intended loss the court mistakenly found that intended lost was straightforward it was nothing more than a math problem of adding the two construction loan draws that were diverted to find intended lawsuit that finding is based on two major errors dealing with the meaning of intended loss under the commentary  first there is that the court failed to consider the value of the collateral in july two thousand and eight before arriving at intended loss and the second reason is that the intended loss of the commentary the court found that roger pollock purposefully stole the money from the bank by diverting the two construction lo proceeds and that as a result of that purposeful conduct knowing that he would default on the construction loan that he that equated to the purpose to  intend to loss to the bank the district court saw no room no gap between the purpose to take the money and the purpose to cause a loss and that's not permitted under the guidelines the colloquy between court and council is instructive the court failed to recognize any difference at all she found the distinction between the intent to commit the crime to purposely divert the proceeds and the intent to cause a loss to the bank as a fantasy even though it's sitting out here we have this valuable three story office building that was available to the victim as collateral she went on to say during the call when you say things that the bank should really get on the value of the collateral in two thousand and eight well i'm not saying that the bank should gamble you're on it but the the point is that mccormick teaches us that in a fraud case where a collateral is available to the victim that district court must consider the collateral in determining intended loss it's not discretionary when the collateral is available to the victim the court must consider the value of the collateral in the july two thousand and eight  did consider as she just said i can't it's too difficult to figure out what the value of the collateral was at the time of the foreclosures are two different concepts your honor there are two different dates that we're talking about in determining actual loss the date that the parties agreed to was the in april in two thousand and nine and there was a huge battle between the defense and the government as to the value of the collateral for purposes of calculating actual loss in april of two thousand and nine now we're talking about an earlier period we're talking about the commission of the offense in july of two thousand and eight what was the defendant's intent when he diverted those two loan proceeds and did he intend to inflict cuny ery harm on the bank there was no battle over that the government presented no evidence as to the value of the collateral in july of two thousand and eight no evidence as to the defendant's belief as to the subjective belief as to the value of the collateral in july in two thousand and eight apart from the defendant's testimony there was substantial evidence in the record that in july of two thousand and eight there was reason that pollock had a reason to believe that the collateral would cover the loss he had two point eight million dollars of his own money in this building the building was listed at nine point eight million dollars which is nine point eight million dollars by collier's which was far and above what was needed to satisfy the bank  its loss in addition at that time he had negotiated a valuable lease with legacy health care for the victim now the reason that the court did not credit mr pollock's testimony when he said he did not intend to cause harm to the bank circles back to her misinterpretation of what it means to intend to last to the bank and the higher intent that's required because the court yeah it's clear from the colloquy between court and counsel that when she used the word willfully if he willfully took those construction loan draw then it's implausible it's a fantasy to suggest that he didn't also intend to cause harm to the bank even though we have this valuable piece of collateral that the court has not even considered and the court is required to consider that collateral and mccormick in helping to determine them it informs the court it a woman ates the issue of of and intending to cause harm to the bank and the court ignored it completely so your point is that he didn't intend to cause any harm to the bank that's right and therefore there was no loss because they had that when they foreclose they had this collateral  well i mean they recouped all their money well that's you know it i think you're mixing actually intended last well i mean it's hard here not yet but sure at the end that's what happened i mean you know the third opinion that the court issued was that there were on restitution is that the bank had suffered no loss right and that she did not order any restitution because there was no actual loss but yeah the key is just trying to figure out if she was trying to comply with the guidelines yet the way the guidelines are set up she had to figure out whether or not there was an actual loss or whether there was and of course and she determined that where she determined that there was in my view that there was no actual loss because the government failed to prove by clear and convincing evidence which it was their burden that there was any loss so then she moved to intended last but the mistake on intended loss it's not enough to prove that he intended the crime that he purposefully sought to to divert these loan proceeds they have to find more than that that's that's the whole idea of the man a tower case in which the judge in this colloquy said that it was splitting hairs and that it was not credible the did didn't assist her in drawing the distinction between the intent to commit the crime he took the money on purpose and the intent to cause a loss to the bank look he he had every reason to believe based on this record and as he said that the that the building was worth far more than what the bank would be owed as a result of the fraud that he had committed the court's got to deal with that issue the court can't simply stop its analysis by saying well i find that he will flee took the money end of story i find it implausible and incredible to believe that when he did that he didn't intend to cause economic harm to the bank that's why we have this amendment what evidence was there as to the actual value of the collateral as of july two thousand  the evidence as a job i two thousand and eight the only evidence is the evidence that i restarted which was which was that he had two point eight million dollars of his own money in the bank that call years had listed the building for sale regionally for ten million and then reduced it to nine point eight million that he was negotiating a valuable lease with that health care company but the burden was on the government and the government offered no evidence as to the value of the building in july two thousand and eight no evidence as to the defendant subjective belief as to the value of the building you know that the court when it came time to you saying that the  to value is the collateral the government have the burden of getting an expert witness to come in and say the collateral as of july two thousand and eight was ten million dollars or whatever or four million dollars has to make a finding as to whether he is subject to belief but in this case the court refused to even consider the evidence in the record because it was so thin but the burden the burden  the government there's no evidence to suggest that he did not have a subjective belief as to the value of that collateral that it exceeded that the money he owed in july of two thousand and eight there isn't any evidence  the record that rebuts the evidence that was presented by the defendant and his testimony that he believed that the bank would not suffer a loss because of the collateral that was  in this case is the court never even got to that kind of an analysis because the court decided if he will fully took the two construction loan dross that was the end of the story i don't have to think any more about it intended lost now it's straight forward all i have to do is add those two because it is a fantasy it is implausible it is impossible to suggest as we did that just because he intended to take the money and that he did it on purpose that he didn't have the purpose to cause the bank a loss without ignoring completely this piece of collateral was out out there she has to deal with it wouldn't be sufficient for the judge to say when he took the money by fraud he didn't care one way or the other was the bank have a loss where there isn't any evidence to support that assumption we can come forward to give any well he did he give some subjective consideration of the value of the property well not only that he continued the at the record shows that he continued to negotiate the lease on behalf of the bank even after he defaulted on the loan and the evidence shows that the bank then adopted that lease and lease the second floor of the building tell a ghost see so there's just really no inference that could be drawn from the evidence that he didn't million dollars or more over the years this is not a con man this was a businessman who found himself in trouble and there simply that's an inference that the court could not draw but we didn't hear you good morning may please the court mr hope it scott bradford on behalf of united states the real issue or the heart of the issue before this court is whether it is left with a definite and firm conviction that judge brown the district court judge in this case made a mistake when it came to her findings on intended loss i think it's first and foremost important to point out for the record that the party stipulated that the value of the collateral should be determined as in april of two thousand  july two thousand and eight as mr holder just mentioned for sentencing purposes and when the district court judge did that there was a round of an evidentiary hearing in a couple of opinions that she issued she found that she could not in following the guidelines sufficiently determine the value of the collateral in order to make a finding on actual loss the government in its sentencing position at at that time put forward three alternative calculations actual loss intended loss and gain was that the government's position that the banks suffered an actual loss in its sentencing that submissions the court to the government did put forward that there that the bank suffered an actual loss of one point one million dollars or something like that yes and she just she rejected that she rejected that finding it was too speculative or establishing the value of the collateral at that time in two thousand and nine was too speculative and what is a district court judge to do when you're determining a sentence in two thousand and sixteen the fraud occurred in two thousand and eight and you had a lot of dynamic factors back then going on you had the defaults on the loan you had the real estate market crashing you had the the government to prove with the value of the colonial rule was it the burden is on the government to prove the value of the collateral and the government did put forward some evidence for the value of the collateral in april two thousand and nine we also  would it would have been the market value career under the guidelines it's the fair market value it's hard to determine and it's hard to discredit judge brown and determining what the fair market value was in two thousand and nine for a partially completed building and wouldn't you find with a firm she said she couldn't find it she could not value she could not find the value of the collateral in two thousand and nine there would you know when the big conducted the that was when the bank conducted the foreclosures correct yes or so usually the banks do that they do the market analysis we put that forward and that's in the record there were two figures put forward one was an as is value of around six million dollars and the other value put forward by and i think with the as is value there was also a eight million dollar value associated with the completion of the building in october so if it were bronzes she couldn't couldn't come to a conclusion does not mean that you can carry your burden of proof i want also highlight for the court that the government put three theories of loss forward to the district court of the time of sen actual loss intended loss and gain while the court said it couldn't find the value of the collateral and therefore could not find actual loss with sufficiency she turned to intended loss and again intended loss under the guidelines and in mccormack i disagree with mr hovis reading of mccormack under intended actual loss i think the court does or that its record does need to find the value of the collateral butter and under intended loss it doesn't necessarily need to do so and here the district court took a very discrete view of things she said let's look at those two payments that he diverted for his personal resort in mexico that he still loans and it's still benefiting from and then she went on to make findings of circumstantial evidence this is a fraud case and most fraud cases we're talking about circumstantial evidence as opposed to direct evidence and she said she found the appropriate and ten subjective intent for him for those two payments of six hundred seventy four thousand dollars because he had a knowledge of the building and lending and lien process he knew when he diverted that money he didn't have the means to repay it he knew the market was in freefall and he knew that the bank would be in builder cetera so based on those inferences that circumstantial evidence she found that he did have the subjective intent for the intended loss of the discrete six hundred seventy four thousand dollars that he diverted to his property in the so she had to arrive at some collateral value to see who he intended to cause the bank a loss i don't think that's the standard for intended loss under mccormick the this court has said we don't the defendant should not get a windfall based on market conditions and the court may in the appropriate case for intended loss consider the collateral but doesn't necessarily need to isn't that where where the district judge concludes they just can't figure out what the fair market value again what's a district court judge to do and twenty sixteen with all those dynamic conditions that occurred in two thousand and eight two thousand and nine and let's not forget but for the banks intervention to save its collateral there would have ben as noted in the victim impact statement and actual loss between three and five million dollars the bank intervened after it had already loan over five million dollars paid off the construction liens that were read were the result of the diversion one point five million dollars and had to win and invest an additional one million dollars to get the project completed so the fact that it has value now is because the bank intervened any value at the time as the judge found would have been speculating you had a crashing markets and you had an uncompleted building so and you're right your honor that was her progression in this case she started with first what's the standard she elevated it to clear and convincing and then she went through the guidelines no actual loss what's the proper intent intended last what's the proper intent and then as an alternative finding she found again his gain was also six hundred seventy four thousand that he diverted to mexico and is still benefiting from so i think that was my question and from your standpoint if you follow the guideline progression exactly a she was supposed to do i agree with that your honor that's the government i've see that i'm almost out of time your honor if there are no more questions the government would submit that judge brown the district court judge in this case correctly found the intended last year it was based on the evidence that was before her and let's not forget that the government that the guidelines don't require a perfect science here it's a reasonable estimate and the district court is in the best position to evaluate that loss given her unique position in this case to evaluate the evidence after the evidence or hearings and the briefings thank you very much thanking one minute for rebuttal and that  the standard isn't clear air the standard is that this court must engage and you know review with respect to the failure of the court to consider the collateral when determining intended loss engage in well you made a finding that she couldn't determine what the market value was the fair market value that's that's what he's saying that we would have to see that was clearly erroneous that's a factual determination the court also has to consider as a de novo review whether the court correctly concluded interpreted the meaning of intended loss and the definition of intended loss and our contention is that she erred when she equated the intent to take the to divert the funds to an intent to cause a loss thank you