, property damage and destruction, and
fraud guidelines other than the options proposed by this amendment.
Specifically, the Commission invites commentators to suggest
alternative loss tables that contain different rates of increases and
different increments from those set forth in the options proposed by
this amendment.
(B) The Commission invites comment on whether, in conjunction with
the above proposed amendments to build into the loss tables ``more than
minimal planning,'' it should add an application note in Secs. 2B1.1
(Theft), 2B1.3 (Property Damage and Destruction), and 2F1.1 (Fraud)
that would prohibit a downward departure if the offense involved only
minimal planning and prohibit an upward departure if the offense
involved ``more than minimal planning.'' For a related proposal to
address cases in which there is limited or insignificant planning, see
Amendment 5(B), infra.
Guidelines that Refer to Theft/Fraud Loss Tables
Chapter Two
2. Synopsis of Proposed Amendment
The following proposed amendments indicate the changes that might
be called for in several guidelines that refer to the loss tables in
either Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft) or
Sec. 2F1.1 (Fraud and Deceit) if the Commission were to adopt one of
the proposed new loss tables (set forth in proposed Amendment 1,
supra.) as well as an alternative monetary table that does not
incorporate ``more than minimal planning'' (MMP).
The amendments are divided into Parts (A) through (G). Part (A)
proposes an alternative monetary table that does not incorporate MMP.
The amendments to the referring guidelines are presented in Parts (B)
through (G) as follows:
(B) Those guidelines that arguably incorporate the concept of MMP
into the base offense level or a specific offense characteristic.
(C) Certain pornography and obscenity guidelines.
(D) Certain copyright infringement and structuring guidelines, for
which use of the proposed loss tables for fraud is also presented as an
option.
(E) Trespass, for which use of the proposed theft and fraud loss
tables starting at $2,000 is also presented as an option, as well as an
issue for comment.
(F) Property destruction, which is proposed to be consolidated with
the theft guideline (thereby mitigating the necessity for reference to
the alternative monetary table).
(G) Bank gratuity, which is proposed to be consolidated with the
principal gratuity guideline.
(A) The Reference Monetary Table
Synopsis of Proposed Amendment
This amendment proposes to add to the guidelines an alternative
monetary
[[Page 605]]
table for guidelines, other than those for theft and fraud, that
currently refer to either the theft or fraud loss table and arguably
incorporate a MMP type feature in either the base offense level or a
specific offense characteristic. The proposed alternative monetary
table does not build in MMP, but does incorporate the enhanced severity
increases of the proposed fraud/theft tables (see Amendment 1, supra.)
for amounts exceeding $40,000.
The use of the proposed monetary table for these guidelines in lieu
of the proposed theft/fraud tables generally would (1) maintain
proportionality with the proposed fraud/theft loss tables, across the
range of monetary values, (2) achieve increases in severity for larger-
scale referring guideline offenses, and (3) eliminate the need for a 2-
level reduction in these referring guidelines to account for the fact
that MMP has been incorporated into the proposed theft/fraud tables.
The two options are presented to coordinate with the two loss table
options in proposed Amendment 1, supra. (i.e., Option 1 presented below
coordinates with Option 1 in Amendment 1, and Option 2 presented below
coordinates with Option 2 in Amendment 1).
Proposed Amendment
[Option 1: Chapter Two, Part X is amended by adding at the end the
following new subpart:
``6. REFERENCE MONETARY TABLE
Sec. 2X6.1. Reference Monetary Table
------------------------------------------------------------------------
Amount (Apply the Greatest) Increase in Level
------------------------------------------------------------------------
[(A) $2, 000 or less] or................. [no increase]
[(A) More than $2,000]or................. [add 1]
[(A) $5,000 or less]..................... [no increase]
(B) More than $5,000..................... add 2
(C) More than $10,000.................... add 3
(D) More than $20,000.................... add 4
(E) More than $40,000.................... add 6
(F) More than $80,000.................... add 8
(G) More than $200,000................... add 10
(H) More than $500,000................... add 12
(I) More than $1,200,000................. add 14
(J) More than $2,500,000................. add 16
(K) More than $7,500,000................. add 18
(L) More than $20,000,000................ add 20
(M) More than $50,000,000................ add 22
(N) More than $100,000,000............... add 24.''.]
------------------------------------------------------------------------
[Option 2: Chapter Two, Part X is amended by adding at the end the
following new subpart:
``6. REFERENCE MONETARY TABLE
Sec. 2X6.1. Reference Monetary Table
------------------------------------------------------------------------
Amount (Apply the Greatest) Increase in Level
------------------------------------------------------------------------
(A) $2, 000 or less...................... no increase
(B) More than $2,000..................... add 1
(C) More than $5,000..................... add 2
(D) More than $12,500.................... add 4
(E) More than $30,000.................... add 6
(F) More than $70,000.................... add 8
(G) More than $150,000................... add 10
(H) More than $350,000................... add 12
(I) More than $800,000................... add 14
(J) More than $2,500,000................. add 16
(K) More than $7,500,000................. add 18
(L) More than $20,000,000................ add 20
(M) More than $50,000,000................ add 22
(N) More than $100,000,000............... add 24.''.]
------------------------------------------------------------------------
(B) Guidelines with MMP Built into the Base Offense Level or a Specific
Offense Characteristic
Synopsis of Proposed Amendment
With respect to these guidelines, there are two issues: (1) the
loss table to be referenced, and (2) whether the initial offense level
increase from the referenced table should occur at $2,000 (the current
status) or at $5,000. To be precise, the ``cutting points'' in the
monetary tables occur when the monetary amount is ``more than $2,000''
or ``more than $5,000'', etc. For simplicity, this discussion generally
will omit the ``more than'' modifier.
To avoid concerns about a MMP overlap, the Reference Monetary Table
is used for all of these guidelines. Option 1 shows how the guideline
might be amended if the Commission were to reference a monetary table
for which the starting point is $5,000.
Alternatively, Option 1A shows how, even with a reference table
starting at $5,000, the individual guideline might be amended to
provide a 1-level increase for cases in which the loss is more than
$2,000 but not more than $5,000.
Option 2 shows how the guideline might be amended if the Commission
were to adopt a reference monetary table for which the starting point
is $2,000. To cover the possibility that the Commission might elect,
for one or more of these guidelines, to reference the new fraud loss
table in spite of an arguable MMP overlap, an issue for comment is
added at the end of the amendments.
Proposed Amendment:
Section 2B5.1(b) is amended by striking:
``(1) If the face value of the counterfeit items exceeded $2,000,
increase by the corresponding number of levels from the table at
Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the face value of the counterfeit items exceeded [Option
1: $5,000][Option 2: $2,000], increase by the corresponding number of
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2B5.1(b) is amended by striking:
``(1) If the face value of the counterfeit items exceeded $2,000,
increase by the corresponding number of levels from the table at
Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the face value of the counterfeit items (A) exceeded
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded
$5,000, increase by the corresponding number of levels from the table
in Sec. 2X6.1 (Reference Monetary Table).''.]
Section 2B6.1(b) is amended by striking:
``(1) If the retail value of the motor vehicles or parts involved
exceeded $2,000, increase the offense level by the corresponding number
of levels from the table in Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the retail value of the motor vehicles or parts involved
exceeded [Option 1: $5,000] [Option 2: $2,000], increase by the
corresponding number of levels from the table in Sec. 2X6.1 (Reference
Monetary Table).''.
[Option 1A
Section 2B6.1(b) is amended by striking:
``(1) If the retail value of the motor vehicles or parts involved
exceeded $2,000, increase the offense level by the corresponding number
of levels from the table in Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the retail value of the motor vehicles or parts (A)
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B)
exceeded $5,000, increase by the corresponding number of levels from
the table in Sec. 2X6.1 (Reference Monetary Table).''.]
Section 2F1.2(b) is amended by striking:
``(1) Increase by the number of levels from the table in Sec. 2F1.1
corresponding to the gain resulting from the offense.'',
and inserting:
``(1) If the gain resulting from the offense exceeded [Option 1:
$5,000][Option 2: $2,000], increase by the corresponding number of
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2F1.2(b) is amended by striking:
[[Page 606]]
``(1) Increase by the number of levels from the table in Sec. 2F1.1
corresponding to the gain resulting from the offense.'',
and inserting:
``(1) If the gain resulting from the offense (A) exceeded $2,000
but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000,
increase by the corresponding number of levels from the table in
Sec. 2X6.1 (Reference Monetary Table).''.]
Section 2B4.1(b) is amended by striking:
``(1) If the greater of the value of the bribe or the improper
benefit to be conferred exceeded $2,000, increase the offense level by
the corresponding number of levels from the table in Sec. 2F1.1.'',
and inserting:
``(1) If the greater of the value of the bribe or the improper
benefit to be conferred exceeded [Option 1: $5,000] [Option 2: $2,000],
increase by the corresponding number of levels from the table in
Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2B4.1(b) is amended by striking:
``(1) If the greater of the value of the bribe or the improper
benefit to be conferred exceeded $2,000, increase the offense level by
the corresponding number of levels from the table in Sec. 2F1.1.'',
and inserting:
``(1) If the greater of the value of the bribe or the improper
benefit to be conferred (A) exceeded $2,000 but did not exceed $5,000,
increase by 1 level; or (B) exceeded $5,000, increase by the
corresponding number of levels from the table in Sec. 2X6.1 (Reference
Monetary Table).''.]
Section 2B3.3(b) is amended by striking:
``(1) If the greater of the amount obtained or demanded exceeded
$2,000, increase by the corresponding number of levels from the table
in Sec. 2F1.1.'',
and inserting:
``(1) If the greater of the amount obtained or demanded exceeded
[Option 1: $5,000] [Option 2: $2,000], increase by the corresponding
number of levels from the table in Sec. 2X6.1 (Reference Monetary
Table).''.
[Option 1A
Section 2B3.3(b) is amended by striking:
``(1) If the greater of the amount obtained or demanded exceeded
$2,000, increase by the corresponding number of levels from the table
in Sec. 2F1.1.'',
and inserting:
``(1) If the greater of the amount obtained or demanded (A)
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B)
exceeded $5,000, increase by the corresponding number of levels from
the table in Sec. 2X6.1 (Reference Monetary Table).''.]
Section 2Q2.1(b)(3) is amended by striking:
``(A) If the market value of the fish, wildlife, or plants exceeded
$2,000, increase the offense level by the corresponding number of
levels from the table in Sec. 2F1.1. (Fraud and Deceit); or'',
and inserting:
``(A) If the market value of the fish, wildlife, or plants exceeded
[Option1: $5,000] [Option 2: $2,000], increase by the corresponding
number of levels from the table in Sec. 2X6.1 (Reference Monetary
Table), [but in no event more than [18] levels]; or''.
[Option 1A
Section 2Q2.1(b)(3) is amended by striking:
``(A) If the market value of the fish, wildlife, or plants exceeded
$2,000, increase the offense level by the corresponding number of
levels from the table in Sec. 2F1.1 (Fraud and Deceit); or'',
and inserting:
``(A) If the market value of the fish, wildlife, or plants (i)
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii)
exceeded $5,000, increase by the corresponding number of levels from
the table in Sec. 2X6.1 (Reference Monetary Table), [but in no event
more than [18] levels]; or''.]
Section 2C1.1(b)(2) is amended by striking:
``(A) If the value of the payment, the benefit received or to be
received in return for the payment, or the loss to the government from
the offense, whichever is greatest, exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit).'',
and inserting:
``(A) If the value of the payment, the benefit received or to be
received in return for the payment, or the loss to the government from
the offense, whichever is greatest, exceeded [Option 1: $5,000] [Option
2: $2,000], increase by the corresponding number of levels from the
table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2C1.1(b)(2) is amended by striking:
``(A) If the value of the payment, the benefit received or to be
received in return for the payment, or the loss to the government from
the offense, whichever is greatest, exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit).'',
and inserting:
``(A) If the value of the payment, the benefit received or to be
received in return for the payment, or the loss to the government from
the offense, whichever is greatest, (i) exceeded $2,000 but did not
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase
by the corresponding number of levels from the table in Sec. 2X6.1
(Reference Monetary Table).''.]
Section 2C1.2(b)(2) is amended by striking:
``(A) If the value of the gratuity exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit).'',
and inserting:
``(A) If the value of the gratuity exceeded [Option 1:
$5,000][Option 2: $2,000], increase by the corresponding number of
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2C1.2(b)(2) is amended by striking:
``(A) If the value of the gratuity exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit).'',
and inserting:
``(A) If the value of the gratuity (i) exceeded $2,000 but did not
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase
by the corresponding number of levels from the table in Sec. 2X6.1
(Reference Monetary Table).''.]
Section 2C1.7(b)(1) is amended by striking:
``(A) If the loss to the government, or the value of anything
obtained or to be obtained by a public official or others acting with a
public official, whichever is greater, exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit); or'',
and inserting:
``(A) If the loss to the government, or the value of anything
obtained or to be obtained by a public official or others acting with a
public official, whichever is greater, exceeded [Option 1:
$5,000][Option 2: $2,000], increase by the corresponding number of
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[[Page 607]]
[Option 1A
Section 2C1.7(b)(1) is amended by striking:
``(A) If the loss to the government, or the value of anything
obtained or to be obtained by a public official or others acting with a
public official, whichever is greater, exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit); or'',
and inserting:
``(A) If the loss to the government, or the value of anything
obtained or to be obtained by a public official or others acting with a
public official, whichever is greater, (i) exceeded $2,000 but did not
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase
by the corresponding number of levels from the table in Sec. 2X6.1
(Reference Monetary Table).''.]
Section 2E5.1(b) is amended by striking:
``(2) Increase by the number of levels from the table in Sec. 2F1.1
(Fraud and Deceit) corresponding to the value of the prohibited payment
or the value of the improper benefit to the payer, whichever is
greater.'',
and inserting:
``(2) If the value of the prohibited payment or the value of the
improper benefit to the payer, whichever is greater, exceeded [Option
1: $5,000][Option 2: $2,000], increase by the corresponding number of
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2E5.1(b) is amended by striking:
``(2) Increase by the number of levels from the table in Sec. 2F1.1
(Fraud and Deceit) corresponding to the value of the prohibited payment
or the value of the improper benefit to the payer, whichever is
greater.'',
and inserting:
``(2) If the value of the prohibited payment or the value of the
improper benefit to the payer, whichever is greater (A) exceeded $2,000
but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000,
increase by the corresponding number of levels from the table in
Sec. 2X6.1 (Reference Monetary Table).''.]
(C) Pornography and Obscenity
Synopsis of Proposed Amendment
Option 1 for the following pornography and obscenity guidelines
references the guidelines to the alternative monetary reference table.
Option 2 references the new fraud loss table. Option 3 deletes the
reference to a monetary table altogether and adds invited upward
departure language for large-scale commercial endeavors.
Note that, with respect to Secs. 2G2.2 and 2G3.1, the floor (i.e.,
an increase of not less than [5] levels) for the amount of the material
has been maintained. However, two effects of maintaining the floor
should be mentioned: (1) The issue of the starting point for any of the
proposed tables is no longer relevant (because the starting point
simply does not come into play at such levels). (2) Under the current
fraud loss table, the 5-level floor presupposes a retail value of at
least $40,000; however, those values change depending on the particular
table proposed to be used. For that reason, the 5-level enhancement is
bracketed in the following options.
Proposed Amendment:
[Option 1
Section 2G2.2(b) is amended by striking:
``(2) If the offense involved distribution, increase by the number
of levels from the table in Sec. 2F1.1 corresponding to the retail
value of the material, but in no event by less than 5 levels.'',
and inserting:
``(2) If the offense involved distribution, increase by the number
of levels from the table in Sec. 2X6.1 (Reference Monetary Table)
corresponding to the retail value of the material, but in no event by
less than [5] levels.''.]
[Option 2
Section 2G2.2 (b)(2) is amended by striking ``corresponding to the
retail value of the material, but in no event less than 5 levels'' and
inserting ``(Fraud and Deceit) corresponding to the retail value of the
material, but in no event less than [5] levels''.]
[Option 3
Section 2G2.2 (b)(2) is amended by striking ``the number of levels
from the table in Sec. 2F1.1 corresponding to the retail value of the
material, but in no event by less than 5 levels'' and inserting ``[5]
levels''.
The Commentary to Sec. 2G2.2 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``4. Subsection (b)(2) provides a five-level enhancement if the
offense involved distribution. If the offense involved distribution by
a large-scale commercial enterprise [(i.e., a commercial enterprise
distributing material having a retail value that is more than
[$40,000])], an upward departure may be warranted.''.]
[Option 1
Section 2G3.1(b) is amended by striking:
``(1) If the offense involved an act related to distribution for
pecuniary gain, increase by the number of levels from the table in
Sec. 2F1.1 corresponding to the retail value of the material, but in no
event by less than 5 levels.'',
and inserting:
``(1) If the offense involved an act related to distribution for
pecuniary gain, increase by the number of levels from the table in
Sec. 2X6.1 (Reference Monetary Table) corresponding to the retail value
of the material, but in no event by less than [5] levels.''.]
[Option 2
Section 2G3.1(b)(1) is amended by striking ``corresponding to the
retail value of the material, but in no event less than 5 levels'', and
inserting ``(Fraud and Deceit) corresponding to the retail value of the
material, but in no event less than [5] levels''.]
[Option 3
Section 2G3.1(b)(1) is amended by striking ``the number of levels
from the table in Sec. 2F1.1 corresponding to the retail value of the
material, but in no event by less than 5 levels'' following ``increase
by'', and inserting ``[5] levels''.
The Commentary to Sec. 2G3.1 captioned ``Application Note'' is
amended by adding at the end the following new note:
``2. Subsection (b)(1) provides a five-level enhancement if the
offense involved an act related to distribution for pecuniary gain. If
the offense involved distribution by a large-scale commercial
enterprise [(i.e., a commercial enterprise distributing material having
a retail value that is more than [$40,000])], an upward departure may
be warranted.'';
and in the caption by striking ``Note'' and inserting ``Notes''.]
[Option 1
Section 2G3.2(b) is amended by striking:
``(2) If 6 plus the offense level from the table at 2F1.1(b)(1)
corresponding to the volume of commerce attributable to the defendant
is greater than the offense level determined above, increase to that
offense level.'',
and inserting:
``(2) If 6 plus the number of levels from the table in Sec. 2X6.1
(Reference Monetary Table) corresponding to the
[[Page 608]]
volume of commerce attributable to the defendant results in a greater
offense level than the offense level determined above, increase to the
greater offense level.''.]
[Option 2
Section 2G3.2(b) is amended by striking:
``(2) If 6 plus the offense level from the table at 2F1.1(b)(1)
corresponding to the volume of commerce attributable to the defendant
is greater than the offense level determined above, increase to that
offense level.'',
and inserting:
``(2) If 6 plus the number of levels from the table in Sec. 2F1.1
(Fraud and Deceit) corresponding to the volume of commerce attributable
to the defendant results in a greater offense level than the offense
level determined above, increase to the greater offense level.''.]
[Option 3
The Commentary to Sec. 2G3.2 is amended by striking subsection
(b)(2); and by strking:
``Background: Subsection (b)(1) provides an enhancement where an
obscene telephonic communication was received by a minor less than 18
years of age or where a broadcast was made during a time when such
minors were likely to receive it. Subsection (b)(2) provides an
enhancement for large-scale `dial-a-porn' or obscene broadcasting
operations that results in an offense level comparable to the offense
level for such operations under Sec. 2G3.1 (Importing, Mailing, or
Transporting Obscene Matter). The extent to which the obscene material
was distributed is approximated by the volume of commerce attributable
to the defendant.'';
and by inserting:
``Application Notes:
1. Subsection (b)(1) provides an enhancement where an obscene
telephonic communication was received by a minor less than 18 years of
age or where a broadcast was made during a time when such minors were
likely to receive it.
2. If the offense involved communications or broadcasting
operations by a large-scale commercial enterprise [(i.e., a commercial
enterprise engaging in a volume of commerce having a value that is more
than [$40,000])], an upward departure may be warranted.''.]
(D) Copyright Infringement and Structuring Transactions
Synopsis of Proposed Amendment
With respect to these guidelines, four options are presented.
Option 1 shows how the guideline might be amended if the Commission
were to reference an alternative monetary table for which the starting
point is $5,000. Alternatively, Option 1A shows how, even with a
reference table starting at $5,000, the individual guideline might be
amended to provide a 1-level increase for cases in which the monetary
amount is more than $2,000 but not more than $5,000. Option 2 shows how
the guideline might be amended if the Commission were to adopt an
alternative reference monetary table for which the starting point is
$2,000.
Option 3 shows how the guideline might be amended if the Commission
were to reference a fraud loss table for which the starting point is
$5,000. Alternatively, Option 3A shows how, even with a reference table
starting at $5,000, the individual guideline might be amended to
provide a 1-level increase for cases in which the monetary amount is
more than $2,000 but not more than $5,000. Option 4 shows how the
guideline might be amended if the Commission were to adopt a fraud loss
table for which the starting point is $2,000.
Proposed Amendment
Section 2B5.3(b) is amended by striking:
``(1) If the retail value of the infringing items exceeded $2,000,
increase by the corresponding number of levels from the table in
Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the retail value of the infringing items exceeded [Option
1: $5,000][Option 2: $2,000], increase by the corresponding number of
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2B5.3(b) is amended by striking:
``(1) If the retail value of the infringing items exceeded $2,000,
increase by the corresponding number of levels from the table in
Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the retail value of the infringing items (A) exceeded
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded
$5,000, increase by the corresponding number of levels from the table
in Sec. 2X6.1 (Reference Monetary Table).''.]
Section 2B5.3(b) is amended by striking:
``(1) If the retail value of the infringing items exceeded $2,000,
increase by the corresponding number of levels from the table in
Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the retail value of the infringing items exceeded [Option
3: $5,000][Option 4: $2,000], increase by the corresponding number of
levels from the table in Sec. 2F1.1 (Fraud and Deceit).''.]
[Option 3A
Section 2B5.3(b) is amended by striking:
``(1) If the retail value of the infringing items exceeded $2,000,
increase by the corresponding number of levels from the table in
Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
``(1) If the retail value of the infringing items (A) exceeded
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded
$5,000, increase by the corresponding number of levels from the table
in Sec. 2F1.1 (Fraud and Deceit).''.]
Section 2S1.3 is amended by striking:
``(a) Base Offense Level: 6 plus the number of offense levels from
the table in Sec. 2F1.1 (Fraud and Deceit) corresponding to the value
of the funds.'',
and inserting:
``(a) Base Offense Level: 6 plus the corresponding number of levels
from the table in Sec. 2X6.1 (Reference Monetary Table), if the value
of the funds exceeded [Option 1: $5,000][Option 2: $2,000].''.
[Option 1A
Section 2S1.3 is amended by striking:
``(a) Base Offense Level: 6 plus the number of offense levels from
the table in Sec. 2F1.1 (Fraud and Deceit) corresponding to the value
of the funds.'',
and inserting:
``(a) Base Offense Level: 6 plus (1) 1 level, if the value of the
funds exceeded $2,000 but did not exceed $5,000; or (2) the
corresponding number of levels from the table in Sec. 2X6.1 (Reference
Monetary Table), if the value of the funds exceeded $5,000.''.]
Section 2S1.3 is amended by striking:
``(a) Base Offense Level: 6 plus the number of offense levels from
the table in Sec. 2F1.1 (Fraud and Deceit) corresponding to the value
of the funds.'',
and inserting:
``(a) Base Offense Level: 6 plus the corresponding number of levels
from the table in Sec. 2F1.1 (Fraud and Deceit), if the value of the
funds exceeded [Option 3: $5,000][Option 4: $2,000].''.]
[[Page 609]]
[Option 3A
Section 2S1.3 is amended by striking: ``(a) Base Offense Level: 6
plus the number of offense levels from the table in Sec. 2F1.1 (Fraud
and Deceit) corresponding to the value of the funds.'',
and inserting:
``(a) Base Offense Level: 6 plus (1) 1 level, if the value of the
funds exceeded $2,000 but did not exceed $5,000; or (2) the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit), if the value of the funds exceeded $5,000.''.]
(E) Trespass
Synopsis of Proposed Amendment
By virtue of an amendment effective November 1, 1997, the trespass
guideline contains a reference to the fraud loss table to cover losses
resulting from the invasion of a protected government computer. The
fraud table, rather than the theft table, was chosen because it better
fits with a guideline structure that provides an initial increase in
offense level at $2,000. Under the proposed loss tables and
accompanying reference monetary tables, a range of as many as six
options are potentially viable. Those considered more likely are set
forth below.
Among the issues specific to this guideline to be decided are: (1)
Should the Commission maintain the $2,000 threshold for an initial
increase in offense level? (2) Should the Commission treat these
offenses comparably to computer offenses sentenced under the theft or
fraud guidelines (which, under the proposed amendments, will be subject
to a phased-in MMP enhancement)?
Options 1 and 1A assume that the Commission may elect to use the
Reference Monetary Table because these computer trespass offenses may
be simpler in nature than computer offenses referenced to the theft and
fraud guidelines (and, thus, the additional MMP enhancement built into
the theft and fraud loss tables would not be warranted). Option 1 shows
how the guideline might be amended if the Commission were to refer to a
Reference Monetary Table that provides an initial increase in offense
level at $2,000. Alternatively, Option 1A shows how, even with a
reference table starting at $5,000, the trespass guideline might be
amended to provide a 1-level increase for cases in which the loss is
more than $2,000 but not more than $5,000.
Options 2 and 3 assume that the Commission will (1) maintain the
current $2,000 starting point for the referenced loss table, and (2)
elect to use a loss table that incorporates the phased-in MMP
enhancement. Option 2 references the proposed fraud loss table and
assumes a Commission decision to use a loss table structure illustrated
by the Option 2 loss tables. (Under this assumed choice, the fraud loss
table, rather than theft, is referenced because the former starts at
$2,000.) Option 3 references the proposed theft loss table and assumes
a Commission decision to use a theft table that provides an initial
increase at $2,000, as in the Option 1 theft loss table.
Proposed Amendment:
[Option 1
Section 2B2.3(b) is amended by striking:
``(3) If the offense involved invasion of a protected computer
resulting in a loss exceeding $2000, increase the offense level by the
number of levels from the table in Sec. 2F1.1 corresponding to the
loss.'',
and inserting:
``(3) If (A) the offense involved invasion of a protected computer,
and (B) the loss resulting from the invasion exceeded $2,000, increase
by the corresponding number of levels from the table in Sec. 2X6.1
(Reference Monetary Table).''.]
[Option 1A
Section 2B2.3(b) is amended by striking:
``(3) If the offense involved invasion of a protected computer
resulting in a loss exceeding $2000, increase the offense level by the
number of levels from the table in Sec. 2F1.1 corresponding to the
loss.'',
and inserting:
``(3) If (A) the offense involved invasion of a protected computer,
and (B) the loss resulting from the invasion (i) exceeded $2,000 but
did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000,
increase by the corresponding number of levels from the table in
Sec. 2X6.1 (Reference Monetary Table).''.]
[Option 2
Section 2B2.3(b) is amended by striking:
``(3) If the offense involved invasion of a protected computer
resulting in a loss exceeding $2000, increase the offense level by the
number of levels from the table in Sec. 2F1.1 corresponding to the
loss.'',
and inserting:
``(3) If (A) the offense involved invasion of a protected computer,
and (B) the loss resulting from the invasion exceeded $2,000, increase
by the corresponding number of levels from the table in Sec. 2F1.1
(Fraud and Deceit).''.]
[Option 3
Section 2B2.3(b) is amended by striking:
``(3) If the offense involved invasion of a protected computer
resulting in a loss exceeding $2000, increase the offense level by the
number of levels from the table in Sec. 2F1.1 corresponding to the
loss.'',
and inserting:
``(3) If (A) the offense involved invasion of a protected computer,
and (B) the loss resulting from the invasion exceeded $2,000, increase
by the corresponding number of levels from the table in Sec. 2B1.1
(Larceny, Embezzlement, and Other Forms of Theft).''.]
Issue for Comment: The Commission invites comment on the
appropriate starting point for a loss table applicable to offenses
sentenced under Sec. 2B2.3 (Trespass) that involve the invasion of a
protected computer described in 18 U.S.C. 1030(e)(2) (A) or (B).
Specifically, should the Commission adopt a table for these offenses
that starts at an amount that is lower or higher than $2,000? Since the
current fraud loss table at Sec. 2F1.1 (Fraud and Deceit) applicable to
these offenses starts at $2,000, should the Commission account for any
difference in offense levels that might occur between a lower or higher
starting amount under a new loss table and the $2,000 starting amount
under the current fraud loss table?
(F) Consolidation of Property Destruction and Theft Guidelines
Synopsis of Proposed Amendment
This amendment proposes to consolidate the property destruction
guideline Sec. 2B1.3 with the theft guideline, thereby mitigating the
necessity for reference to the proposed alternative monetary table.
(For a proposed amendment that consolidates the property destruction,
theft, and fraud guidelines, see Amendment 3, infra.)
Proposed Amendment
Section 2B1.1 is amended in the title by adding at the end ``;
Property Damage or Destruction''.
Section 2B1.1(b)(3) is amended by striking ``taken, or'' and
inserting ``taken or destroyed, (B)''; by striking ``of such item'' and
inserting ``or destruction of undelivered United States mail''; and by
striking ``(B)'' and inserting ``(C)''.
[[Page 610]]
Section 2B1.1(c) is amended by adding at the end the following new
subdivision:
``(2) If the offense involved arson or property destruction by use
of explosives, apply Sec. 2K1.4 (Arson; Property Destruction by Use of
Explosives) if the resulting offense level is greater than that
determined above.''.
Section 2B1.1(c) is amended by striking ``Reference'' and inserting
``References''.
The Commentary to Sec. 2B1.1 captioned ``Statutory Provisions'' is
amended by inserting ``1361, 1363,'' following ``664,''; by inserting
``1703,'' following ``1702,''; and by inserting ``, 2321'' following
``2317''.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``17. In some cases, the monetary value of the property damaged or
destroyed may not adequately reflect the extent of the harm caused. For
example, the destruction of a $500 telephone line may cause an
interruption in service to thousands of people for several hours. In
such instances, an upward departure may be warranted.''.
The Commentary to Sec. 2B1.1 captioned ``Background'' is amended in
the first paragraph by inserting before the first sentence the
following:
``This guideline covers offenses involving theft, stolen property,
and property damage or destruction.''.
The Commentary to Sec. 2B1.1 captioned ``Background'' is amended in
the third paragraph by striking ``Consistent with statutory
distinctions, an'' and inserting ``An''; by inserting ``or
destruction'' following ``for the theft''; and by inserting ``or
destruction'' following ``Theft''.
Strike Sec. 2B1.3 in its entirety.
(G) Consolidation of Bank Gratuity and Principal Gratuity Guidelines
Synopsis of Proposed Amendment
This amendment proposes to consolidate the bank gratuity guideline,
Sec. 2C1.6 with the principal gratuity guideline Sec. 2C1.2, thereby
mitigating the necessity for reference to the proposed alternative
monetary table.
Proposed Amendment
Section 2C1.2(b)(2) is amended by striking:
``(A) If the value of the gratuity exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit).'',
and inserting:
``(A) If the value of the unlawful payment exceeded [Option 1:
$5,000][Option 2: $2,000], increase by the corresponding number of
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
Section 2C1.2(b)(2) is amended by striking:
``(A) If the value of the gratuity exceeded $2,000, increase by the
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and
Deceit).'',
and inserting:
``(A) If the value of the unlawful payment (i) exceeded $2,000 but
did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000,
increase by the corresponding number of levels from the table in
Sec. 2X6.1 (Reference Monetary Table).''.]
Section 2C1.2(b)(2)(B) is amended by striking ``gratuity'' and
inserting ``unlawful payment''.
The Commentary to Sec. 2C1.2 captioned ``Statutory Provision'' is
amended by striking ``Provision'' and inserting ``Provisions''; by
inserting ``Sec. '' following ``U.S.C. Sec. ''; and by inserting ``,
212-214, 217'' following ``(1)''.
The Commentary to Sec. 2C1.2 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``5. An unlawful payment may be anything of value; it need not be a
monetary payment.''.
The Commentary to Sec. 2C1.2 captioned ``Background'' is amended by
striking the second and third sentences as follows:
``A corrupt purpose is not an element of this offense. An
adjustment is provided where the value of the gratuity exceeded $2,000,
or where the public official was an elected official or held a high-
level decision-making or sensitive position.'',
and inserting:
``It also applies to the offer to, or acceptance by, a bank
examiner of any unlawful payment; the offer or receipt of anything of
value for procuring a loan or discount of commercial paper from a
Federal Reserve Bank; and the acceptance of a fee or other
consideration by a federal employee for adjusting or cancelling a farm
debt.''.
Strike Sec. 2C1.6 in its entirety.
Issues for Comment: (A) The Commission invites comment on whether
any of the above guidelines proposed to be referenced to the Reference
Monetary Table (Sec. 2X6.1) instead should be referenced to the loss
table in Sec. 2F1.1, as such table is proposed to be amended under
Option 1 or Option 2 (see Amendment 1, supra.). Such an approach might
be justified by an assessment that the higher penalties of this
approach are warranted for a particular guideline/type of offense and/
or by a determination that there is no substantial overlap in the
incorporation of more-than-minimal planning into the structure of the
guideline and the revised loss table.
(B) The Commission invites comment on whether, for any of the above
guidelines, the increase in offense level resulting from reference to a
particular monetary table should be capped at a certain number of
levels. For example, in Sec. 2Q2.1 (Offenses Involving Fish, Wildlife,
and Plants), should the maximum increase in offense level resulting
from use of the table in Sec. 2X6.1 (Reference Monetary Table) to
measure the market value of the fish, wildlife, or plants be limited to
[18] levels? Capping the increase in offense level for any particular
guideline might be justified in order to maintain proportionality in
sentencing among various offenses and/or be required in order to
maintain consistency with prevailing statutory maximum sentences for
offenses covered by the guideline.
(C) The Commission invites comment on whether, for any of the above
guidelines that are currently referenced to the fraud loss table in
Sec. 2F1.1, the Commission should continue to refer the guideline to
the current fraud table if the Commission adopts one of the proposed
loss tables for fraud offenses under Sec. 2F1.1. Similar to the issue
of capping increases in offense levels for certain guidelines (see
issue for comment (B), supra.), such an approach might be justified in
order to maintain proportionality in sentencing among various offenses
and/or be required in order to maintain consistency with prevailing
statutory maximum sentences for offenses covered by the guideline.
Sections 2B1.1 (Theft), 2B1.3 (Property Destruction), and 2F1.1 (Fraud)
3. Synopsis of Proposed Amendment
This amendment consolidates the three guidelines covering theft
(Sec. 2B1.1), property destruction (Sec. 2B1.3), and fraud
(Sec. 2F1.1). Consolidation of these guidelines is proposed in response
to concerns raised at an October 15, 1997 Commission hearing on
difficulties posed by having different commentary in the theft and
fraud guidelines applicable to the calculation and definition of loss
and related issues. Commentators have also noted that theft and fraud
offenses are conceptually similar and that prosecutors' charging
selection, rather than offense conduct, may determine which of the
theft or
[[Page 611]]
fraud guideline will apply in any given case. For these and other
reasons the Commission is considering and invites comment on the
consolidation proposal set forth below. There are several important
points to note with respect to the proposal:
(A) A base offense level of level 6 has been bracketed to indicate
that the Commission invites comment on alternative proposals. The
current base offense level for theft and property destruction offenses
is level 4, while for fraud it is level 6. The proposal provides, in
subsection (b)(2), for a two-level decrease for theft and property
destruction offenses in which the loss is less than $2,000.
(B) The floor of level 6 for the theft of undelivered United States
mail in subsection (b)(6) will need to be deleted if the Commission
decides on a base offense level of level 6 but does not include a
decrease for small-scale theft and property destruction offenses.
(C) The document presents two options for the current enhancement
on the violation of a judicial order, a factor that relates to a
circuit conflict under consideration by the Commission. Option 1
retains the enhancement in subsection (b)(7)(B). Option 2 deletes the
enhancement and substitutes an encouraged upward departure provision in
Application Note 11 (in lieu of an enhancement). The encouraged upward
departure is provided as an option because of the infrequency with
which the current enhancement applies. In fiscal year 1996, the
charitable organization enhancement and the violation of a judicial
order enhancement, combined, applied in only 153 cases (3% of all fraud
cases in that fiscal year).
(D) Place holders have been noted for the loss table, the loss
definition, and a sophisticated concealment enhancement, all of which
are dependent on other policy choices.
(E) The current application note in Sec. 2B1.1 dealing with theft
and embezzlement from unions and employee benefit or pension plans has
been moved to Sec. 3B1.3 (Abuse of Position of Trust or Use of Special
Skill) where it appears to more appropriately fit.
(F) An additional cross reference to the bribery and gratuity
guidelines has been added to address situations in which a fraud
statute may be used (perhaps for jurisdictional reasons) to prosecute
conduct the essence of which involves bribery. An issue for comment
also has been included to serve as a placeholder, and invite comment
on, the concept of a more generally applicable cross reference that
would apply whenever a broadly applicable fraud statute (e.g., 18
U.S.C. Sec. 1001) is used to reach conduct that is more specifically
addressed in another Chapter Two guideline.
(G) The enhancement in subsection (b)(9) involving conscious or
reckless risk of serious bodily injury contains two proposed
substantive changes. First, it proposes to insert the bracketed
language ``of death'' prior to the term ``serious bodily injury''
because, as a practical matter, a risk of serious bodily injury is
likely to also entail a risk of death. Second, an increase in the
``floor'' offense level is proposed.
(H) The enhancement in subsection (b)(10), relating to ``chop
shops,'' contains two options. Option 1 would add a two-level
enhancement for this conduct, in addition to the existing ``floor''
offense level of level 14. Option 2 would retain the current policy
(i.e., minimum offense level of 14).
It should also be noted that the order in which the enhancements
under the consolidation are placed may affect the ultimate offense
level in any given case, because of the multiple offense level
``floors'' that are involved (e.g., the enhancements in subsections
(b)(3) through (5) may not have an additive effect in cases affected by
one of the enhancements in (b)(7) through (12), that imposes a minimum
or ``floor'' offense level).
In addition to combining the theft and fraud guidelines and the
above-mentioned substantive changes, this amendment also reorganizes
and updates the applicable commentary. Definitions of terms, other than
the definition of loss, are collected under application note 1 and are
presented in alphabetical order. Otherwise, application notes generally
appear in the same sequential order as the relevant enhancements appear
in the guideline.
Finally, this amendment makes a number of stylistic and grammatical
changes in the language of the current affected guidelines to enhance
clarity and consistency (e.g., in subsection (b)(3), the language is
changed from ``if the theft was from the person of another'' to ``if
the offense involved theft from the person of another''. These changes
are intended to be non-substantive, but it is always possible that the
change will produce an unintended substantive effect.
Proposed Amendment
Chapter Two, Part B is amended in the title by inserting
``Economic'' before ``Offenses''; and by striking ``Property'' and
inserting ``Theft, Property Destruction, or Fraud''.
Chapter Two, Part B, Subpart 1 is amended in the title by striking
``AND''; and by inserting at the end ``, AND FRAUD''.
The Commentary to Chapter Two, Part B captioned ``Introductory
Commentary'' is amended by striking ``the most''; and by inserting
``fraud, forgery, counterfeiting (other than offenses involving altered
or counterfeit bearer obligations of the United States),'' following
``embezzlement,''.
Chapter Two is amended by striking sections 2B1.1, 2B1.3 and 2F1.1
and inserting:
``Sec. 2B1.1. Larceny, Embezzlement, and Other Forms of Theft;
Receiving, Transporting, Transferring, Transmitting, or Possessing
Stolen Property; Property Damage or Destruction; Fraud and Deceit;
Offenses Involving Altered or Counterfeit Instruments Other than
Counterfeit Bearer Obligations of the United States
(a) Base Offense Level: [6]
(b) Specific Offense Characteristics
(1) LOSS TABLE--TO BE INSERTED]
[(2) If (A) the offense involved theft, embezzlement, transactions
in stolen property, or property damage or destruction; and (B) the
total amount of the [loss] involved in the offense was less than
[$2,000], decrease by 2 levels.]
(3) If the offense involved theft from the person of another,
increase by 2 levels.
(4) If the offense involved receiving stolen property, and the
defendant was a person in the business of receiving and selling stolen
property, increase by 2 levels.
(5) If the offense involved misappropriation of a trade secret and
the defendant knew or intended that the offense would benefit a foreign
government, foreign instrumentality, or foreign agent, increase by 2
levels.
[(6) If (A)(i) undelivered United States mail was taken or
destroyed, or the taking or destruction of such item was an object of
the offense; or (ii) the property stolen, destroyed, received,
transported, transferred, transmitted, or possessed was undelivered
United States mail; and (B) the offense level as determined above is
less than level 6, increase to level 6.]
[Option 1 for judicial process
(7) If the offense involved (A) a misrepresentation that the
defendant was acting on behalf of a charitable, educational, religious,
or political organization, or a government agency; or (B) a violation
of any judicial or administrative order, injunction, decree, or process
not addressed elsewhere in the guidelines, increase by 2 levels. If
[[Page 612]]
the resulting offense level is less than 10, increase to level 10.]
[Option 2 for judicial process
(7) If the offense involved a misrepresentation that the defendant
was acting on behalf of a charitable, educational, religious, or
political organization, or a government agency, increase by 2 levels.
If the resulting offense level is less than 10, increase to level 10.]
[(8) PLACE HOLDER FOR SOPHISTICATED CONCEALMENT ENHANCEMENT TO
REPLACE FRAUD SOC ON USE OF FOREIGN BANK ACCOUNTS OR TRANSACTIONS]
(9) If the offense involved (A) the conscious or reckless risk [of
death] or serious bodily injury; or (B) possession of a dangerous
weapon (including a firearm), increase by 2 levels. If the resulting
offense level is less than level [13][14], increase to level [13][14].
(10) If (A) the offense involved an organized scheme to steal
vehicles or vehicle parts, or to receive stolen vehicles or vehicle
parts, [Option 1: increase by 2 levels. If the resulting offense level
as determined above is less than level 14, increase to level 14.]
[Option 2: and (B) the offense level as determined above is less than
level 14, increase to level 14.]
(11) If the offense substantially jeopardized the safety and
soundness of a financial institution, increase by 4 levels. If the
resulting offense level is less than level 24, increase to level 24.
(12) If (A) the defendant derived more than $1,000,000 in gross
receipts from one or more financial institutions as a result of the
offense; and (B) the offense level as determined above is less than
level 24, increase to level 24.
(c) Cross References
(1) If (A) a firearm, destructive device, explosive material, or
controlled substance was taken, or the taking of such item was an
object of the offense; or (B) the stolen property received,
transported, transferred, transmitted, or possessed was a firearm,
destructive device, explosive material, or controlled substance, apply
Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or
Trafficking; Attempt or Conspiracy), Sec. 2D2.1 (Unlawful Possession;
Attempt or Conspiracy), Sec. 2K1.3 (Unlawful Receipt, Possession, or
Transportation of Explosive Materials; Prohibited Transactions
Involving Explosive Materials), or Sec. 2K2.1 (Unlawful Receipt,
Possession, or Transportation of Firearms or Ammunition; Prohibited
Transactions Involving Firearms or Ammunition), as appropriate, if the
resulting offense level is greater than that determined above.
(2) If the offense involved arson or property destruction by use of
explosives, apply Sec. 2K1.4 (Arson: Property Destruction by Use of
Explosives), if the resulting offense level is greater than that
determined above.
[(3) If the offense involved (A) commercial bribery, or (B)
bribery, gratuity, or a related offense involving a public official,
apply Sec. 2B4.1 (Bribery in Procurement of Bank Loan and Other
Commercial Bribery) or a guideline from Chapter Two, part C (Offenses
Involving Public Officials), as appropriate, if the resulting offense
level is greater than that determined above.]
(d) Special Instruction
(1) If the defendant is convicted under 18 U.S.C. Sec. 1030(a)(4)
or (5), the minimum guideline sentence, notwithstanding any other
adjustment, shall be six months' imprisonment.
Commentary
Statutory Provisions: 7 U.S.C. Secs. 6, 6b, 6c, 6h, 6o, 13, 23; 15
U.S.C. Secs. 50, 77e, 77q, 77x, 78j, 78ff, 80b-6, 1644, 1983-1988,
1990c; 18 U.S.C. Secs. 225, 285-289, 471-473, 500, 510, 511, 553(a)(1),
(2), 641, 656, 657, 659, 662, 664, 1001-1008, 1010-1014, 1016-1022,
1025-1028, 1029, 1030(a)(5), 1031, 1341-1344, 1361, 1363, 1702, 1703,
1708, 1831, 1832, 2113(b), 2312-2317, 2321; 29 U.S.C. Secs. 439, 461,
501(c), 1131. For additional statutory provision(s), see Appendix A
(Statutory Index).
Application Notes
1. For purposes of this guideline--
`Financial institution' means (A) any institution described in 18
U.S.C. Secs. 20, 656, 657, 1005-1007, and 1014; (B) 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; (C) any health, medical or
hospital insurance association; (D) brokers and dealers registered, or
required to be registered, with the Securities and Exchange Commission;
(E) futures commodity merchants and commodity pool operators
registered, or required to be registered, with the Commodity Futures
Trading Commission; and (F) any similar entity, whether or not insured
by the federal government. `Union or employee pension fund' and
`health, medical, or hospital insurance association,' primarily include
large pension funds that serve many individuals (e.g., pension funds of
large national and international organizations, unions, and
corporations doing substantial interstate business), and associations
that undertake to provide pension, disability, or other benefits (e.g.,
medical or hospitalization insurance) to large numbers of persons.
`Firearm,' and `destructive device' are defined in the Commentary
to Sec. 1B1.1 (Application Instructions).
`Foreign instrumentality,' `foreign agent,' and `trade secret' have
the meaning given those terms in 18 U.S.C. 1839 (1), (2), and (3),
respectively.
`Gross receipts' means any moneys, funds, credits, assets,
securities, or other real or personal property, whether tangible or
intangible, owned by, or under the custody or control of, a financial
institution, that are obtained directly or indirectly as a result of
the offense. See 18 U.S.C. 982(a)(4), 1344.
`Theft from the person of another' means the taking, without the
use of force, of property that was being held by another person or was
within arms' reach. Examples include pick-pocketing or non-forcible
purse-snatching, such as the theft of a purse from a shopping cart.
[`Undelivered United States mail' means mail, including mail that
is in the addressee's mailbox, that has not been received by the
addressee or the addressee's agent.]
[2. DISCUSSION OF LOSS [including downstream damages discussion
from property destruction guideline]--TO BE INSERTED]
3. Subsection (b)(7)(A) applies in the case of a misrepresentation
that the defendant was an employee or authorized agents of a
charitable, educational, religious or political organization, or a
government agency. Examples of conduct to which this factor applies
include (A) the mail solicitation by a group of defendants of
contributions to a non-existent famine relief organization; (B) the
diversion by a defendant of donations given for a religiously
affiliated school as a result of telephone solicitations to church
members in which the defendant falsely claims to be a fund-raiser for
the school; and (C) the posing by a defendant as a federal collection
agent in order to collect a delinquent student loan.
4. For purposes of subsection (b)(10), a [Option 1: two-level
enhancement and a] minimum measure of loss [are/is] provided in the
case of an ongoing, sophisticated operation (such as an auto theft ring
or `chop shop') to steal vehicles or vehicle parts or to receive stolen
vehicles or vehicle parts. `Vehicles' refers to all forms of vehicles,
including aircraft and watercraft.
5. For purposes of subsection (b)(11), an offense shall be
considered to have substantially jeopardized the safety and soundness
of a financial institution if, as a consequence of the offense, the
institution (A) became insolvent; (B) substantially reduced benefits to
pensioners or insureds; (C) was unable on demand to refund fully any
deposit,
[[Page 613]]
payment, or investment; (D) was so depleted of its assets as to be
forced to merge with another institution in order to continue active
operations; or (E) was placed in substantial jeopardy of experiencing
any of the conditions described in subdivisions (A) through (D) of this
note.
6. For purposes of subsection (b)(12), 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.
7. Subsection (b)(7)(A) applies in the case of a misrepresentation
that the defendant was an employee or authorized agents of a
charitable, educational, religious or political organization, or a
government agency. Examples of conduct to which this factor applies
include (A) the mail solicitation by a group of defendants of
contributions to a non-existent famine relief organization; (B) the
diversion by a defendant of donations given for a religiously
affiliated school as a result of telephone solicitations to church
members in which the defendant falsely claims to be a fund-raiser for
the school; and (C) the posing by a defendant as a federal collection
agent in order to collect a delinquent student loan.
8. [Option 1 for judicial process: The enhancements in subsection
(b)(7) are alternative rather than cumulative; however, if both of the
enumerated factors apply in a particular case, an upward departure may
be warranted.]
9. In the case of a partially completed offense (e.g., an offense
involving a completed fraud that is part of a larger, attempted fraud),
the offense level is to be determined in accordance with the provisions
of Sec. 2X1.1 (Attempt, Solicitation, or Conspiracy), whether the
conviction is for the substantive offense, the inchoate offense
(attempt, solicitation, or conspiracy), or both. See Application Note 4
in the Commentary to Sec. 2X1.1.
10. Sometimes offenses involving fraudulent statements are
prosecuted under 18 U.S.C. 1001, or a similarly general statute,
although the offense is also covered by a more specific statute.
Examples include false entries regarding currency transactions, for
which Sec. 2S1.3 would be more apt, and false statements to a customs
officer, for which Sec. 2T3.1 likely would be more apt. In certain
other cases, the mail or wire fraud statutes, or other relatively broad
statutes, are used primarily as jurisdictional bases for the
prosecution of other offenses. For example, a state arson offense in
which a fraudulent insurance claim was mailed might be prosecuted as
mail fraud. [In certain other cases, an offense involving fraudulent
statements or documents, or failure to maintain required records, may
be committed in furtherance of the commission or concealment of another
offense, such as embezzlement or bribery.]
Offenses involving fraudulent identification documents and access
devices, in violation of 18 U.S.C. 1028 and 1029, are also covered by
this guideline. If the primary purpose of the offense involved the
unlawful production, transfer, possession, or use of identification
documents for the purpose of violating, or assisting another to
violate, the laws relating to naturalization, citizenship, or legal
resident status, apply Sec. 2L2.1 or Sec. 2L2.2, as appropriate, rather
than this guideline. [In the case of an offense involving false
identification documents or access devices, an upward departure may be
warranted if the actual loss does not adequately reflect the
seriousness of the conduct.]
If the indictment or information setting forth the count of
conviction (or a stipulation as described in Sec. 1B1.2(a)) establishes
an offense more aptly covered by another guideline, apply that
guideline rather than this guideline. Otherwise, in such cases, this
guideline is to be applied, but a departure may be warranted.
11. If the defendant is convicted under 18 U.S.C. 225 (relating to
a continuing financial crimes enterprise), the offense level is that
applicable to the underlying series of offenses comprising the
continuing financial crimes enterprise.
[Option 2 for judicial process
12. If the offense involved a violation of any judicial or
administrative order, injunction, decree, or process not addressed
elsewhere in the guidelines, an upward departure may be warranted. If
it is established that an entity the defendant controlled was a party
to the prior proceeding, and the defendant had knowledge of the prior
decree or order, an upward departure pursuant to this note may be
warranted, even if the defendant was not a specifically named party in
that prior case. For example, an upward departure may be warranted in
the case of a defendant whose business was previously enjoined from
selling a dangerous product, but who nonetheless engaged in fraudulent
conduct to sell the product. However, an upward departure based on
conduct addressed elsewhere in the guidelines (e.g., a violation of a
condition of release, addressed in Sec. 2J1.7 (Offense Committed While
on Release), or a violation of probation, addressed in Sec. 4A1.1
(Criminal History Category)) is not authorized under this note.]
13. In cases involving theft of information from a `protected
computer', as defined in 18 U.S.C. Sec. 1030(e)(2) (A) or (B), an
upward departure may be warranted if the defendant sought the stolen
property to further a broader criminal purpose.
Background
This guideline covers offenses involving theft, stolen property,
property damage or destruction, fraud, forgery, and counterfeiting
(other than offenses involving altered or counterfeit bearer
obligations of the United States). It also covers offenses involving
altering or removing motor vehicle identification numbers, trafficking
in automobiles or automobile parts with altered or obliterated
identification numbers, odometer laws and regulations, obstructing
correspondence, the falsification of documents or records relating to a
benefit plan covered by the Employment Retirement Income Security Act,
and the failure to maintain, or falsification of, documents required by
the Labor Management Reporting and Disclosure Act.
Because federal fraud statutes often are broadly written, a single
pattern of offense conduct usually can be prosecuted under several code
sections, as a result of which the offense of conviction may be
somewhat arbitrary. Furthermore, most fraud statutes cover a broad
range of conduct with extreme variation in severity. The specific
offense characteristics [and cross references] contained in this
guideline are designed with these considerations in mind.
[Note: Depending on decisions made with respect to `loss',
background commentary on loss can be added.]
Consistent with statutory distinctions, an increased minimum
offense level is provided for the theft of undelivered mail. Theft of
undelivered mail interferes with a governmental function, and the scope
of the theft may be difficult to ascertain.
Theft from the person of another, such as pickpocketing or non-
forcible purse-snatching, receives an enhanced sentence because of the
increased risk of physical injury. This guideline does not include an
enhancement for thefts from the person by means of force or fear; such
crimes are robberies and are covered under Sec. 2B3.1 (Robbery).
A minimum offense level of 14 is provided for offenses involving an
organized scheme to steal vehicles or vehicle parts. Typically, the
scope of such activity is substantial, but the
[[Page 614]]
value of the property may be particularly difficult to ascertain in
individual cases because the stolen property is rapidly resold or
otherwise disposed of in the course of the offense. Therefore, the
specific offense characteristic of ``organized scheme'' is used as an
alternative to `loss' in setting a minimum offense level.
Use of false pretenses involving charitable causes and government
agencies enhances the sentences of defendants who take advantage of
victims' trust in government or law enforcement agencies or the
generosity and charitable motives of victims. Taking advantage of a
victim's self-interest does not mitigate the seriousness of fraudulent
conduct; rather, defendants who exploit victims' charitable impulses or
trust in government create particular social harm. In a similar vein, a
defendant who has been subject to civil or administrative proceedings
for the same or similar fraudulent conduct demonstrates aggravated
criminal intent and is deserving of additional punishment for not
conforming with the requirements of judicial process or orders issued
by federal, state, or local administrative agencies.
Subsection (b)(9)(B) implements, in a broader form, the instruction
to the Commission in section 110512 of Public Law 103-322. Subsection
(b)(11) implements, in a broader form, the instruction to the
Commission in section 961(m) of Public Law 101-73. Subsection (b)(12)
implements the instruction to the Commission in section 2507 of Public
Law 101-647. Subsection (d)(2) implements the instruction to the
Commission in section 805(c) of Public Law 104-132.''.
The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is
amended in Note 1(f) by striking the second paragraph as follows:
`` `More than minimal planning' is deemed present in any case
involving repeated acts over a period of time, unless it is clear that
each instance was purely opportune. Consequently, this adjustment will
apply especially frequently in property offenses.'';
by striking the fifth and sixth paragraphs as follows:
``In a theft, going to a secluded area of a store to conceal the
stolen item in one's pocket would not alone constitute more than
minimal planning. However, repeated instances of such thefts on several
occasions would constitute more than minimal planning. Similarly,
fashioning a special device to conceal the property, or obtaining
information on delivery dates so that an especially valuable item could
be obtained, would constitute more than minimal planning.
In an embezzlement, a single taking accomplished by a false book
entry would constitute only minimal planning. On the other hand,
creating purchase orders to, and invoices from, a dummy corporation for
merchandise that was never delivered would constitute more than minimal
planning, as would several instances of taking money, each accompanied
by false entries.''.
Section 2K1.4(a)(4) is amended by striking ``Sec. 2B1.3 (Property
Damage or Destruction)'' and inserting:
``Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft;
Receiving, Transporting, Transferring, Transmitting, or Possessing
Stolen Property; Property Damage or Destruction; Fraud and Deceit;
Offenses Involving Altered or Counterfeit Instruments Other than
Counterfeit Bearer Obligations of the United States)''.
The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``3. The following additional illustrations of an abuse of a
position of trust pertain to theft or embezzlement from employee
pension or welfare benefit plans or labor unions:
(A) If the offense involved theft or embezzlement from an employee
pension or welfare benefit plan and the defendant was a fiduciary of
the benefit plan, an adjustment under this section for abuse of a
position of trust will apply. `Fiduciary of the benefit plan' is
defined in 29 U.S.C. 1002(21)(A) to mean a person who exercises any
discretionary authority or control in respect to the management of such
plan or exercises authority or control in respect to management or
disposition of its assets, or who renders investment advice for a fee
or other direct or indirect compensation with respect to any moneys or
other property of such plan, or has any authority or responsibility to
do so, or who has any discretionary authority or responsibility in the
administration of such plan.
(B) If the offense involved theft or embezzlement from a labor
union and the defendant was a union officer or occupied a position of
trust in the union (as set forth in 29 U.S.C. 501(a)), an adjustment
under this section for an abuse of a position of trust will apply.''.
Issues for Comment
(A) The Commission invites comment on whether Application Note 10
in the proposed amendment should be alternatively stated in the
guideline as an explicit cross reference to apply the most applicable
guideline, if the resulting offense level is greater than the offense
level obtained under the proposed guideline.
(B) The Commission invites comment on whether any of the specific
offense characteristics in this proposed consolidated guideline should
be eliminated because of infrequency of use or other good reason. If
any such factor should be eliminated, should it be replaced with
commentary encouraging departure?
Secs. 2B1.1 (Theft) and 2F1.1 (Fraud)
4. Synopsis of Proposed Amendment
The Sentencing Commission has identified the definition of loss in
fraud and theft offenses as an issue for consideration during the 1997-
98 amendment cycle. The genesis of Commission interest in many of the
issues raised about the definition of loss is summarized in the Loss
Issues Working Paper (10-14-97) that is part of the Commission meeting
materials generated in connection with the October 15, 1997 public
hearing on clarifying the definition of loss. This paper and the
transcript of the public hearing on the definition of loss are
available on the Commission's website (http://www.ussc.gov/) or from
the Commission. Following are two proposed options for revising the
definition of loss for fraud and theft offenses. Both options envision
one definition of loss for both fraud and theft offenses.
Option 1 provides a dramatically simplified and shortened
definition of loss that has the same core principles as those found in
Option 2, but without the additional rules and guidance found in Option
2. The formulation in Option 1 arguably provides maximum discretion to
sentencing judges and minimal guidance as to what should be included
in, or excluded from, actual loss. Option 2 attempts to provide more
guidance to courts on how to resolve issues that have arisen in the
case law and elsewhere about the current definition of loss.
Both options propose adoption of a general definition that loss is
the greater of the actual or intended loss, and that actual loss is
defined to include ``reasonably foreseeable harm resulting from the
conduct for which the defendant is accountable under Sec. 1B1.3
(Relevant Conduct).'' Adoption of this provision would provide an
explicit causation standard for the determination of actual loss.
Option 2 raises the possibility of limiting the
[[Page 615]]
relevant harm (both actual and intended) to ``economic'' harm.
Both options provide that intended loss is the ``harm intended to
be caused by the defendant and other persons for whose conduct the
defendant is accountable under Sec. 1B1.3 (Relevant Conduct)'', with
Option 2 raising the issue as to whether intended loss should be
limited to those consequences ``that realistically could have
occurred.''
The balance of the language proposed in Option 1 also appears in
Option 2 but, again, without additional rules or guidance. Language is
proposed to be added to the background commentary that provides an
operating principle for the use of the amount of loss, namely, that it
``serves as a measure of the seriousness of the offense and the
defendant's relative culpability.'' Additional language is proposed for
the commentary in both options that emphasizes the fact-based nature of
the determination of loss and the importance of giving appropriate
deference to the sentencing court's determinations, and that invites
departure where loss ``substantially understates or overstates the
seriousness of the offense or the culpability of the defendant.''
In addition to the provisions summarized above, Option 2 provides
added specificity in a number of areas: (A) Departures; (B) estimation
of loss; (C) time of measuring loss and credits against loss; (D)
interest; (E) special rules.
(A) Departures
In addition to the general language inviting departure where loss
``substantially understates or overstates the seriousness of the
offense or the culpability of the defendant'', Option 2 lists a number
of grounds for invited departures, most of which can be found in the
current commentary. Option 2 also provides an option for including
selected non-economic factors as specific offense characteristics
instead of only as possible departure grounds.
(B) Estimation of Loss
Option 2 provides a nonexclusive listing of factors (most of which
are in the current commentary) that a court may use in estimating loss.
Two options are provided for how gain might be fashioned as such a
factor: either provide for the use of gain as any other factor, or
provide that it may be used if gain exceeds loss or the loss is
difficult or impossible to calculate.
(C) Time of Measuring Loss and Credits Against Loss
This provision raises the issue of whether there needs to be an
applicable or limiting time frame on what is to be included in loss
(such as, ``at the time the offense is detected''). This provision
provides, in effect, that loss is a ``net'' concept, for both fraud and
theft offenses, in contrast to the current rule that expressly uses
such a concept only for certain fraud-type offenses. The determination
of loss is a ``net'' concept under this proposed rule in the sense that
the loss amount shall be reduced by the value of certain items,
including money, property, or other economic benefit pledged, returned,
or otherwise transferred to the victim before detection of the offense,
valued as of the time of pledging or transfer (unless the defendant
causes the reduction in the value of the collateral after pledging or
the increase in the loss, after detection). Valuation as of the time of
detection would eliminate the effect of most fluctuations in value of
collateral from affecting the offense level.
(D) Interest
Option 2 provides two options for dealing with interest. One would
respond to the circuit court decisions that allow use of, for example,
bargained-for interest, and explicitly exclude interest from the
determination of loss, except as a possible departure ground. The other
would continue the exclusion of opportunity-cost interest but provide
for inclusion of interest if it ``was bargained for by a victim as part
of a transaction which is the subject of the criminal case'' or if the
victim ``transferred the funds lost as a result of the offense from an
investment account on which interest or dividends were regularly
earned.''
(E) Special Rules
This provision provides rules for special cases, including
retaining the current rules for stolen credit cards, diversion of
government program benefits (proposed for modification or elimination),
and Davis-Bacon Act cases. This provision proposes adding rules on
sting operations (to respond to case law that excludes from intended
loss amounts that were unlikely or impossible because informants or
government agents were the only ``victims'') and Ponzi schemes (to
choose from divergent precedent a rule that provides that loss in such
cases shall be based on ``the net loss to losing victims, i.e., the sum
of the net losses to each victim who lost all or part of this principal
investment as a result of the fraudulent scheme'').
Proposed Amendment
[Option One
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by striking the first through fourth paragraphs of Note 2 and
inserting the following:
``2. `Loss' is the greater of the actual loss or the intended loss.
`Actual loss' means the reasonably foreseeable harm resulting from the
conduct for which the defendant is accountable under Sec. 1B1.3
(Relevant Conduct). `Intended loss' means the harm intended to be
caused by the defendant and other persons for whose conduct the
defendant is accountable under Sec. 1B1.3. Loss need not be determined
precisely but may be based on a reasonable estimate.
Because of the fact-based nature of the determinations, the
sentencing judge is in a unique position to assess the evidence and
estimate the loss based upon that evidence. Accordingly, the district
court's determinations in this regard are entitled to appropriate
deference. See 18 U.S.C. 3742(e) and (f).
There may be cases in which the loss substantially understates or
overstates the seriousness of the offense or the culpability of the
defendant. In such cases, a departure may be warranted.''.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by striking Notes 3, 4, 5, and 15; and by redesignating Notes
6, 7, 8, 9, 10, 11, 12, 13, 14, and 16 as Notes 3, 4, 5, 6, 7, 8, 9,
10, 11, and 12, respectively.
The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by
inserting after the first paragraph the following additional paragraph:
``Along with other relevant factors under the guidelines, loss
serves as a measure of the seriousness of the offense and the
defendant's relative culpability.''.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by striking Note 7 and inserting the following:
``7. `Loss' is the greater of the actual loss or the intended loss.
`Actual loss' means the reasonably foreseeable harm resulting from the
conduct for which the defendant is accountable under Sec. 1B1.3
(Relevant Conduct). `Intended loss' means the harm intended to be
caused by the defendant and other persons for whose conduct the
defendant is accountable under Sec. 1B1.3. Loss need not be determined
precisely but may be based on a reasonable estimate.
Because of the fact-based nature of the determinations, the
sentencing judge is
[[Page 616]]
in a unique position to assess the evidence and estimate the loss based
upon that evidence. Accordingly, the district court's determinations in
this regard are entitled to appropriate deference. See 18 U.S.C.
3742(e) and (f).
There may be cases in which the loss substantially understates or
overstates the seriousness of the offense or the culpability of the
defendant. In such cases, a departure may be warranted.''.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by striking Notes 8 and 10; and by redesignating Notes 9, 11,
12, 13, 14, 15, 16, 17, and 18 as Notes 8, 9, 10, 11, 12, 13, 14, 15,
and 16, respectively.
The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by
inserting after the first paragraph the following additional paragraph:
``Along with other relevant factors under the guidelines, loss
serves as a measure of the seriousness of the offense and the
defendant's relative culpability.''.]
[Option Two
[Non-economic Factors, Option A:
Section 2B1.1(b) is amended by adding at the end the following new
subdivision:
[``(8) If the offense involved one of the following aggravating
factors: (A) the primary objective of the offense was non-monetary; (B)
the offense caused or risked substantial non-monetary harm; (C) the
offense was committed for the purpose of facilitating another felony
offense, other than an offense covered by this guideline; (D)
reasonably foreseeable (i) bodily injury, or (ii) psychological harm or
emotional trauma that is substantial and severe; or (E) a reasonably
foreseeable risk of substantial loss in addition to the loss that
actually occurred, increase by [2] levels. If the offense involved more
than one of these aggravating factors, increase by [4] levels.''.]
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by striking the first through the fourth paragraphs of Note 2
and inserting the following:
``2. `Loss' is the greater of the actual loss or the intended loss.
`Actual loss' means the reasonably foreseeable [economic] harm
resulting from the conduct for which the defendant is accountable under
Sec. 1B1.3 (Relevant Conduct). `Intended loss' means the [economic]
harm intended to be caused by the defendant and other persons for whose
conduct the defendant is accountable under Sec. 1B1.3 [and that
realistically could have occurred].
(A) Estimation of Loss. For the purposes of subsection (b)(1), the
loss need not be determined precisely. The court need only make a
reasonable estimate of the loss, given the available information and
considering, as appropriate under the circumstances, measuring factors
such as the following:
(1) the fair market value of the property, or other thing of value,
taken or otherwise unlawfully acquired, misapplied, misappropriated,
damaged, or destroyed;
(2) the cost to the victim of replacing property taken, damaged, or
destroyed;
(3) the cost of repairs, not to exceed the replacement cost had the
property been destroyed;
(4) the approximate number of victims and an estimate of the
average loss to each victim;
(5) the scope and duration of the offense, or revenues generated by
similar operations;
[Gain, Option A
[(6) the gain to criminally responsible participants from
committing the offense.]
[Gain, Option B
[(6) if the gain exceeds the loss or if the loss is difficult or
impossible to calculate, the gain to criminally responsible
participants from committing the offense.]
(B) [Time of Measuring Loss,] Credits Against Loss. [In general,
loss is to be measured at the time the offense is detected (i.e., when
either a victim or law enforcement first develops a reasonable
suspicion that an offense has occurred, or is occurring).]
Money, property, or other economic benefit pledged, returned, or
otherwise transferred to the victim(s) (including services performed)
before detection of the offense shall be valued at the time of
pledging, return, transfer, or performance, as the case may be, and
shall be credited in determining the amount of loss.
Payments, property transfers, pledges of collateral, or services
performed after detection of the offense shall not be credited. Amounts
recovered, or readily recoverable, through civil processes after
detection of the offense also shall not be credited.
However, if acts or omissions for which the defendant is
accountable diminish the value of pledged assets after pledging, or
otherwise increase the economic harm after detection of the offense,
the loss shall reflect that increased net harm.
[Interest, Option A
[(C) Interest Not Included. For the purposes of subsection (b)(1),
loss does not include interest of any kind; however, in an appropriate
case (e.g., if interest was bargained for as part of a transaction that
is the subject of the criminal case), an upward departure may be
warranted based upon the loss of interest.]
[Interest, Option B
[(C) Interest. Loss shall not include interest the victim could
have earned had the offense not occurred (i.e., `opportunity-cost
interest'). Interest shall be included if: [(i)] interest was bargained
for by a victim as part of a transaction which is the subject of the
criminal case[, or (ii) the victim transferred the funds lost as a
result of the offense from an investment account on which interest or
dividends were regularly earned.]
(D) Special Rules. The following special rules are to be used in
determining loss in the situations indicated:
(1) Sting Operations
In cases involving the participation of an informant or undercover
government agent, intended loss includes economic harms the defendant
intended, even if accomplishment of the defendant's goals would have
been unlikely or impossible because of the participation of an
informant or undercover government agent.
(2) Ponzi Schemes
In a Ponzi-type scheme, loss is the net loss to losing victims,
i.e., the sum of the net losses to each victim who lost all or part of
his principal investment as a result of the fraudulent scheme.
(3) Stolen Credit Cards, Access Devices
In cases involving stolen credit cards or access devices, the loss
includes any unauthorized charges made with the stolen credit cards (or
purloined numbers), but in no event less than $100 per card.
(4) Diversion of Government Program Benefits
[Option A
[In a case involving diversion of government program benefits, loss
is the value of the benefits derived from intended recipients or uses.]
[Option B
[In a case involving diversion of government program benefits, use
the gain to the criminally responsible participants as the loss. In the
case of a grant, the loss is the amount of the grant. In the case of a
loan, the minimum loss is the savings in interest over the life of the
loan compared with alternative loan terms for which the defendant would
have qualified.]
(5) Davis-Bacon Act Cases
[[Page 617]]
In a case involving a Davis-Bacon Act violation (a violation of 40
U.S.C. Sec. 276a, criminally prosecuted under 18 U.S.C. Sec. 1001), the
loss is the difference between the legally required and actual wages
paid.
[Non-Economic Factors, Option A
[(E) Departure Considerations. There may be cases in which the loss
substantially understates or overstates the seriousness of the offense
or the culpability of the defendant. In such cases, a departure may be
warranted. The following is a non-exhaustive list of types of
circumstances which the court may consider in determining whether a
departure may be warranted:
(1) the offense endangered national security or military readiness;
(2) the offense caused a loss of confidence in an important
institution;
(3) the offense endangered the solvency or financial security of
one or more victims;
(4) the defendant's gain from the offense substantially exceeded
the aggregate loss to the victim(s);
(5) but for the exclusion above, the loss would have included a
substantial amount of interest that was bargained for by a victim as
part of a transaction which is the subject of the criminal case;
(6) the offense involved [ten or more victims][a large number of
victims;]
(7) the loss significantly exceeds the greater of the defendant's
actual and intended personal gain;
(8) the loss intended by the defendant significantly exceeded the
amount that realistically could have occurred.]
[Non-Economic Factors, Option B
[(E) Departure Considerations. There may be cases in which the loss
substantially understates or overstates the seriousness of the offense
or the culpability of the defendant. In such cases, a departure may be
warranted. The following is a non-exhaustive list of types of
circumstances which the court may consider in determining whether a
departure may be warranted:
(1) a primary objective of the offense was non-monetary;
(2) the offense caused or risked substantial non-monetary harm;
(3) false statements were made for the purpose of facilitating some
other crime;
(4) the offense caused physical or psychological harm or severe
emotional trauma;
(5) the offense endangered national security or military readiness;
(6) the offense caused a loss of confidence in an important
institution;
(7) the offense endangered the solvency or financial security of
one or more victims;
(8) the defendant's gain from the offense substantially exceeded
the aggregate loss to the victim(s);
(9) the offense created a serious risk of substantially greater
economic harm than the loss that actually occurred;
(10) but for the exclusion above, the loss would have included a
substantial amount of interest that was bargained for by a victim as
part of a transaction which is the subject of the criminal case;
(11) the offense involved [ten or more victims][a large number of
victims;]
(12) the loss significantly exceeds the greater of the defendant's
actual and intended personal gain;
(13) the loss intended by the defendant significantly exceeded the
amount that realistically could have occurred.]
(F) Appropriate Deference. Because of the fact-based nature of the
determinations, the sentencing judge is in a unique position to assess
the evidence and approximate the loss based upon that evidence.
Accordingly, the district court's determinations in this regard are
entitled to appropriate deference. See 18 U.S.C. 3742 (e) and (f).''.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by striking Notes 3, 4, 5, and 15; and by redesignating Notes
6, 7, 8, 9, 10, 11, 12, 13, 14, and 16 as Notes 3, 4, 5, 6, 7, 8, 9,
10, 11, and 12, respectively.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by adding at the end the following new notes:
[Non-Economic Factors, Option A
[``17. If the defendant received an enhancement under subsection
(b)(7) but that enhancement does not adequately reflect the extent or
seriousness of the conduct involved, an upward departure may be
warranted.]
[18. Under subsection (b)(7)(D)(ii), psychological harm or
emotional trauma shall be considered to be substantial and severe if it
is of prolonged duration and, as a result of such harm, the victim
received medical treatment or other professional assistance.
Under subsection (b)(7)(E), a risk of additional loss shall be
considered `substantial' if the court determines that the additional
risked loss would have increased the actual loss, as determined under
subsection (b)(1), by at least 4 levels, had the risked loss actually
occurred. If the risk of loss was greater than 4 levels, an upward
departure may be warranted.''.]
The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by
inserting after the first paragraph the following additional paragraph:
``Along with other relevant factors under the guidelines, loss
serves as a measure of the seriousness of the offense and the
defendant's relative culpability.''.
[Non-economic Factors, Option A
Section 2F1.1(b) is amended by adding at the end the following new
subdivision:
[``(7) If the offense involved one of the following aggravating
factors: (A) the primary objective of the offense was non-monetary; (B)
the offense caused or risked substantial non-monetary harm; (C) the
offense was committed for the purpose of facilitating another felony
offense, other than an offense covered by this guideline; (D)
reasonably foreseeable (i) bodily injury, or (ii) psychological harm or
emotional trauma that is substantial and severe; or (E) a reasonably
foreseeable risk of substantial loss in addition to the loss that
actually occurred, increase by [2] levels. If the offense involved more
than one of these aggravating factors, increase by [4] levels.''.] The
Commentary to Sec. 2F1.1 captioned ``Application Notes'' is amended by
striking Note 7 and inserting the following:
``7. `Loss' is the greater of the actual loss or the intended loss.
`Actual loss' means the reasonably foreseeable [economic] harm
resulting from the conduct for which the defendant is accountable under
Sec. 1B1.3 (Relevant Conduct). `Intended loss' means the [economic]
harm intended to be caused by the defendant and other persons for whose
conduct the defendant is accountable under Sec. 1B1.3 [and that
realistically could have occurred].
(A) Estimation of Loss. For the purposes of subsection (b)(1), the
loss need not be determined precisely. The court need only make a
reasonable estimate of the loss, given the available information and
considering, as appropriate under the circumstances, measuring factors
such as the following:
(1) the fair market value of the property, or other thing of value,
taken or otherwise unlawfully acquired, misapplied, misappropriated,
damaged, or destroyed;
(2) the cost to the victim of replacing property taken, damaged, or
destroyed;
(3) the cost of repairs, not to exceed the replacement cost had the
property been destroyed;
(4) the approximate number of victims and an estimate of the
average loss to each victim;
(5) the scope and duration of the offense, or revenues generated by
similar operations;
[[Page 618]]
[Gain, Option A
[(6) the gain to criminally responsible participants from
committing the offense.]
[Gain, Option B
[(6) if the gain exceeds the loss or if the loss is difficult or
impossible to calculate, the gain to criminally responsible
participants from committing the offense.]
(B) [Time of Measuring Loss,] Credits Against Loss. [In general,
loss is to be measured at the time the offense is detected (i.e., when
either a victim or law enforcement first develops a reasonable
suspicion that an offense has occurred, or is occurring).]
Money, property, or other economic benefit pledged, returned, or
otherwise transferred to the victim(s) (including services performed)
before detection of the offense shall be valued at the time of
pledging, return, transfer, or performance, as the case may be, and
shall be credited in determining the amount of loss.
Payments, property transfers, pledges of collateral, or services
performed after detection of the offense shall not be credited. Amounts
recovered, or readily recoverable, through civil processes after
detection of the offense also shall not be credited.
However, if acts or omissions for which the defendant is
accountable diminish the value of pledged assets after pledging, or
otherwise increase the economic harm after detection of the offense,
the loss shall reflect that increased net harm.
[Interest, Option A
[(C) Interest Not Included. For the purposes of subsection (b)(1),
loss does not include interest of any kind; however, in an appropriate
case (e.g., if interest was bargained for as part of a transaction that
is the subject of the criminal case), an upward departure may be
warranted based upon the loss of interest.]
[Interest, Option B
[(C) Interest. Loss shall not include interest the victim could
have earned had the offense not occurred (i.e., `opportunity-cost
interest'). Interest shall be included if: [(i)] interest was bargained
for by a victim as part of a transaction which is the subject of the
criminal case[, or (ii) the victim transferred the funds lost as a
result of the offense from an investment account on which interest or
dividends were regularly earned.]
(D) Special Rules. The following special rules are to be used in
determining loss in the situations indicated:
(1) Sting Operations
In cases involving the participation of an informant or undercover
government agent, intended loss includes economic harms the defendant
intended, even if accomplishment of the defendant's goals would have
been unlikely or impossible because of the participation of an
informant or undercover government agent.
(2) Ponzi Schemes
In a Ponzi-type scheme, loss is the net loss to losing victims,
i.e., the sum of the net losses to each victim who lost all or part of
his principal investment as a result of the fraudulent scheme.
(3) Stolen Credit Cards, Access Devices
In cases involving stolen credit cards or access devices, the loss
includes any unauthorized charges made with the stolen credit cards (or
purloined numbers), but in no event less than $100 per card.
(4) Diversion of Government Program Benefits
[Option A
[In a case involving diversion of government program benefits, loss
is the value of the benefits derived from intended recipients or uses.]
[Option B
[In a case involving diversion of government program benefits, use
the gain to the criminally responsible participants as the loss. In the
case of a grant, the loss is the amount of the grant. In the case of a
loan, the minimum loss is the savings in interest over the life of the
loan compared with alternative loan terms for which the defendant would
have qualified.]
(5) Davis-Bacon Act Cases
In a case involving a Davis-Bacon Act violation (a violation of 40
U.S.C. 276a, criminally prosecuted under 18 U.S.C. 1001), the loss is
the difference between the legally required and actual wages paid.
[Non-Economic Factors, Option A
[(E) Departure Considerations. There may be cases in which the loss
substantially understates or overstates the seriousness of the offense
or the culpability of the defendant. In such cases, a departure may be
warranted. The following is a non-exhaustive list of types of
circumstances which the court may consider in determining whether a
departure may be warranted:
(1) the offense endangered national security or military readiness;
(2) the offense caused a loss of confidence in an important
institution;
(3) the offense endangered the solvency or financial security of
one or more victims;
(4) the defendant's gain from the offense substantially exceeded
the aggregate loss to the victim(s);
(5) but for the exclusion above, the loss would have included a
substantial amount of interest that was bargained for by a victim as
part of a transaction which is the subject of the criminal case;
(6) the offense involved [ten or more victims][a large number of
victims;]
(7) the loss significantly exceeds the greater of the defendant's
actual and intended personal gain;
(8) the loss intended by the defendant significantly exceeded the
amount that realistically could have occurred.]
[Non-Economic Factors, Option B
[(E) Departure Considerations. There may be cases in which the loss
substantially understates or overstates the seriousness of the offense
or the culpability of the defendant. In such cases, a departure may be
warranted. The following is a non-exhaustive list of types of
circumstances which the court may consider in determining whether a
departure may be warranted:
(1) A primary objective of the offense was non-monetary;
(2) The offense caused or risked substantial non-monetary harm;
(3) False statements were made for the purpose of facilitating some
other crime;
(4) The offense caused physical or psychological harm or severe
emotional trauma;
(5) The offense endangered national security or military readiness;
(6) The offense caused a loss of confidence in an important
institution;
(7) The offense endangered the solvency or financial security of
one or more victims;
(8) The defendant's gain from the offense substantially exceeded
the aggregate loss to the victim(s);
(9) The offense created a serious risk of substantially greater
economic harm than the loss that actually occurred;
(10) But for the exclusion above, the loss would have included a
substantial amount of interest that was bargained for by a victim as
part of a transaction which is the subject of the criminal case;
(11) The offense involved [ten or more victims][a large number of
victims];
(12) The loss significantly exceeds the greater of the defendant's
actual and intended personal gain;
(13) The loss intended by the defendant significantly exceeded the
amount that realistically could have occurred.]
[[Page 619]]
(F) Appropriate Deference. Because of the fact-based nature of the
determinations, the sentencing judge is in a unique position to assess
the evidence and approximate the loss based upon that evidence.
Accordingly, the district court's determinations in this regard are
entitled to appropriate deference. See 18 U.S.C. 3742(e) and (f).''.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by striking Notes 8 and 10; and by redesignating Notes 9, 11,
12, 13, 14, 15, 16, 17, and 18 as Notes 8, 9, 10, 11, 12, 13, 14, 15,
and 16, respectively.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by adding at the end the following new notes:
[Non-Economic Factors, Option A
[``19. If the defendant received an enhancement under subsection
(b)(7) but that enhancement does not adequately reflect the extent or
seriousness of the conduct involved, an upward departure may be
warranted.]
[20. Under subsection (b)(7)(D)(ii), psychological harm or
emotional trauma shall be considered to be substantial and severe if it
is of prolonged duration and, as a result of such harm, the victim
received medical treatment or other professional assistance.
Under subsection (b)(7)(E), a risk of additional loss shall be
considered `substantial' if the court determines that the additional
risked loss would have increased the actual loss, as determined under
subsection (b)(1), by at least 4 levels, had the risked loss actually
occurred. If the risk of loss was greater than 4 levels, an upward
departure may be warranted.''.]
The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by
inserting after the first paragraph the following additional paragraph:
``Along with other relevant factors under the guidelines, loss
serves as a measure of the seriousness of the offense and the
defendant's relative culpability.''.
Issues for Comment
The following issues for comment solicit input on possible changes
to the definition of loss in Secs. 2B1.1 and 2F1.1 to clarify the
Commission's intent, resolve issues raised by case law, and aid in
consistency of application.
(A) Standard of Causation
The current definition of loss in Secs. 2B1.1 and 2F1.1 does not
specify any standard governing the causal relationship between the
offense conduct and the harm caused. The proposed definition does
include such a standard, using the concept of ``reasonable
foreseeability'' as the touchstone. The Commission invites comment on
whether such a standard is needed and, if so, whether the proposed
``reasonable foreseeability'' standard is preferable to other
alternatives, such as a ``but-for'' causation or ``proximate cause''
standard.
The Commission also invites comment on what, if any, limitations
should be placed on loss amounts that are included using the new
causation standard, such as whether to limit the inclusion of
``consequential damages.'' The current loss definition provides for
inclusion of such damages only in contract procurement, product
substitution, and certain computer crime cases. Would the creation of a
causation standard obviate the need for commentary governing
consequential damages? If not, in what cases, if any, should
consequential damages be included, and how should they be defined and
determined? For example, should language be added that specifies
whether loss includes or excludes the costs of investigation and
prosecution?
(B) Fair Market Value
The current definition of loss in theft and fraud uses the concept
of fair market value as an important factor in determining loss. The
Commission invites comment on whether this concept should be clarified
to specify, for example, whether retail, wholesale, or black market
value is intended, depending on the nature of the offense. In addition,
the Commission invites comment on what value should be used when the
black market price is different from the price on the legitimate
market. See, e.g., United States v. Ellerbee, 73 F.3d 105, 108-09 (6th
Cir. 1996) (using retail price of stolen compact disks instead of lower
price for which thief acquired and sold them); United States v. Mount,
966 F.2d 262, 265-67 (7th Cir. 1992) (using black market price of
stolen postseason baseball tickets instead of lower face value).
(C) Interest
Although the definition of loss in the theft and fraud guidelines
excludes interest ``that could have been earned had the funds not been
stolen,'' some courts have interpreted the definition of loss to permit
inclusion in loss of the interest that the defendant agreed to pay in
connection with the offense. Compare United States v. Hoyle, 33 F.3d
415, 419 (4th Cir. 1994) (``[I]nterest shall not be included to
determine loss for sentencing purposes.''), cert. denied, 513 U.S. 1133
(1995), with United States v. Gilberg, 75 F.3d 15, 18-19 (1st Cir.
1996) (including in loss interest on fraudulently procured mortgage
loan) and United States v. Henderson, 19 F.3d 917, 928-29 (5th Cir.)
(``Interest should be included if, as here, the victim had a reasonable
expectation of receiving interest from the transaction.''), cert.
denied, 513 U.S. 877 (1994). The Commission invites comment on whether
the definition of loss should be clarified to (1) exclude all forms of
interest in all cases, (2) permit inclusion of bargained-for interest
and/or interest that was lost because the victim(s) removed money from
an investment vehicle or instrument to provide funds to the defendant,
or (3) allow consideration of interest either in all loss calculations
or as a departure factor. If lost opportunity cost interest should be
included, how should such interest be calculated?
(D) Credits Against Loss--Benefit Received By Victims
The current loss definition instructs the courts to reduce the loss
figure by the value of payments made and collateral pledged in
fraudulent loan cases, and by the value of substituted products in
product substitution cases. Some courts have extended this concept to
other types of cases. See, e.g., United States v. Maurello, 76 F.3d
1304, 1311-12 (3d Cir. 1996) (calculating loss by subtracting value of
satisfactory legal services from amount of fees paid to bogus lawyer);
United States v. Reddeck, 22 F.3d 1504, 1513 (10th Cir. 1994) (reducing
loss by value of education received from bogus university). The
Commission invites comment on what credits should be applied in
determining an appropriate loss figure where the victim was given
something of value in connection with the offense, and how such a
crediting principle might be articulated. For example, what payments,
if any, made by a defendant should be credited against loss? The
Commission further invites comment on whether the crediting principle
should be used and similarly applied in both theft and fraud offenses.
Furthermore, the current commentary also credits only those
payments on a loan that have been made ``at the time the offense is
discovered.'' The Commission invites comment on whether this is the
most appropriate ``cutoff point'' for crediting such payments. Should
the commentary include a definition of ``at the time the offense is
discovered'' that would specify, for example, discovery ``by whom''
(such as by the victim or law enforcement)?
[[Page 620]]
The Commission invites comment on whether there should be an
adjustment or an invited departure for situations in which a defendant
demonstrated the intent to make additional payments but was apprehended
before he could do so.
The Commission also invites comment on whether funds that a
defendant has ``misapplied'' to an account but not withdrawn should
count as loss. Compare United States v. Johnson, 993 F.2d 1358, 1358-59
(8th Cir. 1993) (no), with United States v. Strozier, 981 F.2d 281,
283-85 (7th Cir. 1992) (yes).
The current loss definition calculates the value of collateral
based on the net proceeds of the sale of the collateral, or if the sale
has not been accomplished prior to sentencing, based on the market
value of the collateral reduced by the expected cost of the sale. The
Commission invites comment on whether fluctuations in the value of
collateral after it is pledged should affect the loss figure, as is the
case with the current rule, or whether the Commission should change the
rule to value collateral as of the time of pledging, so changes in the
value of collateral do not affect the loss determination. See, e.g.,
United States v. Barrett, 51 F.3d 86, 90-91 (7th Cir. 1995) (including
in loss the drop in value of property securing fraudulently obtained
loans).
The Commission also invites comment on whether special rules are
necessary to govern loss calculation for Ponzi schemes, and, if so,
what those rules should be.
(Note: a Ponzi scheme is defined as ``a fraudulent investment scheme
in which money placed by later investors pays artificially high
dividends to the original investors, thereby attracting even larger
investments.'' Bryan A. Garner, A Dictionary of Modern Legal Usage
671 (2d ed. 1995)).
See, e.g., United States v. Holiusa, 13 F.3d 1043, 1048 (7th Cir. 1994)
(holding that loss does not include ``amounts that [the defendant] both
intended to and indeed did return to investors''). Compare United
States v. Orton, 73 F.3d 331, 334 (11th Cir. 1996) (holding defendant
accountable only for ``the net losses of all victims who lost all or
part of the money they invested'') with United States v. Carrozzella,
105 F. 3d 796, 805 (2d Cir. 1997) (holding that defendant should not be
credited with amounts repaid to victims of a Ponzi scheme ``as part of
a meretricious effort to maintain [the victims'] confidences.''
(E) Diversion of Government Benefits
The Commission invites comment on how loss should be determined in
fraud cases involving the diversion or misuse of government program
benefits and kickbacks. For example, what is the loss in a case in
which a doctor acquires a patient by paying a kickback in return for a
referral, provides necessary medical care, and is then paid for his
services using Medicare funds? Does the current or proposed commentary
adequately cover such cases?
(F) Gain
Courts have disagreed about when the current loss definition allows
an offender's gain to be used in lieu of loss. Compare United States v.
Kopp, 951 F.2d 521, 530 (3d Cir. 1991) (holding that gain cannot be
used if loss is measurable even if loss is zero), with United States v.
Haddock, 12 F.3d 950, 960 (10th Cir. 1993) (allowing gain to be used as
alternative at all times). The Commission invites comment on whether
and in what circumstances gain should be used in lieu of loss, whether
gain should play a part in the loss calculation, and whether there
should be some adjustment or departure if gain differs significantly
from the loss figure. The Commission also invites comment on how gain
might be calculated; e.g., should there be a ``net gain'' concept, or a
distinction between a defendant's personal gain and the gain resulting
from all offense conduct?
(G) Intended loss: Under the current loss definition, intended loss
is used when it is greater than actual loss. The proposed definition
extends this concept to theft cases as well. The Commission invites
comment on whether the current rules should be changed to provide that
loss is to be based on actual loss, with intended loss available only
as a possible ground for departure, or whether some downward adjustment
for defendants whose actual loss is greater than their intended loss is
warranted.
Furthermore, courts have disagreed over whether intended loss
should be limited by concepts of ``economic reality'' or impossibility.
Compare United States v. Moored, 38 F.3d 1419, 1425 (6th Cir. 1994)
(focusing on loss that defendant ``realistically intended''), with
United States v. Lorenzo, 995 F.2d 1448, 1460 (9th Cir.) (``[T]he
amount of [intended] loss * * * does not have to be realistic.''),
cert. denied, 510 U.S. 881 (1993). The Commission invites comment on
whether, if the substance of the current rule is to be retained,
intended loss should be limited by concepts of ``economic reality'' or
impossibility, such as in a government sting operation where there can
be no loss, or in a false insurance claims case in which the defendant
submits a claim for an amount in excess of the fair market value of the
item.
(H) Risk of Loss
Under the current loss definition, a defendant might obtain a loan
by fraudulent means but be accountable for zero loss because of pledged
collateral and payments made prior to discovery. A defendant in an
investment scam might likewise be accountable for zero loss because the
risky investments he made were fortuitously profitable. The Commission
invites comment on whether the definition of loss should be revised to
include the concept of risk of loss, or, alternatively, whether the
guideline should be amended to provide a higher minimum offense level
(e.g., a floor offense level of [12 to 16]) or an added enhancement
(e.g., an enhancement of [2-4] levels), so as to ensure higher
punishment levels for defendants who expose their victims to the
possibility of a loss, although their offenses may result in low actual
loss figures. If any such amendments are warranted, what role should
risk of loss play in determining the offense level? See Sec. 2F1.1,
comment. (n. 7(b)).
(I) Loss Amounts That Over- or Understate the Significance of the
Offense
The Commission invites comment on whether to provide guidance for
applying the current provision allowing departure where the loss amount
over-or understates the significance of the offense. See Sec. 2F1.1,
comment. (n. 10). More specifically, the Commission invites comment on
whether to specify that where the loss amount included through
Sec. 1B1.3 (Relevant Conduct) is far in excess of the benefit
personally derived (or intended) by the defendant, the court might
depart down to an offense level corresponding to the loss amount that
more appropriately measures the defendant's culpability. Alternatively,
the Commission invites comment on whether to provide a specific offense
characteristic (e.g., calling for a reduction of [2-4] levels) or
special rule in the definition of loss to reduce the offense level in
such cases.
(J) Additional Special Rules
The Commission invites comment on whether there is any unique
category of cases, other than those mentioned above, for which a
special rule for determining loss is necessary or desirable. For
example, the current loss definition in Sec. 2F1.1 has a special rule
for Davis-Bacon Act cases. Should that rule be maintained, and,
similarly, are there other types of cases for which a special loss
determination is warranted?
[[Page 621]]
Theft, Fraud and Tax Related Issues
5. Synopsis of Proposed Amendment
The following amendments (described in Parts (A) through (D))
address issues related and subsidiary to the revisions of the theft,
fraud, and tax loss tables that increase penalties and build in the
more-than-minimal planning (MMP) enhancement.
(A) Deletion of More-than-Minimal-Planning (MMP) Enhancement
Synopsis of Proposed Amendment
Deletion of the MMP enhancement involves the following issues and
guideline modifications:
i. Removal from Sec. 1B1.1 (Application Instructions) of certain
commentary describing features of MMP that are no longer applicable in
view of the proposed amendments to the theft and fraud loss tables.
The language to be deleted is principally that which describes the
``repeated acts'' and ``concealment'' prongs of MMP. The definitional
commentary for the ``planning'' prong of MMP needs to be retained
because a MMP enhancement will continue to be a specific offense
characteristic under the Aggravated Assault and Burglary guidelines.
The example in the last sentence of Application Note 4, which currently
refers to the cumulative application of the MMP adjustment from the
fraud guideline and an aggravating role adjustment, could be replaced
with a similar illustration from, e.g., the Burglary guideline, or the
sentence could be deleted entirely. The amendment language shown below
deletes the sentence.
ii. Removal of the MMP enhancement from the Theft and Property
Destruction guidelines, with conforming commentary changes.
The two-level MMP enhancement exists in the Theft guideline
(Sec. 2B1.1) as an alternative to a four-level enhancement for being in
the business of receiving and selling stolen property. The latter
enhancement is assumed to incorporate MMP. Hence, when the two-level
MMP factor is deleted (and incorporated into the loss table), the
remaining enhancement for fencing stolen property needs to be adjusted
from a four-level to a two-level enhancement. This particular specific
offense characteristic (SOC) was applied in 57 (1.8%) of the 1996 theft
cases and 40 (1.2%) of the 1995 theft cases.
iii. Removal of the MMP enhancement from the Fraud guideline, with
conforming commentary changes in Sec. 2F1.1 and the Multiple Count
guidelines.
The MMP enhancement in the Fraud guideline currently exists as an
alternative to a comparable, two-level enhancement for ``a scheme to
defraud more than one victim.'' In carrying through the decision to
delete a separate MMP enhancement and fold it into the loss table, the
Commission conceivably could elect to retain the enhancement for
multiple victims. According to the Commission's Intensive Study Sample
(ISS) assessment, an estimated 10 percent of all fraud cases involve
more than one victim. However, because victim information currently is
not well identified in the sentencing documents the Commission
customarily receives, it is likely that the actual number of multiple
victim cases is substantially higher. Thus, retention of the multiple
victim enhancement may effectively retain the MMP enhancement in a
substantial number of cases.
The background commentary also is modified to reflect the view that
loss is a better measure of offense seriousness than whether the
offense involved minimal or greater planning.
Proposed Amendment: The Commentary to Sec. 1B1.1 captioned
``Application Notes'' is amended in Note 1(f) in the first paragraph by
striking the last sentence as follows:
`` `More than minimal planning' also exists if significant
affirmative steps were taken to conceal the offense, other than conduct
to which Sec. 3C1.1 (Obstructing or Impeding the Administration of
Justice) applies.''.
The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is
amended in Note 1(f) by striking the second paragraph as follows:
`` `More than minimal planning' is deemed present in any case
involving repeated acts over a period of time, unless it is clear that
each instance was purely opportune. Consequently, this adjustment will
apply especially frequently in property offenses.''
The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is
amended in Note 1(f) by striking the last two paragraphs as follows:
``In a theft, going to a secluded area of a store to conceal the
stolen item in one's pocket would not alone constitute more than
minimal planning. However, repeated instances of such thefts on several
occasions would constitute more than minimal planning. Similarly,
fashioning a special device to conceal the property, or obtaining
information on delivery dates so that an especially valuable item could
be obtained, would constitute more than minimal planning.
In an embezzlement, a single taking accomplished by a false book
entry would constitute only minimal planning. On the other hand,
creating purchase orders to, and invoices from, a dummy corporation for
merchandise that was never delivered would constitute more than minimal
planning, as would several instances of taking money, each accompanied
by false entries.''.
The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is
amended in Note 4 in the second paragraph by striking the last sentence
as follows:
``For example, the adjustments from Sec. 2F1.1(b)(2) (more than
minimal planning) and Sec. 3B1.1 (Aggravating Role) are applied
cumulatively.''.
Section 2B1.1(b)(4) is amended by striking subdivision (A) as
follows:
``(A) If the offense involved more than minimal planning, increase
by 2 levels; or''.
Section 2B1.1(b)(4)(B) is amended by striking ``(B)''; and by
striking ``4'' and inserting ``2''.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended in Note 1 by striking `` `More than minimal planning,'' '; and
by striking `` `firearm''' and inserting `` `Firearm' ''.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by striking Note 13 as follows:
``13. If subsection (b)(6) (A) or (B) applies, there shall be a
rebuttable presumption that the offense involved `more than minimal
planning.'' '.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by redesignating Notes 14, 15, and 16 as Notes 13, 14, and 15,
respectively.
The Commentary to Sec. 2B1.1 captioned ``Background'' is amended in
the first paragraph by striking the last sentence as follows:
``Because of the structure of the Sentencing Table (Chapter 5, Part
A), subsection (b)(1) results in an overlapping range of enhancements
based on the loss.''.
The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by
striking the second paragraph as follows:
``The guidelines provide an enhancement for more than minimal
planning, which includes most offense behavior involving affirmative
acts on multiple occasions. Planning and repeated acts are indicative
of an intention and potential to do considerable harm. Also, planning
is often related to increased difficulties of detection and proof.''.
Section 2B1.3(b) is amended by striking subdivision (3) as follows:
``(3) If the offense involved more than minimal planning, increase
by 2 levels.''.
The Commentary to Sec. 2B1.3 captioned ``Application Notes'' is
amended by striking Note 1 as follows:
[[Page 622]]
``1. `More than minimal planning' is defined in the Commentary to
Sec. 1B1.1 (Application Instructions).'';
and by redesignating Notes 2 through 4 as Notes 1 through 3,
respectively.
Section 2F1.1(b) is amended by striking subdivision (2) as follows:
``(2) If the offense involved (A) more than minimal planning, or
(B) a scheme to defraud more than one victim, increase by 2 levels.''.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by striking Notes 2 and 3 as follows:
``2. `More than minimal planning' (subsection (b)(2)(A)) is defined
in the Commentary to Sec. 1B1.1 (Application Instructions).
3. `Scheme to defraud more than one victim,' as used in subsection
(b)(2)(B), refers to a design or plan to obtain something of value from
more than one person. In this context, `victim' refers to the person or
entity from which the funds are to come directly. Thus, a wire fraud in
which a single telephone call was made to three distinct individuals to
get each of them to invest in a pyramid scheme would involve a scheme
to defraud more than one victim, but passing a fraudulently endorsed
check would not, even though the maker, payee and/or payor all might be
considered victims for other purposes, such as restitution.'';
by striking Note 18 as follows:
``18. If subsection (b)(6)(A) or (B) applies, there shall be a
rebuttable presumption that the offense involved `more than minimal
planning.' '';
and by redesignating Notes 4 through 17 as Notes 2 through 15,
respectively.
The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by
striking the second and third paragraphs as follows:
``Empirical analyses of pre-guidelines practice showed that the
most important factors that determined sentence length were the amount
of loss and whether the offense was an isolated crime of opportunity or
was sophisticated or repeated. Accordingly, although they are
imperfect, these are the primary factors upon which the guideline has
been based.
The extent to which an offense is planned or sophisticated is
important in assessing its potential harmfulness and the dangerousness
of the offender, independent of the actual harm. A complex scheme or
repeated incidents of fraud are indicative of an intention and
potential to do considerable harm. In pre-guidelines practice, this
factor had a significant impact, especially in frauds involving small
losses. Accordingly, the guideline specifies a 2-level enhancement when
this factor is present.'',
and inserting:
``The Commission has determined that, ordinarily, the sentences of
defendants convicted of fraud offenses should reflect the nature and
magnitude of the economic harm caused by their crimes. Accordingly, the
amount of loss caused by an offense is a principal factor in
determining the offense level under this guideline.''.
The Commentary to Sec. 3D1.3 captioned ``Application Notes'' is
amended in Note 3 by striking the last sentence as follows:
``In addition, the adjustment for `more than minimal planning'
frequently will apply to multiple count convictions for property
offenses.''.
The ``Illustrations of the Operation of the Multiple-Count Rules''
after guideline 3D1.5 is amended in illustration 2 by striking
``$2,000'' wherever it appears and inserting ``$3,000''; and in the
fourth sentence by striking ``$4,800'' and inserting ``$5,800''.
The ``Illustrations of the Operation of the Multiple-Count Rules''
after guideline 3D1.5 is amended in illustration 2 by striking in the
sixth sentence by striking ``; 1 level is'' and inserting ``[Option 1:
and 2 levels are]; [Option 2: and 4 levels are]''; and by striking ``;
and 2 levels are added because the conduct involved repeated acts with
some planning (Sec. 2F1.1(b)(2)(A))''.
The ``Illustrations of the Operation of the Multiple-Count Rules''
after guideline 3D1.5 is amended in illustration 2 in the last sentence
by striking ``9'' and inserting ``[Option 1: 8]; [Option 2: 10]''.
(B) Reduction for Cases Involving Limited or Insignificant Planning
Synopsis of Proposed Amendment
The Commission's Practitioners' Advisory Group has suggested the
following 2-level reduction in the theft and fraud guideline for cases
that involve only limited or insignificant planning in the event that
the more than minimal planning enhancement is built into the theft and
fraud loss tables. For a related proposal, see Amendment 1(C), supra.
Proposed Amendment: Section 2B1.1(b) is amended by adding at the
end the following new subdivision:
``(8) If the offense involved (A) limited or insignificant
planning, or (B) simple efforts at concealment, reduce by 2 levels.''.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``17. The term `limited or insignificant planning' means planning
that is necessary for commission of the offense in a simple form.''.
Section 2F1.1(b) is amended by adding at the end the following new
subdivision:
``(7) If the offense involved (A) limited or insignificant
planning, or (B) simple efforts at concealment, reduce by 2 levels.''.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``19. The term `limited or insignificant planning' means planning
that is necessary for commission of the offense in a simple form.''.
(C) Sophisticated Concealment Enhancement.
Synopsis of Proposed Amendment
This amendment adds an enhancement in the fraud and theft
guidelines similar to the existing ``sophisticated means'' enhancement
in the tax guidelines. This amendment also entails some modification of
the existing sophisticated means enhancement in the tax guidelines and
the addition of a ``floor'' offense level of 12 to both the new and
existing enhancements.
i. Addition of ``Sophisticated Concealment'' enhancement to Theft
and Fraud guidelines.
Two options are proposed to add an enhancement for sophisticated
concealment to the theft and fraud guidelines. Option 1 treats
``committing the offense from outside the United States'' as a separate
and alternative enhancement to other forms of sophisticated
concealment. Option 2 treats ``committing the offense from outside the
United States'' as one form of sophisticated concealment.
ii. Modification of ``Sophisticated Means'' enhancement in tax
guidelines.
This amendment modifies the tax guidelines' sophisticated means
SOC. In April, 1997, the Commission considered modifications that were
designed to provide a floor offense level of 12, enhance the precision
of the language, and address a circuit conflict. The conflict involved
the issue of whether the sophisticated means enhancement applies based
on the personal conduct of the defendant (see United States v. Kraig,
99 F.3d 1361 (6th Cir. 1996)), or the overall offense conduct for which
the defendant is accountable (see United States v. Lewis, 93 F.3d 1075
(2d Cir. 1996)). The modifications take into account the latter view
because that
[[Page 623]]
view appears more consistent with the usual relevant conduct
attribution rules.
The sophisticated means enhancement was applied in 103 (16.6%) tax
evasion (Sec. 2T1.1) cases sentenced in FY 1996 and 82 (16.1%) of such
cases sentenced in FY 1995. The identical enhancement in the other two
tax guidelines (Secs. 2T1.4, 2T3.1) was not applied in FY 1995 or FY
1996.
Two options are presented. Option 1 is substantially similar to the
modifications considered by the Commission in April, 1997, with minor,
non-substantive modifications in the commentary. Option 2 eliminates
the element of ``greater planning than a routine tax-evasion case'' and
generally conforms the SOC to the ``sophisticated concealment''
language prepared for the theft and fraud guidelines. However, the
definition of ``sophisticated concealment'' does not include
``committing the offense from outside the United States'' because it
seems unlikely that a tax offense would be perpetrated from outside the
United States to avoid detection or prosecution. Under this option, the
planning concept is deleted because that element arguably would be
built into the offense level if the Commission adopts one of the
proposed loss table amendments, both of which propose using a tax loss
table that is the same as, or substantially similar to, the fraud loss
table that is amended to phase in more than minimal planning. Without
the planning element, the ``harm'' that is sought to be captured is the
complex scheme designed to make the offense difficult to detect.
Finally, Option 2 retains the floor offense level of 12.
Proposed Amendment: Section 2B1.1(b) is amended by redesignating
subdivisions (5) through (7) as subdivisions (6) through (8); and by
inserting the following new Note 5:
``(5) If the offense involved sophisticated concealment, increase
by 2 levels. If the resulting offense level is less than level 12,
increase to level 12.''.
The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``17. For purposes of subsection (b)(5), `sophisticated
concealment' means complex or intricate offense conduct that is
designed to prevent discovery of the offense or its extent. This
enhancement applies to conduct in which deliberate steps are taken to
hide assets or transactions, or both, or otherwise make the offense, or
its extent, difficult to detect. Thus, the use of corporate shells,
fictitious entities, foreign bank accounts, or similarly sophisticated
actions ordinarily indicate `sophisticated concealment.' ''.
[Option 1
Section 2F1.1(b)(5) is amended by striking:
``If the offense involved the use of foreign bank accounts or
transactions to conceal the true nature or extent of the fraudulent
conduct, and the offense level as determined above is less than level
12, increase to level 12.'',
and inserting:
``If (A) any part of the offense was committed from outside the
United States, or (B) the offense otherwise involved sophisticated
concealment, increase by 2 levels. If the resulting offense level is
less than level 12, increase to level 12.''.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by adding at the end the following new note:
19. For purposes of subsection (b)(5)(A), United States'' means
each of the 50 states, the District of Columbia, the Commonwealth of
Puerto Rico, the United States Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa.
``For purposes of subsection (b)(5)(B), `sophisticated concealment'
means complex or intricate offense conduct that is designed to prevent
discovery of the offense or its extent. This enhancement applies to
conduct in which deliberate steps are taken to hide assets or
transactions, or both, or otherwise make the offense, or its extent,
difficult to detect. Thus, the use of corporate shells, fictitious
entities, foreign bank accounts, or similarly sophisticated actions
ordinarily indicate `sophisticated concealment.' ''.]
[Option 2
Section 2F1.1(b)(5) is amended by striking:
``If the offense involved the use of foreign bank accounts or
transactions to conceal the true nature or extent of the fraudulent
conduct, and the offense level as determined above is less than level
12, increase to level 12.'',
and inserting:
``If the offense involved sophisticated concealment, increase by 2
levels. If the resulting offense level is less than level 12, increase
to level 12.''.
The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by adding at the end the following new note:
``19. For purposes of subsection (b)(5), `sophisticated
concealment' means complex or intricate offense conduct that is
designed to prevent discovery of the offense or its extent. This
enhancement applies to conduct in which deliberate steps are taken to
hide assets or transactions, or both, or otherwise make the offense, or
its extent, difficult to detect. Thus, commission of the offense from
outside the United States, or the use of corporate shells, fictitious
entities, foreign bank accounts, or similarly sophisticated actions
ordinarily indicate `sophisticated concealment.' ''.]
[Option 1
Section 2T1.1(b)(2) is amended by striking ``existence'' and
inserting ``offense''; by inserting ``its'' following ``or''; by
striking ``of the offense''; and by adding at the end the following new
sentence:
``If the resulting offense level is less than level 12, increase to
level 12.''.
The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is
amended in Note 4 by striking ``An'' and inserting ``The''; by striking
``be applied'' and inserting ``apply''; by striking ``where the
defendant used offshore'' and inserting ``if the offense involved the
use of foreign''; by inserting ``or foreign transactions'' following
``accounts''; and by inserting ``, to conceal the offense or its
extent'' following ``entities''.
Section 2T1.4(b)(2) is amended by striking ``existence'' and
inserting ``offense''; by inserting ``its'' following ``or''; by
striking ``of the offense'' following ``extent''; and by adding at the
end the following new sentence:
``If the resulting offense level is less than level 12, increase to
level 12.''.
The Commentary to Sec. 2T1.4 captioned ``Application Notes is
am
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