Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-22-50142/USCOURTS-ca9-22-50142-0/pdf.json

Parties Involved:
Andrew Hackett
Appellant
United States of America
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, 

 v. 

ANDREW HACKETT, 

Defendant-Appellant.

No. 22-50142 

D.C. No. 

3:18-cr-03072-

TWR-1 

OPINION

Appeal from the United States District Court

for the Southern District of California

Todd W. Robinson, District Judge, Presiding

Argued and Submitted August 21, 2023

Pasadena, California

Filed December 18, 2024

Before: Marsha S. Berzon, Johnnie B. Rawlinson, and 

Daniel A. Bress, Circuit Judges.

Opinion by Judge Rawlinson;

Dissent by Judge Berzon

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2 USA V. HACKETT

SUMMARY*

Criminal Law

The panel affirmed the district court’s judgment in a case 

in which Andrew Hackett, a stock promoter, was convicted 

and sentenced for conspiracy to commit securities fraud and 

securities fraud in connection with the manipulative trading 

of a public company’s stock. 

The district court imposed a 16-level sentencing 

enhancement under the pre-November 1, 2024, version of 

U.S.S.G. § 2B1.1(b)(1)(I), which applies if the loss exceeds 

more than $1.5 million. (The 2024 versions of the guideline 

and commentary do not apply to this case.)

Hackett argued on appeal that the district court erred by 

following the commentary to § 2B1.1, which defines “loss” 

as the “greater of actual loss or intended loss.” U.S.S.G. § 

2B1.1 cmt. n.3(A). According to Hackett, this court should 

follow the framework articulated in Kisor v. Wilkie, 588 U.S. 

558 (2019), to determine whether § 2B1.1 is genuinely 

ambiguous as it pertains to the definition. In Hackett’s view, 

because “loss” does not include intended loss in its ordinary 

meaning, applying intended loss to enhance his sentence 

impermissibly expanded the guideline. 

The panel reviewed for plain error because Hackett’s 

objection to the district court’s loss calculation was not 

sufficiently specific to preserve de novo review. 

* This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.

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USA V. HACKETT 3

The panel held that the district court’s reliance upon the 

definition of “loss” set forth in the commentary withstands 

plain error review because any error was not clear or obvious 

given this court’s precedent recognizing both actual and 

intended loss, and because there is a lack of consensus 

among the circuit courts on this issue.

In a concurrently filed memorandum disposition, the 

panel addressed Hackett’s additional challenges to his 

conviction and sentence.

Judge Berzon dissented. She wrote (1) Hackett’s 

challenge on appeal includes a narrower argument than a 

generic challenge to the “intended loss” commentary, in that 

he also argues that the term “intended loss” does not include 

a loss that was discussed or hoped for but was never 

attempted to be implemented; (2) regardless of whether 

Hackett preserved a wholesale challenge to any inclusion of 

intended loss in § 2B1.1 calculations, he certainly preserved 

a narrower objection urging a substantial-action threshold to 

determine intended loss; (3) as to that argument, if not to the 

broader one, de novo review is appropriate; and (4) that 

argument is potentially meritorious, although its application 

to this case cannot be determined without further district 

court consideration.

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4 USA V. HACKETT

COUNSEL

Carlton F. Gunn (argued), Law Office of Carlton F. Gunn, 

Los Angeles, California, for Defendant-Appellant. 

Zachary Howe (argued) and Mark R. Rehe, Assistant United 

States Attorneys; Daniel E. Zipp, Assistant United States 

Attorney Chief, Appellate Section, Criminal Division; 

Randy S. Grossman, United States Attorney; United States 

Department of Justice, Office of the United States Attorney, 

San Diego, California; Aaron P. Arnzen, Bottini & Bottini 

Inc., La Jolla, California; for Plaintiff-Appellee.

OPINION

RAWLINSON, Circuit Judge: 

Andrew Hackett (Hackett) appeals his conviction for one 

count of conspiracy to commit securities fraud in violation 

of 18 U.S.C. §§ 371, 981(a)(1)(C), and 28 U.S.C. § 2461(c); 

and one count of securities fraud in violation of 15 U.S.C. 

§§ 78j(b), 78f(f), 18 U.S.C. § 981(a)(1)(C), 28 U.S.C. 

§ 2461(c), and 17 C.F.R. § 240.10b-5. Hackett also appeals 

the forty-six months of imprisonment imposed following his 

conviction. Hackett specifically challenges the district 

court’s reliance on the commentary to United States 

Sentencing Guidelines (U.S.S.G.) § 2B1.1, which defines 

loss as “the greater of actual loss or intended loss.” U.S.S.G. 

§ 2B1.1 cmt. n. 3(A).1 

1 As we discuss later, the Sentencing Commission recently amended the 

relevant Guidelines provision and commentary. Those revisions do not 

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USA V. HACKETT 5

We have jurisdiction under 28 U.S.C. § 1291, and we 

affirm the judgment of the district court.2

I. BACKGROUND

Kevin Gillespie (Gillespie) was the founder and CEO of 

First Harvest, an investment bank. First Harvest primarily 

consulted with cannabis companies that were preparing to go 

public or to raise capital.3 In 2016, First Harvest became a 

publicly traded company. Gillespie consulted with Annetta 

Budhu (Budhu), the owner of Baywall, Inc., in taking First 

Harvest public. Baywall, Inc. was compensated 200,000 

restricted shares4 in First Harvest in exchange for Budhu’s 

assistance. 

Gillespie testified that the company began to lose 

approximately $125,000 a month after going public. 

According to Gillespie, the company was “[s]teadily raising 

capital month in and month out.” But on several occasions, 

Gillespie acquired toxic debt.5 

Around the time Gillespie was taking on toxic debt, 

Budhu introduced Gillespie to Hackett, a Canadian stock 

apply to this case. Unless otherwise noted, all citations of the Guidelines 

and commentary in this opinion are of the versions in effect prior to the 

recent 2024 amendments.

2 In a memorandum disposition filed concurrently with this opinion, we 

address Hackett’s additional challenges to his conviction and sentence. 

3 First Harvest was subsequently renamed Arias Intel (Arias). 

4 The restricted shares could not be sold for 180 days after First Harvest 

went public. 

5 Gillespie described toxic debt as “like taking a very, very bad loan.” 

According to Gillespie, if the debt is not repaid, the debt holder will 

continuously sell shares of the company on the open market “until it’s 

basically worthless.” 

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6 USA V. HACKETT

promoter. Gillespie and Hackett engaged in several 

telephone discussions regarding successful stocks that 

“[Hackett’s] group had participated in.” Gillespie 

researched one of the stocks and described it as a “pumpand-dump scheme.”6

Through his company Free Life Investments, Hackett 

agreed to loan First Harvest $300,000 in exchange for a 

convertible promissory note. According to the promissory 

note, Hackett would receive 750,000 shares at $0.40 per 

share plus interest if after one year Harvest failed to repay 

Hackett $300,000 plus five percent interest. But the 

agreement was not executed. According to Gillespie, 

Hackett’s “money was [not] available and [Hackett’s 

partner] had capital available.” So First Harvest entered into 

an agreement with Hackett’s partner, Robert Farrill (Farrill) 

that was “substantially similar” to the agreement with 

Hackett. Farrill wired $300,000 to First Harvest and 

converted the promissory note into 750,000 shares.7 

Hackett also contracted with Budhu to receive Baywall’s 

restricted shares. Budhu then contacted Clear Trust, LLC 

(Clear Trust), a stock transfer agent, and requested that Clear 

6 A pump-and-dump scheme “involve[s] the touting of a company’s 

stock . . . through false and misleading statements to the marketplace.” 

United States v. Zolp, 479 F.3d 715, 717 n.1 (9th Cir. 2007) (internal 

quotation marks omitted). “After pumping the stock, [f]raudsters make 

huge profits by selling their cheap stock into the market.” Id. (citations 

omitted). The critical steps in the “pump-and-dump scheme” are control, 

pump, and dump. 

7 Although Hackett was no longer a party to the agreement, he remained 

involved through telephone conversations with Gillespie. Hackett 

encouraged Gillespie to use the $300,000 to invest in a marketing plan, 

and also suggested that Gillespie file an “S-1 [form] so that the shares 

would become free trading quickly.”

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USA V. HACKETT 7

Trust transfer 200,000 shares of First Harvest stock to Free 

Life Investments, Hackett’s company, and lift the transfer 

restrictions under Rule 144 of the Securities Exchange Act 

of 1934.8 Prior to lifting the restrictions on sale of the 

Baywall shares, Clear Trust received a share purchase 

agreement for 200,000 shares of stock between Baywall, 

Inc., as seller and Free Life Investments as purchaser; a legal 

opinion; and a seller’s representation letter from Hackett on 

behalf of Free Life Investment. In the representation letter, 

Hackett agreed to comply with Rule 144. 

After the restrictions were lifted by Clear Trust, Hackett 

promoted First Harvest stock, and recruited others to 

promote First Harvest stock. Hackett and his co-defendants 

paid Stellar Media Group, LLC to develop and distribute 

newsletters promoting First Harvest and Arias stock. 

Subject lines included text such as: “HVST stock has expert 

analysts drooling. Profit now,” “Experts love this stock. It 

could help you profit by 291%,” “ASNT stock could net you 

the biggest gains of 2018,” and “ASNT stock is in a position 

to gain up to 1,880%.” 

8 Under Rule 144, a shareholder must present the shares, a seller’s 

representation letter that the shareholder will comply with Rule 144 

when selling shares, and a legal opinion that the shareholder is qualified 

to resell under Rule 144. In the representation letter, the seller represents 

that: the resell of the shares would comply with Rule 144 and would be 

sold “within a reasonable period of time.” The seller also represents that 

(1) no payment was made “in connection with the offer or sale of the 

Shares to any person or entity except any customary broker’s 

commission or dealer’s charges,” (2) there was no solicitation of or 

arrangement “for the solicitation of orders to buy in anticipation of or in 

connection with the proposed sale,” (3) the seller did not act “in concert 

with any person in selling the Shares,” and (4) the seller did not 

“engage[] in a plan with anyone else to dispose of the Shares.” See Note 

to 17 C.F.R. § 230.144(f)(1). 

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8 USA V. HACKETT

Hackett also used call rooms to promote stock purchases. 

David Wolfson (Wolfson) was the owner of several call 

rooms in California, and was associated with the owner of a 

call room located in the Philippines. Wolfson described a 

call room as “an office with agents, salespeople, openers, 

and closers who market and sell various things.” According 

to Wolfson, the sales agents used “predictive dialer” 

software that called “10, 12 lines at a time per person until it 

reached a contact” from a list of credited investors that 

Wolfson bought “from lead brokers.” Hackett introduced 

Wolfson to Liana Millhouse (Millhouse) to work with 

Wolfson. Hackett informed Wolfson that “most of the stock 

[Hackett] was successful in selling came as a result of Ms. 

Millhouse’s work.” Wolfson acknowledged that sales 

agents would tout the pitched stock with statements that 

were not always “completely honest.” For example, agents 

represented that the stocks had favorable growth, price, and 

appreciation potential. When an investor expressed interest 

in buying shares, the sales agents would notify Wolfson, and 

he would alert Millhouse of a prospective purchaser. 

Millhouse would “give a specific price to execute the trade.” 

The price provided by Millhouse was often higher than the 

market price. Wolfson and other sales agents were paid 

commissions for stock sales. 

The activities of Hackett and his co-defendants were 

exposed by FBI informant, Michael Forster (Forster), who 

was involved with many pump-and-dump schemes. In 2017, 

Forster arranged a meeting at the airport with an unknown 

individual. When Forster arrived, he was met with an arrest 

warrant from the FBI. Forster was offered a cooperation 

agreement, requiring him “to begin recording and capturing 

all correspondence with anyone and everyone involved in 

pump and dumps, with stock fraud.” Forster provided all 

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USA V. HACKETT 9

recordings, text messages, and emails with the co-defendants 

to the FBI. 

Hackett and his co-defendants were subsequently 

charged with one count of conspiracy to commit securities 

fraud, and one count of securities fraud. The indictment 

alleged that Hackett and his co-defendants promoted and 

recruited others to promote Arias and its stock “in order to 

artificially avoid the deflation of, maintain the price of, and 

inflate the share price of Arias stock.” The allegations 

include Hackett’s participation in the manipulative trading 

of Arias stock, and “engag[ing] call room operators to 

contact potential investors and convinc[ing] them to 

purchase Arias stock, in exchange for a portion of the 

investments made by those investors.” Once the stock was 

artificially inflated through these tactics, Hackett sold the 

stock in the open market. Hackett was convicted on both 

counts. 

The district court imposed a sixteen-level sentencing 

enhancement under § 2B1.1(b)(1). The court found that 

Hackett owned 550,000 shares and intended to sell each 

share at four to five dollars a share. The district court used 

the lower amount to calculate an intended loss amount of 

$2.2 million. Hackett’s counsel objected to the court’s 

calculation of the amount of loss, but did not object that 

intended loss was a legally invalid way to calculate the 

amount of loss. The commentary to § 2B1.1(b)(1) defines 

loss as “the greater of actual loss or intended loss.” See 

U.S.S.G. § 2B1.1 cmt. n. 3(A). The district court obviously 

relied upon the commentary to determine that the loss caused 

by Hackett was “the intended loss amount had the venture 

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10 USA V. HACKETT

been successful.”9 After applying a sixteen-level 

enhancement, the district court sentenced Hackett to fortysix months of imprisonment. Hackett filed a timely appeal.

Our colleague in dissent posits that “Hackett’s challenge 

on appeal to his sentence includes a narrower argument than 

a generic challenge to the intended loss commentary. 

Hackett also argues that the definition of loss [in the 

Guideline itself] . . . does not include intended loss that never 

takes place, at least in contexts such as that here.” Dissenting 

Opinion, p. 25 (internal quotation marks omitted) 

(alterations in the original). However, a review of the entire 

paragraph from Hackett’s brief confirms that Hackett’s 

challenge is indeed to the guideline commentary definition 

of loss. The entire paragraph reads:

This [Kisor v. Wilkie, 588 U.S. 558 (2019)] 

makes guideline commentary authoritative 

only when the actual guideline is ‘genuinely 

ambiguous.’ The definition of ‘loss’ may 

vary in some respects, in some contexts, but 

it does not include ‘intended loss’ that never 

takes place, at least in contexts such as that 

here [United States v. Banks, 55 F.4th 246 

(3d Cir. 2022)] was correct in holding the 

‘intended loss’ application note 

9 Our colleague in dissent takes the position that “the district court did 

not refer to the Guidelines’ commentary to § 2B1.1.” See Dissenting 

Opinion, p. 24. However, the district court’s use of the phrase “intended 

loss” mirrors the language used in Comment Note 3(A).

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USA V. HACKETT 11

impermissibly expands the guideline for 

‘loss,’ and this Court should follow Banks.

Read in its entirety the paragraph, selectively quoted 

from Hackett’s brief in the Dissenting Opinion, 

unmistakenly presents a challenge to the Guideline 

Commentary.

The balance of the Dissenting Opinion relies on an 

analysis that was not included in Hackett’s briefing or 

mentioned during his oral argument. Accordingly, we 

briefly make three additional points in response:

1. Hackett’s fraudulent scheme was not “contemplated 

but unimplemented.” Dissenting Opinion, p. 32. As 

previously detailed, Hackett orchestrated a classic “pumpand-dump” scheme.

2. Tellingly, the Dissenting Opinion does not cite one 

case that has adopted our dissenting colleague’s proferred 

interpretation of § 2B1.1 to include only “losses tethered to 

a defendant’s substantial actions.” Dissenting Opinion, p. 

29.

3. The Sentencing Commission recently amended 

§ 2B1.1 to move the “intended loss” language from the 

commentary into § 2B1.1 itself. United States Sentencing 

Guidelines Manual, November 1, 2024, § 2B1.1(b)(1), 

Notes to Table (A) (“Loss is the greater of actual loss or 

intended loss”). We acknowledge that the 2024 amendment 

does not apply to Hackett’s sentencing. However, we 

include discussion of the amendment because the 

amendment supports our position that the intended loss 

calculation challenged by Hackett and our dissenting 

colleague is not inconsistent with the Guidelines’ “overall 

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12 USA V. HACKETT

structure and purpose.” Dissenting Opinion, p. 31. 

Importantly, the Sentencing Commission explained that the 

amendment to § 2B1.1 was made due to the “conflicting 

court decisions” following the Supreme Court’s decision in 

Kisor, and to disavow the Third Circuit’s approach as 

articulated in Banks. See United States Sentencing 

Commission Guidelines Manual 2024, Supplement to 

Appendix C, November 1, 2024. This explanation 

undermines Hackett’s argument that the intended loss 

calculation is incompatible with other provisions of the 

Guidelines.

II. DISCUSSION

A. Standard of Review

Section 2B1.1(b)(1) of the Sentencing Guidelines directs 

district courts to increase a defendant’s offense level “[i]f the 

loss exceeded $6,500.” It then provides a graduated 

schedule for increasing the offense level if the losses exceed 

certain amounts. Relevant here, if the loss exceeds more 

than $1.5 million, a 16-level enhancement applies. See 

U.S.S.G. § 2B1.1(b)(1)(I). The Guidelines do not define 

“loss.” But commentary in the Guidelines’ Application 

Notes states that “loss is the greater of actual loss or intended 

loss.” U.S.S.G. §2 B1.1 cmt. n. 3(A). On appeal, Hackett 

argues that under Kisor “intended loss” is not a permissible 

interpretation of “loss” as used in the Guidelines.

The parties disagree on the standard of review that we 

should apply to this question. The Government contends 

that we should review for plain error. Hackett argues that 

we should review de novo. Hackett maintains that he raised 

an objection “to the presentence report’s loss calculation and 

methodology.” He also maintains that “even [if] there was 

not a sufficient objection,” this issue is a question of law and 

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USA V. HACKETT 13

the government would not be prejudiced if we decide the 

issue.

Under the “contemporaneous-objection rule . . . a party 

must inform the court – when the court ruling or order is 

made or sought – of the action the party wishes the court to 

take, or the party’s objection to the court’s action and the 

grounds for that objection. . . .” United States v. Klensch, 87 

F.4th 1159, 1162 (9th Cir. 2023) (citations, alteration, and 

internal quotation marks omitted). “Sentencing objections 

must have a specific substantive basis that provides the 

district court with an opportunity to address the error in the 

first instance and allows this court to engage in more 

meaningful review.” Id. (citation and internal quotation 

marks omitted). 

Hackett’s objection to the district court’s loss calculation 

was not sufficiently specific to preserve de novo review. See 

United States v. Grissom, 525 F.3d 691, 694 (9th Cir. 2008).

In his objections to the calculations in the Presentencing 

Report (PSR), Hackett did not take issue with using intended 

loss as a measure of loss. He instead argued that the 

calculation in the PSR of intended loss in the amount of 

$4,750,000 was flawed. He maintained that he owned 

550,000 shares rather than 950,000 shares of stock, and that 

the price should have been less than five dollars per share. 

There was thus no objection to use of intended loss, as set 

forth in the Application Note, but to the amount arrived at 

after application of that loss metric. At the sentencing 

hearing, Hackett made the same objection to the 

Government’s application of market-share analysis to 

calculate intended loss. 

At the sentencing hearing, Hackett likewise did not argue 

that intended loss was a legally improper measure of loss, 

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14 USA V. HACKETT

whether under Kisor or otherwise. Nor did Hackett clearly 

advocate for a loss calculation based on the actual losses of 

the victims, as opposed to a loss amount based on “the actual 

market price at the time of sale,” which was effectively 

another way to calculate loss based on intended loss. The 

government had argued in its sentencing memorandum that 

actual loss would be difficult to determine because Hackett 

“hid his transactions in nominee and/or offshore accounts.” 

Hackett did nothing to rebut this statement at the sentencing 

hearing.

And far from maintaining that intended loss was an 

improper metric of loss, Hackett’s counsel, if anything, 

accepted that intended loss could be an appropriate measure 

of loss. Among other things, counsel stated that “there 

seems to be a number of different manners in which one can 

try to calculate loss,” and that “there are different ways to 

calculate the intent to view the intent in these types of deals.” 

Counsel’s argument that “[t]he actuality of what happened 

here was I think even more important,” referred to counsel’s 

central argument at the sentencing hearing: that the district 

court should use the actual market price at the time of the 

sale to calculate loss, as the government had endorsed in the 

cases of Hackett’s co-defendants. But Hackett’s argument 

in favor of avoiding disparities among co-defendants is 

distinct from the claim he now advances on appeal: that 

“intended loss” is not a permissible interpretation of 

Guidelines “loss” under Kisor.

Hackett points out that we have said that “[i]t is claims 

that are deemed waived, or forfeited, not arguments.” 

United States v. Kirilyuk, 29 F.4th 1128, 1135 (9th Cir. 

2022). But we do not think it can be fairly said on this record 

that Hackett is advancing the same claim that he did in the 

district court. And unlike in Kirilyuk, Hackett at sentencing 

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USA V. HACKETT 15

accepted the premise that the interpretation of “loss” in the 

Guidelines’ Application Notes, which included intended 

loss, could be a permissible reading of “loss” in U.S.S.G. 

§ 2B1.1(b)(1). Kirilyuk is therefore distinguishable. In 

short, because Hackett did not sufficiently object to the 

district court’s reliance on the commentary to determine the 

loss amount for the enhancement, we conclude that our 

review is for plain error. See id.

Finally, we reject Hackett’s argument that we should 

exercise our discretion to review the Kisor argument de 

novo. See United States v. McAdory, 935 F.3d 838, 841-42 

(9th Cir. 2019) (explaining that we are “not limited” to plain 

error review when the question is purely legal and the failure 

to raise it below would not prejudice the opposing party). As 

we explained above, Hackett did essentially nothing to 

develop in the district court the factual basis for an actual 

loss calculation— a factual, not legal issue. And had Hackett 

more properly objected under Kisor, the government could 

have offered, and the district court could have considered, 

alternative ways of calculating loss. Undertaking that 

analysis now, so many years after the original sentencing, 

would prejudice the government. For all these reasons, plain 

error review remains the most appropriate on this record.

B. Plain Error Review

“A trial court commits plain error when (1) there is error, 

(2) that is plain . . ., and (3) the error affects substantial 

rights.” United States v. Ramirez-Ramirez, 45 F.4th 1103, 

1109 (9th Cir. 2022) (citation and alteration omitted). Error 

constitutes plain error when it is so obvious that a district 

court judge should be able to avoid the error without the 

benefit of an objection. See United States v. Klinger, 128 

F.3d 705, 712 (9th Cir. 1997), as amended (citation omitted). 

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16 USA V. HACKETT

“If those conditions are met, we have discretion to notice 

such error, but only if the error seriously affects the fairness, 

integrity, or public reputation of judicial proceedings.” 

Ramirez-Ramirez, 45 F.4th at 1109 (citation and internal 

quotation marks omitted). 

Hackett argues that the district court erred by following 

the guideline commentary, which defines “loss” as the 

“greater of actual loss or intended loss.” § 2B1.1 cmt. 

n.3(A).10 According to Hackett, the commentary’s 

definition expands “beyond the ordinary meaning of loss.” 

Hackett insists that we follow the framework articulated in 

Kisor to determine whether § 2B1.1 is genuinely ambiguous 

as it pertains to the definition of “loss.” In Hackett’s view, 

because “loss” does not include intended loss in its ordinary 

meaning, applying intended loss to enhance his sentence 

impermissibly expanded the guideline. 

In Kisor, the Supreme Court instructed courts to 

“exhaust all the traditional tools of construction” to 

determine whether a regulation is “genuinely ambiguous” 

after analyzing its “text, structure, history, and purpose.” 

588 U.S. at 575 (citation and internal quotation marks 

omitted). If after exhausting these “tools of construction,” 

id., the regulation is not “genuinely ambiguous,” no 

deference should be given to the agency’s interpretation of 

the regulation. Id. 

10 Under U.S.S.G. § 2B1.1 cmt. n.3(A)(i), “actual loss” is the 

“reasonably foreseeable pecuniary harm that resulted from the offense.” 

“Intended loss” is “the pecuniary harm that the defendant purposely 

sought to inflict,” including “intended pecuniary harm that would have 

been impossible or unlikely to occur (e.g., as in a government sting 

operation, or an insurance fraud in which the claim exceeded the 

insurance value).” Id. at cmt. n.3(A)(ii). 

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USA V. HACKETT 17

We have not previously held that the term “loss” under 

§ 2B1.1 is genuinely ambiguous. Rather, we have often 

recognized “intended loss” as part and parcel of the plain 

meaning of the term “loss.” See United States v. Tulaner, 

512 F.3d 576, 578 (9th Cir. 2008) (“In determining the 

amount of the loss, the greater of the actual or intended loss 

applies. . . .”) (citing U.S.S.G. § 2B1.1 cmt. n. 3(A)). See 

also United States v Popov, 742 F.3d 911, 915 (9th Cir. 

2014) (“Section 2B1.1 of the Guidelines provides that the 

applicable loss is the greater of the actual loss or the intended 

loss. . . .”) (citation omitted); United States v. Jenkins, 633 

F.3d 788, 808 (9th Cir. 2011) (“Typically, loss is the greater 

of actual loss or intended loss . . .”) (citation omitted). 

We concluded in United States v. Castillo, 69 F.4th 648, 

657 (9th Cir. 2023), that the analysis in Kisor must be 

conducted when applying Stinson v. United States, 508 U.S. 

36 (1993). In Stinson, the Supreme Court held that 

Sentencing Guidelines commentary “that interprets or 

explains a guideline” is “authoritative unless it violates the 

Constitution or a federal statute, or is inconsistent with, or a 

plainly erroneous reading of, that guideline.” 508 U.S. at 38. 

But Castillo held that “[the] more demanding deference 

standard articulated in Kisor applies to the Guidelines 

commentary.” Castillo, 69 F.4th at 655.

In a recent opinion, decided before Castillo, we applied 

Stinson to determine that a $500-per-credit card loss 

multiplier set forth in the commentary to § 2B1.1 is 

“inconsistent with, or a plainly erroneous reading of” “loss” 

under that Guideline. Kiriliyuk, 29 F.4th at 1136-37 (citation 

omitted). We clarified that, while “dictionary definitions for 

‘loss’ may vary, . . . [n]o reasonable person would define the 

loss from a stolen credit card as an automatic $500 rather 

than a fact-specific amount.” Id. at 1138 (citation, alteration, 

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18 USA V. HACKETT

and internal quotation marks omitted). We specifically held 

that “loss” cannot mean a pre-determined, contrived amount 

with no connection to the crime committed. Id. (citation and 

internal quotation marks omitted). Rather, “§ 2B1.1 is 

driven by the amount of loss caused by the crime.” Id. 

(citation and internal quotation marks omitted) (emphasis in 

the original). We determined that application of the “$500-

per-card multiplier” as provided in the guideline 

commentary “operate[d] as an enhanced punishment, rather 

than an assessment of ‘loss’ tied to the facts of the case.” Id. 

(emphasis in the original).11 

In Kiriliyuk, we did not specifically address whether the 

commentary’s definition of “loss” as including both actual 

and intended loss impermissibly expanded that term as a 

matter of law. Id. at 1138. But, the opinion did reference 

both actual and intended loss. See id. (“As determined by 

the Probation Office, Kiriliyuk’s conspiracy involved $1.4 

million in actual losses or $3.4 million in intended 

losses. . . .”). This inclusion is consistent with our 

established practice of referencing both actual loss and 

intended loss when interpreting the term “loss.” Tulaner, 

512 F.3d at 578; Popov, 742 F.3d at 915; Jenkins, 633 F.3d 

at 808. 

In sum, we have not grappled with the effect of the Kisor

decision on the deference we have afforded the definition of 

“loss” in the guideline commentary. We decline to do so 

now because any error was not clear or obvious given our 

precedent recognizing both actual and intended loss, and 

because there is a lack of consensus among the circuit courts 

on this issue. See United States v. Ghanem, 993 F.3d 1113, 

11 Hackett has never argued that the assessment of loss in his case was 

not “tied to the facts of the case.” Id. 

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USA V. HACKETT 19

1131 (9th Cir. 2021) (“[An error] cannot be plain if there is 

no controlling authority on point and where the most closely 

analogous precedent leads to conflicting results.”) (citations 

and internal quotation marks omitted). 

Our sister circuits have varied in their determinations of 

whether Kisor permits application of the definition of “loss” 

set forth in the commentary. In Banks, 55 F.4th at 257, the 

Third Circuit reasoned that “[t]he ordinary meaning of ‘loss’ 

in the context of § 2B1.1 is ‘actual loss.’” The Third Circuit 

focused on the absence of the term “intended loss” in the 

Guideline as an indication “that the Guideline does not 

include intended loss.” Id. (footnote reference omitted). The 

Third Circuit also relied on dictionary definitions of the term 

“loss.” See id. at 257-58. The Third Circuit did, however, 

acknowledge that “loss” could mean “intended loss” when 

taken “in context.” Id. at 258. However, the Third Circuit 

observed that “in the context of a sentence enhancement for 

basic economic offenses, the ordinary meaning of the word 

loss is the loss the victim actually suffered.” Id. (footnote 

reference and internal quotation marks omitted). The Third 

Circuit “accord[ed] the commentary no weight” because in 

the Third Circuit’s view, “the commentary expands the 

definition of loss” by including intended loss. Id. (internal 

quotation marks omitted). 

In contrast, the Sixth Circuit deferred to the 

Commission’s interpretation of “loss” because the term 

“[fell] within [the] zone of ambiguity” of § 2B1.1.” United 

States v. You, 74 F.4th 378, 397-98 (6th Cir. 2023) (internal 

quotation marks omitted). The Sixth Circuit concluded that 

“the definition of loss has no single right answer,” and 

relying solely on the definition of the word “loss” does not 

sufficiently engage in the Kisor analysis. Id. (citation 

omitted). The Sixth Circuit disagreed with the Third 

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20 USA V. HACKETT

Circuit’s analysis in Banks. The Sixth Circuit criticized 

Banks as “attempt[ing] to impose a one-size-fits all 

definition” “without consulting the traditional tools of the 

commentary’s structure, history, and purpose.” Id. at 397 

(citations and internal quotation marks omitted). The Sixth 

Circuit explained that the inclusion of intended loss is 

consistent with the Guidelines’ purpose of “assess[ing] the 

seriousness of the offense and the defendant’s relative 

culpability.” Id. (citations and internal quotation marks 

omitted). The Sixth Circuit also reasoned that excluding 

intended loss would result in “vastly different sentences for 

similarly culpable defendants.” Id. at 398. The Sixth Circuit 

expressly linked its analysis to the defendant’s situation, 

observing that “[f]or someone like [the defendant], who was 

arrested before causing actual loss, including losses that she 

intended is a reasonable way to gauge her culpability.” Id. 

One month later, in United States v. Smith, 79 F.4th 790, 

798 (6th Cir. 2023), the Sixth Circuit reiterated that the term 

“loss” is “ambiguous.” In Smith, the Sixth Circuit undertook 

to further explain why the term “loss” is ambiguous. Id. at 

797. The Sixth Circuit referenced “Kisor’s demand that [a 

court] look at the whole structure of the Guidelines” in 

assessing ambiguity. Id. at 798. Included within that 

structure is “§ 1B.1.3, which is the relevant-conduct 

guideline.” Id. The Sixth Circuit emphasized that “[t]he 

relevant-conduct guideline instructs the court to consider all 

harm that resulted from the acts and omissions of the . . . 

undertaken criminal activity and all harm that was the object 

of such acts and omissions.” Id. (citation, alteration, and 

internal quotation marks omitted) (emphasis in the original). 

The Sixth Circuit observed that “[the] use of the term ‘harm’ 

in the relevant-conduct guideline clearly contemplates harm 

that actually occurred and harm that the person intended to 

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USA V. HACKETT 21

cause.” Id. (internal quotation marks omitted) (emphasis in 

the original). The court explained that “[t]he context of the 

Guidelines therefore renders the term ‘loss’ in [§ 2B1.1] 

ambiguous.” Id.

The Tenth Circuit resolved a similar issue in United 

States v. Maloid, 71 F.4th 795, 808 (10th Cir. 2023), by 

focusing on whether Kisor overruled Stinson. The Tenth 

Circuit explicitly held that “[t]he Supreme Court has not 

abrogated Stinson or the deference we have routinely given 

the Guidelines’ commentary.” Id. at 813.12 According to 

the Tenth Circuit, Kisor is a “middle-ground approach to 

govern the relationship between the Judiciary and executive 

agencies.” Id. at 806. The court observed “that Kisor had 

everything to say about executive agencies and precious 

little about the Sentencing Commission,” which is “a critical 

distinction.” Id. The court emphasized that the Commission 

is different from executive agencies because “it speaks as an 

agent of the Judiciary to help judges properly sentence 

defendants.” Id. at 807. In contrast, agencies address 

“policy concerns as agents of the President.” Id. (citation 

and internal quotation marks omitted). 

The First, Fourth, and Eleventh Circuits have addressed 

under plain error review whether “loss” in § 2B1.1 

encompasses intended loss. In United States v. Gadson, 77 

F.4th 16, 20 (1st Cir. 2023), the First Circuit determined that 

even if Kisor abrogated Stinson, no binding precedent 

indicated that the district court’s reliance on the Guideline 

commentary’s definition of the term “loss” was plainly 

12 In an unpublished opinion, the Tenth Circuit concluded that Maloid

foreclosed the argument that the term “loss” in § 2B1.1 encompasses 

only “actual loss.” See United States v. Foreman, No. 22-1255, 2024 

WL 548644 at *1-*2 (10th Cir. Feb. 12, 2024).

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22 USA V. HACKETT

erroneous. The First Circuit observed that the Banks 

decision did not establish plain error because the Third 

Circuit had “expressed no opinion as to whether its 

interpretation was ‘clear or obvious’” and had indicated that 

its holding applied only “in certain contexts.” Id. at 21. The 

First Circuit also reasoned that, like the Ninth Circuit, it 

“regularly” used both actual loss and intended loss to 

calculate “the harm (both actual and intended) inflicted by 

the fraudster’s nefarious activities, and that intended loss is 

frequently a better measure of culpability than actual loss.” 

Id. (citations and internal quotation marks omitted). 

In an unpublished disposition, the Fourth Circuit took a 

similar approach, determining that the district court did not 

plainly err by affording deference to the guideline’s 

commentary, because there is no “settled law of the Supreme 

Court or [the] circuit.” United States v. Limbaugh, No. 21-

4449, 2023 WL 119577 at *4 (4th Cir. Jan. 6, 2023) (citation 

omitted). The Fourth Circuit declined to “say that the district 

court committed a clear or obvious error in treating as valid 

longstanding Guidelines commentary to which the 

defendant did not object.” Id. (internal quotation marks 

omitted). The Fourth Circuit concluded that circuit authority 

provides no “robust consensus” that would “allow [the court] 

to label as plain any error committed here.” Id. (citation and 

internal quotation marks omitted). 

Similarly, the Eleventh Circuit held that its precedent 

“did not specifically and directly resolve the question of 

whether § 2B1.1’s definition of loss is ambiguous.” United 

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USA V. HACKETT 23

States v. Verdeza, 69 F.4th 780, 794 (11th Cir. 2023) 

(alteration and internal quotation marks omitted).13 

After reviewing these cases, we feel comfortable in our 

conclusion that there is no consensus among the circuits on 

this issue.

III. CONCLUSION

The district court did not plainly err by relying upon the 

definition of “loss” set forth in the commentary to § 2B1.1. 

Because of the unsettled nature of the law on this issue, any 

error was not clear or obvious. See United States v. 

Thompson, 82 F.3d 849, 855 (9th Cir. 1996) (“[W]e do not 

see how an error can be plain error when the Supreme Court 

and this court have not spoken on the subject, and the 

authority in other circuits is split.”) (citation omitted).

AFFIRMED.

13 The Eleventh Circuit had previously ruled that Kisor applies to the 

Commission’s commentary. United States v. Dupree, 57 F.4th 1269, 

1276 (11th Cir. 2023) (en banc) (“Kisor’s clarification of Auer [v. 

Robbins, 519 U.S. 452 (1997)] deference applies to the Guidelines and 

its commentary.”). 

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24 USA V. HACKETT

BERZON, Circuit Judge, dissenting:

The majority opinion misconstrues both the procedural 

history of this case and the meaning of the relevant 

Sentencing Guideline.1 I would reverse, vacate Hackett’s 

sentence, and remand to the district court for resentencing.

I.

On appeal, Hackett challenges a loss-based sentence 

enhancement under Guideline § 2B1.1. The district court 

calculated a loss of $2,200,000 by multiplying 550,000 stock 

shares by a price of $4 per share, which triggered “an 

adjustment of 16 levels upward for the intended loss amount 

in this case.” The court found that Hackett “at one time held 

550,000 shares” of First Harvest, considering “only those 

shares that [Hackett] had, not the ones that [he] talked about 

acquiring.” And it determined $4 as the “target price of the 

pump aspect” by “credit[ing] the conversation” in which 

Hackett “discussed the 4 to 5 dollar per share target with 

respect to the pump aspect of this scheme.” In pronouncing 

the sentence, the district court did not refer to the Guidelines’ 

commentary to § 2B1.1. See Maj. Op. at 23 (“The district 

court . . . rel[ied] upon the definition of ‘loss’ set forth in the 

commentary to § 2B1.1.”).

1 As the majority notes, the relevant Guideline has now been changed, 

by moving the commentary regarding “intended loss” into the Notes to 

the loss amount table included in the Guideline. See Maj. Op. at 4–5 n.1; 

U.S.S.G. App. C, Amdt. 827 (Nov. 1, 2024). All references in this dissent 

to the Guideline and the commentary are to the version at the time of 

sentencing (“the Guideline”). There has been no change in the Guideline 

as to the issue addressed in this dissent, except that the commentary I 

rely on later, see pp. 29–30, infra, is now in the Notes.

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USA V. HACKETT 25

The majority opinion considers Hackett’s challenge as 

one solely to the validity of the Guidelines’ commentary 

stating that “loss is the greater of actual loss or intended 

loss.” U.S.S.G. § 2B1.1 cmt. 3(A). And the majority reviews 

that challenge for plain error, reasoning that he objected to 

the amount of loss calculation rather than to the district 

court’s deference to the guideline commentary on the 

definition of intended loss. Maj. Op. at 13. But Hackett’s 

challenge on appeal to his sentence includes a narrower 

argument than a generic challenge to the “intended loss” 

commentary. Hackett also argues that the “definition of 

‘loss’ [in the Guideline itself] . . . does not include ‘intended 

loss’ that never takes place, at least in contexts such as that 

here.” The majority’s suggestion that, on appeal, Hackett 

only “specifically challenges the district court’s reliance on 

the commentary to United States Sentencing Guidelines 

(U.S.S.G.) § 2B1.1” is thus incorrect. Maj. Op. at 4.

At sentencing, Hackett preserved a context-specific 

objection to the district court’s broad construction of “loss” 

in § 2B1.1. In his objections to the Presentence Report’s 

(PSR) Guidelines calculations, Hackett challenged a 

proposed offense-level increase based on an intended loss 

figure of $4,750,000. Hackett’s written objection to the PSR 

argued that “the conclusion in the PSR of an intended loss of 

$4,750,000 is flawed,” objecting to the use of “some 

amorphous hopeful price in the future” to calculate the loss 

amount rather than the “market price at the time of sale.” 

At his June 2022 sentencing hearing, Hackett renewed 

his challenge to the PSR’s method of calculating and 

imputing a loss amount to him. He emphasized that “there 

are different ways to calculate the intent or to view the intent 

in these types of deals, because there may have been 

discussions, but those discussions never necessarily were 

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26 USA V. HACKETT

anything more than mere discussions. The actuality of what 

happened here was[,] I think[,] even more important.” 

Hackett maintained that the $4 price discussed was too 

speculative to be used in loss calculations because no 

substantial action was taken toward selling at that price: 

I will address your $4 calculation 

specifically. The problem is that these 

conversations all occur before anything is 

really ever kind of formalized, or for that 

matter really arrived at by these defendants. 

Because there is all sorts of different 

discussions. Budhu is talking about $2, and 

then they talk about $4, and then this 

discussion about $5.

As a result of this tentativeness and vacillation, Hackett 

further argued,

it could be fairly stated that those numbers 

that were thrown out [in discussions] weren’t 

even numbers that people were really 

planning on or intending. They were just 

discussing [those prices] as mere 

opportunities or possibilities. And I think 

there is a difference between mere 

opportunities and possibilities and something 

that was, in fact, intended by the parties.

(Emphasis added.)

Hackett’s objection in district court thus fairly previewed 

the narrower argument he urges—if briefly and somewhat 

opaquely—on appeal: Even if “intended loss” is properly 

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USA V. HACKETT 27

included in the loss calculation, the sentence enhancement 

based on loss does not apply in the current context.

Hackett’s challenge to the district court’s loss calculation 

emphasized that even intended loss must be predicated on 

the “actuality of what happened”—that is, actions 

performed, not actions contemplated but abandoned. 

Regardless of whether Hackett preserved a wholesale 

challenge to any inclusion of intended loss in § 2B1.1 

calculations, I would hold that he has certainly preserved a 

narrower objection urging a substantial-action threshold to 

determine intended loss. As to that argument, if not to the 

broader one, de novo review of his legal position is 

appropriate.2 Addressing it, I would hold that the argument 

is potentially meritorious, although its application to this 

case cannot be determined without further district court 

consideration.

II.

Section 2B1.1(b)(1) provides that “[i]f the loss exceeded 

$6,500,” a defendant’s offense level should be increased as 

the Guideline indicates. U.S.S.G. § 2B1.1(b)(1). For a loss 

of “[m]ore than $1,500,000,” a 16-level increase applies. Id.

As the language of the Guideline indicates and as explicated 

by the commentary, the attributed loss does not include loss 

never realized because of a failure to carry out substantial 

action toward executing an inchoate plan. As that 

2 Like the majority, I do not address de novo whether the entire concept 

of “intended loss” is inconsistent with § 2B1.1, applying Kisor v. Wilkie, 

588 U.S. 558 (2019), and United States v. Castillo, 69 F.4th 648 (9th Cir. 

2023). I agree that that issue was not raised in the district court and so is 

reviewable only for plain error. On my approach to the case, there is no 

reason to conduct that plain error review, as Hackett is entitled to 

resentencing in any event.

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28 USA V. HACKETT

interpretation was not applied by the district court, Hackett 

should be resentenced applying the proper understanding of 

the Guideline and commentary, read together.

First, the text of the Guideline itself is straightforward. 

Section 2B1.1’s reference to situations where “the loss 

exceeded . . . $1,500,000” does not sweep in loss attributable 

to plans an individual never substantially implemented.

Section 2B1.1 “does not define ‘loss.’ In interpreting the 

Guidelines, we apply the ordinary tools of statutory 

interpretation and look to the plain meaning of its terms. See 

Kisor v. Wilkie, 588 U.S. 558, 573-75 (2019). Such tools 

include ‘consult[ing] dictionary definitions, which we trust 

to capture the common contemporary understandings of the 

word.’” United States v. Kirilyuk, 29 F.4th 1128, 1137 (9th 

Cir. 2022) (citations omitted). The Guideline’s use of the 

past tense—“loss exceeded”—underscores that § 2B1.1’s 

plain language refers to losses that are at least readily 

quantifiable based on a defendant’s concrete actions. See

Loss, Black’s Law Dictionary (12th ed. 2024) (defining 

“loss” as “the disappearance or diminution of value”); id.

(“When the loss is a decrease in value, the usual method of 

calculating the loss is to ascertain the amount by which a 

thing’s original cost exceeds its later selling price.”).

Although “‘loss’ can have a range of meanings,” we have 

recognized that it “cannot mean a . . . contrived amount with 

no connection to the crime committed.” Kirilyuk, 29 F.4th at 

1137-38. In Kirilyuk, we rejected the imposition of an 

automatic assessed loss of $500 per stolen credit card 

number rather than an amount tethered to the facts of a 

particular offense. See id. at 1133-39. Here, the same 

insistence that sentence enhancements must bear a 

“connection to the crime committed,” id. at 1138, should 

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USA V. HACKETT 29

make us wary of reading “loss” so broadly as to reach 

intended loss predicated on actions a defendant discussed but 

never took steps to perform.

Second, the history of § 2B1.1 also supports linking 

“loss” to concrete action by a defendant in furtherance of an 

offense. The 1987 Guidelines provided for a sentence 

enhancement pegged to “the value of the property taken,” 

with a tiered table of values specified under the heading of 

“[l]oss.” U.S.S.G. § 2B1.1(b)(1) (1987). That is, the original 

framing of § 2B1.1 understood “loss” as an amount 

attributable to a defendant’s actions, viz. taking property. 

See id.; see also U.S.S.G. § 2B1.1(b)(1) (Jan. 1988). The 

June 1988 Guidelines replaced “the value of the property 

taken” with, simply, “the loss,” which language (still also 

reflected in the Guideline’s table heading) endured at the 

time of sentencing. U.S.S.G. § 2B1.1(b)(1) (June 1988).

Third, the commentary, read as a whole, is in this respect 

consistent with the Guideline’s text, confirming that “loss” 

in § 2B1.1 refers at least to losses tethered to a defendant’s 

substantial actions. The commentary’s discussion of 

“[i]ntended loss” includes two examples of “intended 

pecuniary harm that would have been impossible or unlikely 

to occur.” U.S.S.G. § 2B1.1 cmt. 3(A)(ii). In both “a 

government sting operation” and “an insurance fraud in 

which the claim exceeded the insured value,” a defendant

takes substantial action to effectuate a loss, but the loss does 

not occur due to third-party actions or policies beyond the 

defendant’s control. Id. Hackett, in contrast, maintains that 

he took no similar action to effectuate the loss for which the 

district court held him responsible. His one-time discussion 

of selling at $4 per share—the price the district court used to 

calculate total loss—could turn out to be far afield from a 

nearly complete transaction that would have occurred but for 

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30 USA V. HACKETT

police deception or an insurance maximum. Whether it is or 

not would depend on factors such as whether Hackett tried 

but failed to sell his shares at $4 per share, or whether, in 

contrast, he never tried to implement the inchoate plan and 

decided instead—as his district court challenge suggested—

to sell at the market price on a particular day, whatever that 

price was.

More broadly, the commentary to § 2B1.1 indicates that 

“loss” in the Guideline only sweeps in “[i]ntended loss” that 

a “defendant purposely sought to inflict.” Id. (emphasis 

added). “Sought” suggests doing something toward an end, 

not just talking about it. Read alongside the examples above, 

the commentary’s requirement of intentional pursuit lends 

further support to a reading of § 2B1.1 that enhances a 

defendant’s sentence based only on losses he proactively 

attempted to generate.

Fourth, this reading of “loss” coheres with criminal 

law’s broader approach to inchoate crimes. The law of 

attempt generally emphasizes that legal liability for a 

criminal attempt requires that concrete acts be taken toward 

committing the underlying offense. That is, “[t]o constitute 

an attempt, the mere intent to commit a crime is not enough; 

the performance of an act is also necessary,” to “distinguish 

situations of ‘preparation,’ not deserving of criminal 

punishment, from situations of genuine attempt.” 1 

Wharton's Criminal Law § 7:5 (16th ed. 2023); see id. 

(listing actions that support attempt liability). In the same 

vein, our court has long recognized that criminal liability 

attaches only when some substantial step has been taken 

toward committing a crime, with an inchoate plan 

insufficient to trigger liability. See United States v. 

Saavedra-Velazquez, 578 F.3d 1103, 1104 (9th Cir. 2009) 

(noting that “the definition [of attempt] at common law . . . 

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USA V. HACKETT 31

requires a ‘substantial step towards committing the crime’” 

(citation omitted)); United States v. Buffington, 815 F.2d 

1292, 1301 (9th Cir. 1987) (requiring “conduct constituting 

a substantial step toward commission of the crime”); see also 

United States v. Gracidas-Ulibarry, 231 F.3d 1188, 1192 

(9th Cir. 2000) (collecting sources).

Fifth, looking to the Guidelines’ overall structure and 

purpose, other provisions make clear that sentencing must 

rest on injuries attributable to actions actually undertaken—

not merely contemplated but abandoned—by a defendant. 

Section 1B1.3’s discussion of relevant conduct provides that 

a defendant’s offense level “shall be determined on the basis 

of . . . all harm that resulted from the acts and omissions 

specified in subsections (a)(1) and (a)(2) above, and all harm 

that was the object of such acts and omissions.” U.S.S.G. 

§ 1B1.3(a)(3) (emphasis added). Subsections (a)(1) and 

(a)(2) sweep in “all acts and omissions committed . . . or 

willfully caused by the defendant” and, for joint offenses, 

“all acts and omissions of others . . . that occurred” within 

certain parameters. U.S.S.G. § 1B1.3(a)(1), (a)(2) 

(emphases added). This language, relied on by the 

government as support for the proposition that “loss” 

includes “intended loss,” makes clear that for Guidelines 

purposes an “object” counts as harm only if a concrete act or 

omission with that object occurred, not if it was only 

contemplated. These provisions support a consistent reading 

of the Guidelines in which sentencing is based on harms, 

including losses, attributable to a defendant’s actual actions. 

The commentary to § 1B1.3 confirms this understanding of 

“harm.” One note refutes the idea that the Guidelines’ 

conception of “harm” includes those that have not been 

realized but were only risked, stating that “[u]nless clearly 

indicated by the guidelines, harm that is merely risked is not 

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32 USA V. HACKETT

to be treated as the equivalent of harm that occurred.” 

U.S.S.G. § 1B1.3 cmt. 6(B).

Sixth, the fact patterns in other cases on intended loss are 

instructive in parsing § 2B1.1. The majority opinion invokes 

case law from other circuits to buttress its analysis. But most 

of the cases on which it relies do not match Hackett’s 

situation as he portrays it. Those cases permit attributing 

intended loss to a defendant in situations where that 

defendant took substantial steps toward carrying out an 

offense directed at causing a loss of a certain amount, but 

that amount of loss did not materialize due to circumstances 

beyond the defendant’s control. They therefore underscore 

that § 2B1.1’s use of “loss” does not include amounts 

attributable to contemplated but unimplemented plans.

For example, in Banks, the Fourth Circuit determined 

that “Banks’s plot was to open Gain Capital [Group] 

accounts and make electronic deposits into those accounts, 

but his deposits were drawn on bank accounts with 

insufficient funds. He then tried to withdraw funds from 

these accounts, with the goal being to complete the 

withdrawals/transfers before the lack of supporting funds 

could be detected.” United States v. Banks, 55 F.4th 246, 251 

(3d Cir. 2022) (internal quotation marks omitted). The 

defendant “made fraudulent deposits of $324,000 and 

unsuccessfully executed 70 withdrawals/transfers totaling 

$264,000” with Gain, although Gain “suffered no actual 

loss” and “did not transfer a single dollar to Banks.” Id.

Similarly, the Sixth Circuit in Smith held that the 

“intended loss” amount in a scheme “defraud[ing] banks and 

their customers” by misusing account holders’ personal 

information included the actual losses “plus the funds the 

conspirators tried to steal but were unsuccessful at 

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USA V. HACKETT 33

obtaining.” United States v. Smith, 79 F.4th 790, 792-93 (6th 

Cir. 2023). And in Gadson, the First Circuit explained that 

the “coconspirators obtained the names and personal 

information . . . of real individuals, and then used that 

information to apply for [specific] loans for themselves in 

those persons’ names, with no intention of repaying the 

loans.” United States v. Gadson, 77 F.4th 16, 18 (1st Cir. 

2023).3 Finally, the Eleventh Circuit in Verdeza described 

the intended loss of $3.4 million as representing the total 

amount two clinics billed to an insurer as part of a fraudulent 

healthcare operation, although the insurer “grew suspicious 

. . . [and] denied the claims.” United States v. Verdeza, 69 

F.4th 780, 785-86, 794 (11th Cir. 2023).

In each of these instances, it appears, the defendant took 

substantial actions that were meant to achieve the amount of 

intended loss attributed, but was thwarted by external 

circumstances or their own errors.

* * *

I am convinced that, considered along with the 

commentary, the Guideline’s reference to “loss” is not 

ambiguous as to the contextual issue Hackett preserved on 

appeal. See Kisor, 588 U.S. at 575. Section 2B1.1’s use of 

“loss” clearly excludes intended losses attributable only to a 

defendant’s contemplated but unperformed actions. We do 

not punish thought crimes and so cannot rely for sentencing 

3 “To support the loan applications, Gadson and his coconspirators also 

created and used fraudulent supporting documents, such as counterfeit 

driver’s licenses, pay stubs, and lease agreements.” United States v. 

Gadson, 77 F.4th 16, 18 (1st Cir. 2023). The opinion does not contain 

more information about how the intended loss was calculated based on 

the factual circumstances or how “the district court here determined that 

intended loss was greater than actual loss.” Id. at 20.

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34 USA V. HACKETT

purposes on evidence of an intent never manifested by 

substantial action.

III.

As to how my interpretation of Section 2B1.1 applies 

here: The factual record in this case is, unfortunately, murky. 

In calculating the loss amount under § 2B1.1, the district 

court attributed 550,000 total shares to Hackett, although it 

is not immediately clear whether Hackett took steps to 

effectuate the sale of all of those various shares. My reading 

of the record suggests that Hackett did pump the value of 

First Harvest stock and then sell thousands of shares of that 

stock at the resulting elevated market price (which was 

higher than it would have been absent fraudulent pumping). 

Later, there was a near-complete loss of value in the 

remaining First Harvest stock because the market for that 

stock was flooded with shares for sale. But the underlying 

record is not sufficiently developed to provide a full factual 

account of Hackett’s relevant conduct or of the connection 

between such conduct and the prices and total shares the 

district court attributed to him in determining a $2,200,000 

loss and thus a 16-level enhancement under § 2B1.1.

Various questions remain: How many of the 550,000 

shares attributed to Hackett were sold on the open market 

versus through call rooms versus via other means versus 

never sold at all? At what price was each of those shares 

ultimately sold? Who had control over which blocks of stock 

at which points in time? What substantial actions did Hackett 

take—not just consider—with respect to selling the shares 

under his control as part of his offense conduct? And what 

led Hackett not to sell his shares at the price he discussed on 

the phone call: his own decision to sell sooner at a different 

price, market forces beyond his control that foreclosed the 

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USA V. HACKETT 35

contemplated price, or some other factor? The answers to 

these important questions, which bear directly on how much 

loss the Guidelines should attribute to Hackett, are not 

evident in the record and briefing before us.

“[A]s a general matter, if a district court errs in 

sentencing, we will remand for resentencing on an open 

record—that is, without limitation on the evidence that the 

district court may consider.” United States v. Matthews, 278 

F.3d 880, 885 (9th Cir. 2002) (en banc). Because the answers 

to the above questions are not available at this juncture, I 

would remand the case on an open record so that the district 

court can apply the correct interpretation of “loss” in § 2B1.1 

when resentencing Hackett, after conducting any necessary 

additional fact-finding.

Case: 22-50142, 12/18/2024, ID: 12917285, DktEntry: 64-1, Page 35 of 35