better in business owners to an unintended recipient his company ca services and it's this diversion of taxpayer money away from the government's targeted group that is in the heartland of the government benefit rule and this court should therefore reverse the district a set of caustic setter your honor the reason that this is different from garden variety procurement fraud is because congress has an intentionally set up a program to give a specific group of bidders a leg up in the  contracting process in this case the sable veterans who are disabled in the service of their country who own small businesses so that that really gets you out of the garden variety procurement fraud where the government it's simply for example contracting to have a building built they contract to have a building built they give the bid to the lowest responsible better and if that person defraud the government then it's a loss to the government but it's not you don't have th separate diversionary aspect that frustrates congress intent to the point where the the group that congress has targeted is no longer getting the benefit that congress and into intended for them to receive let me let me ask the question this way i think it's a difficult problem so i don't want you to think i think it's easy but let's just say for the sake of argument you lose given the way it's written from principles  or a why should i be that worried about this big gap in enforcement sentencing power i would think it's a pretty easy argument from a usa to get out there and say you know the guidelines don't really account for this we end up treating these cases just like fraud particular many cases and as a result the guidelines quite under represents an appropriate range and you should always go up  this kind of thing because it really is outrageous to steer our contracts from the very people congress wanted to get it so why why should be worried about any problems resulting it seems like it's an incredibly easy argument a fourteen months and the reason i point to the circuit case in austin that talks about the guidelines being a proxy for the seriousness of the fraud if the fraud in these sorts of cases is the hero because the government at the end of the day got a building that is a serious mis under representation of the seriousness of this fraud it will not have the proper deterrent effect a lot of times you'll be in a probationary sentence guideline range it'll be difficult to have in have folks even want to pursue these cases and investigate them in the st place so that it is it is a big deal for and again we would say that that is that's kind of plays into why this is a better fit for the government benefit rule than it is for the general because again you're talking about diverting it's the diversion of the benefits away from the targeted class what do you do with the even if it is under the government benefit rule let's run with a rd circuit response at the responses to that one if you look at the kind of the structure of three a through which is the three a of course is the general rule in the general is loss is the greater of the actual or segue largely to pick unitary harm then if you look at the structure of a through it's kind of telling the district court how to get to that how to get to the general rule how to get to the answer talks about definitions of actual loss intended los harm game estimation of losses kudos from lost then you get to three s and what three f is laying out is again going back to this awesome concept that the reason the purpose for the guidelines is to measure the severity of the fraud these are situations where three those are telling you how to get to the general rule three f starts with the specific rules of special rules and we would point specifically to three f five which we also raised as an alternative argument here where three of five says there is no offset two talks about diverting funds from its intended recipients to an intended recipient so once you divert here those eleven point eight million dollars even if you end up building the building then you've still diverted the funds it makes sense that there would be no offset in this narrow because because their seed company never should have done the work in the st place i have a nd way to answer judge murphy's question if i may that is even if you disagree and you think that one does in fact modif three f two because earth he would still not be entitled to an offset here for a couple of reasons three iwan talks about the goods or services provided to the victim prior to the the harm being being determined well there's two the government would present there's two victims here really there's the service disabled veteran program company that the actual one that didn't get the contract that those people got zero flowed out of that program and it's gone forever it is not it was not it was so we talk about restitution on the one instance we conceded in the district court that restitution would be zero but the two victims in this case the v we think thirty one does not modify three or two but even if you disagree with that we don't believe that an offset would be appropriate in this instance because neither of the victims got anything so there's nothing to offset and that goes back to really kind of unpack the term diversion once because there is he has committed fraud in the st instance to divert the stream of money that congress has intentionally set up to help this particular group of people that is in the heartland of what the government benefit rule was was set up to to prohibit and that's why it's in three f land because i counsel it but i've another question i know you're also relying on three  and the regulatory approval point and you know i get the argument you had to lie to get approved for the set aside program so i understand why you could call that regulatory approval what's your answer to the reality that that particular some permission refers to goods and not services and this looks like a case about services and in fact earlier up they have won on services well your honor we would i guess we would point to the g o p decision from the th circuit which was similar to this i don't i don't think i don't think that decision distinguish goods and services and that's why i'm asking the question well i guess i would i would it somewhat by analogy i would agree that what we're talking about is committing regulatory fraud in the st instance wait wait so the it's you get under three because goods are now just a services except when you're making well i mean i guess the this is a this is providing a building so i suppose that the contracting work that was done would be better in the services basket i agree with that but the the concept is that there was fraud in the inducement in the sense of to to qualify to bid on the contract you know it was just to make sure we're on the same page and i don't think the th circuit decision takes this point on the st thing is about services and the talks about fraudulent red dirt bikes people posing as licensed professionals and just not this case three arguably could be this case but it only refers to good i agree i mean i agree with that your honor i agree that i agree that this was this was a this is a service and we think that the g m think ok says it isn't is rule it gives us two things right it gives us a term government and then it gives us a list of examples grants loans in the program in our normal rules of statutory construction tell us that  example list restricts the term to things of that type and very well what do you what do you think of loans right i mean every banks get loans every day right there they're not getting loans in the goodness of their heart they're g loans because they expect a return sauce interest so you could a loan as a simply a contract and i think you are out of that many different than this private contract between the entity that needs to build something in the bill or it is a general loan generally are are do operate that with government loans operate different government loans the the government doesn't intrude a little market place as someone who's trying to maximize their profit circuit and look to the primary purpose not just of it is there any benefit to the recipient with the primary purpose in a in government loan programs to help small business loans there for the purpose of benefiting the recipient even a set aside contract programs the primary the starting place is what does the government want only from there does the government even enter can this be provided by a small business of any kind that government not from the other the other victim and then we would be after him because service was provided to the other but right so right so right there i think that doesn't quite work we can see below that there there was a loss to the the other service disabled veteran small businesses we think the proper measure of who has to them is lost profit not a lie why isn't lost revenues i mean that would be one theory that says the government that i mean what contractors to provide the particular services they produce goods on the open market none of those things are there's any requirement that it be but from a small business in fact in these needs instances where they were somewhat specialty hospital this is there's a limited number of vendors that you can buy these things from so the starting point was certainly service disabled veterans more business and that was the intent but it once the money flows through if it goes out the you know it's not all their money and you know the reason the reason i ask that question is it could get tricky to determine a loss i mean in this case is a good example of that yeah that just estimate based on difference  and said you know he agrees with your interpretation the system a classic government benefits situation but he's quite offended by what your client did and he's actually going to he's going to look at a range that actually is in the range of the oh well i'm eleven million dollars fraud and he decides that you know this and this whole thing was tonight in the summer and gee i'm not that worried about the government i'm really worried about this truly disabled veteran course and i would argue it's too high but i think let's be honest here i think you'd have a tough time on appeal arguing the that was an abuse of discretion to take the fall now he didn't take that into account to the degree the government wanted to but he did take it into what one thing that my colleague said which is that this was a loss to the so the service i program it wasn't there is no set aside program dollar part that sits out there and is user isn't use it going to certain groups well i didn't go to that group that's certainly true that certainly to have and i want to my my point is only the that the primary purpose again to the extent that there's a to me the reason i'm responding to that is i've got in my mind the primary purpose of the program like the hair skirts and in the th circuit right if there was a pool of money that was set aside for only that thing i think entire discussion of there's this example list of benefits there's the credits against last rule has not withstanding language it puts all that aside in a footnote that says it doesn't really change anything every circuit court of appeals that's decided this issue end incoming three you have a bar with no credit provided for the value of those items or services it doesn't apply for the reasons that were in our brief and the same questions  was not arbitrary given the evidence provided the government there is the burden in this context and they decided not to offer any evidence of fair market value lost profits they decided to go all or nothing so the defense offered some evidence to the district court could estimate lost profits i don't think the government can now really complain that there wasn't enough evidence to justify the district court's decision when it decided not to offer any  in thank you our four brief points and response st this was a government benefit that was the whole point of a fraud is for khazars he to avail himself of this government benefit set aside for specific small businesses owned and controlled by a service is a better and so one and i would point you to page twenty five of mr because there's brief where he concedes that loans and grants are not unilateral payments from the government to whoever they're going to do so that really kind of cuts out the legs of harris and martin the government require specific performance that grants the way her case from the support is an example of that and they require repayment of loans and the cost the cost base from th circuit is an interesting case in that regard because that was a fraud in a loan case where the government paid out about one hundred and seventy four thousand dollars at which point they figured out the fraud along was for two hundred thousand dollars and the loss amount for guidelines purposes was two hundred thousand dollars and the reason was even though the government had not paid out the rest the reason was is because of this diversionary idea the group the loan was supposed to go to a particular group of people who had been damaged you know by a natural disaster and it went to someone else and so it's this diversionary point which caused the loss amount to be the two hundred thousand dollars nd point the government contracts for buildings but here they weren't just simply contracting for a building they were contracting for a building built by a service disabled veteran o small business if they wanted to just contract for a building they could have simply put it out to the lowest responsible better that's not what they did rd point the notwithstanding three a piece which is which is what three fs not withstanding three  again two responses to that one if you read the guidelines the most logical rationale is that three a three d modify the general rule and then the special rules again are for times when the is not the right yardstick for the loss because loss disposed to be a measure of the severity of the fraud and the nd point is that the victim neither the victims in this case got a dime from mr  just go back briefly to three have five your honor we were talking about good versus services i would also point to the st sub portion of that which talks about services fraudulent rendered to the victim granted it speaks to licensed professionals but that would also be a strong analogy to what happened here i see i've got about twenty seconds left so just your questions we would ask that you reversed and remand for refinancing with directions to apply to government benefit rule with no offset