14

- 270

USA v. I ovino UNITED STATES COURT OF APPEALS
F OR THE S ECOND C IRCUIT

_______________ August Term, 201 4 (Argued: January 13, 2015 Decided: February 2 , 2015)

Docket No. 1 4

- 270

_______________

U NITED S TATES OF A MERICA , Appelle e ,

— v. — P ETER I OVINO , Defendant

- Appellant.

_______________ Before:
K ATZMANN , Chief Judge , K EARSE and R AGGI , Circuit Judges

.

_______________2

Appeal from a judgment of conviction entered in the United States District Court for the Southern D istrict of New York ( Vincent L. Bric c etti , J. ), which sentenced the defendant principally to 60 months’ imprisonment. We conclude that the district court properly applied the four

- level Sentencing Guidelines enhancement for crimes involving more th an fift y victims, because Iovin o defrauded a condominium association whose 70

- odd members were consequently required to pay higher common charges. Accordingly , the judgment of the district court is AFFIRMED

.

_______________ A NDREW B AUER (Justin Anderson, on the brief ), for Preet Bharara, United States Attorney for the Southern District of New York, New York, New York , for Appellee

. J EREMY G UTMAN , New York, New York , for Defendant

- Appellant.

_______________

P ER CURIAM : This case calls on us to clarify how sentencing courts should count the number of victims of a fraud when deciding whether to apply a multiple

- victim enhancement under section 2B1.1(b)(2) of the U.S. Sentencing Guidelines. Appellant Peter Iovino appeals from a judgment of convic tion entered on January 6, 2014 by the United States District Court for the Southern District of New York (Briccetti, J .). Iovino, who was employed as the property manager of a condominium association, was charged with one count of wire fraud for3

embezzli ng funds from the condominium association and one count of bank
fraud for taking out an unauthorized loan in the condominium association’s

name . Iovino ple a d ed guilty to both counts, and was principally sentenced to 60
months ’ imprisonment. On appeal, Io vino contends that the district court miscalculated his Sentencing Guidelines range when it increased his offense level by four levels pursuant to United States Sentencing Guidelines § 2B1.1(b)(2)(B), which applies to offenses that ‚involve*+ 50 or more vi ctims.‛ Iovino argues that the district court erred by finding that each owner of a unit in the condominium (hereinafter ‚tenant‛) qualified as a victim, rather than just the condominium association
itself. Because we conclude that the district court pro perly counted the individual tenants as victims, and therefore properly applied the § 2B1.1(b)(2)(B) enhancement, we AFFIRM the judgment and sentence of the district court.
I. BACKGROUND Beginning in 2000 , Peter Iovino was employed as the property manager of
the Bedford Terrace Condominium Association (‚Bedford Terrace‛) , which is4

occupied by more than 70 tenants . As property manager, Iovino was responsible for paying Bedford Terrace’s vendors, managing its finances, and report ing to the association’s Boar d of Managers at the Board’s monthly meetings. Although Iovino had access to Bedford Terrace’s bank accounts, he was not allowed to withdraw funds without the signed approval of at least two Board members.
In 2011, the Board discovered that Iovino had t aken out an unauthorized
loan in the name of Bedford Terrace. Further investigation revealed that Iovino
had also made several unauthorized withdrawals from Bedford Terrace’s bank

accounts. Iovino concealed his withdrawals by providing the Board with for ged
bank statements that hid the true balance of the accounts. Iovino was charged with a single count of wire fraud, based on his
unauthorized withdrawals from the Bedford Terrace bank accounts , and a single count of bank fraud, based on the unauthorized loan. On January 16, 2013, Iovino plead ed guilty to both counts.

As relevant here , the district court quantified the loss caused by Iovino’s
illicit withdrawals from the Bedford Terrace accounts as $139,292.00 . At a Fatico hearing , the district court heard testimony from the president of Bedford5

Terrace’s B oard of M anagers, who explained that the bank accounts from which Iovino had stolen were funded by the common charges paid by the tenants of the
condominium association

. The Board president further testified that, after
Iovino’s fraud was uncovered , Bedford Terrace raised its common charges by roughly $100 per month in order to replenish the accounts depleted by Iovino’s fraud. Based on this testimony, the district court found that each of the tenan ts of Bedford Terrace had been a victim of Iovino’s fraud because each was forced to pay these higher common charges as a result of the theft from the Bedford Terrace bank accounts. Accordingly, the district court increased Iovino’s offense level by four levels pursuant to United States Sentencing Guidelines § 2B1.1(b)(2)(B), which applies to offenses that ‚involve*+ 50 or more victims.‛

II. DISCUSSION Iovino’s sole argument on appeal is that the district court erred by counting each of the individual t enants of Bedford Terrace as a separate victim of
his fraud . Because Iovino’s argument depen ds on the Sentencing Guidelines’ definition of ‚victim,‛ we begin by reviewing the interlocking provisions of the Guidelines. Section 2B1.1(b)(2)(B) of the Senten cing Guidelines instructs6

sentencing courts to increase a defendant’s offense level by four levels when the offense ‚involved 50 or more victims.‛ Application note 1 to § 2B1.1 defines
‚victim‛ as , inter alia , ‛ any person who sustained any part of the act ual loss determined under subsection (b)(1).‛ ‚*S+ubsection (b)(1),‛ in turn, refers to the provision of the Sentencing Guidelines that charges sentencing courts with calculating the loss caused by the defendant’s crime, and setting the offense level

acco rdingly. 1 Because a victim must have sustained part of the ‚ actual loss determined under subsection (b)(1),‛ U.S. S entencing Guidelines Manual § 2B1.1 cmt. n.1 , we have previously held that a victim must have suffered some part of the loss actually calcu lated by the district court. In United States v. Abiodun , 536 F.3d 162 (2d Cir. 2008), the defendant pleaded guilty to defrauding hundreds of individuals by obtaining credit card advances in their names. Although in most
cases the individuals suffered no direct financial loss because they were reimbursed by their banks, the district court nonetheless counted them as victims because they ‚had spent an appreciable amount of time securing reimbursement

1 The ‚loss‛ is calculated as ‚the greater of actual loss or intended loss.‛7

for their financial losses.‛ Id. at 166. On appeal, we vacated and remanded , holding that these individuals had not been properly counted as victims. Id. at
169. Although the lost time was cognizable as a loss under the Sentencing Guidelines, the district court had not quantified the monetary value of this l ost time when calculating the ‚actual loss‛ caused by the fraud. See i d. at 169. Instead, the district court had focused solely on the total value of the fraudulent
credit card advan ces procured by the defendant. See i d. at 165. Because the lost
time wa s not ‚part of the actual loss determined under subsection (b)(1) , ‛ U.S.
S entencing Guidelines Manual § 2B1.1 cmt. n.1, we held that the individual

account

- holders were not victims as defined by the Sentencing Guidelines.
Abiodun , 536 F.3d at 169.

Simil arly, in United States v. Skys , 637 F.3d 146 (2d Cir. 2011), the defendant unsuccessfully attempted to defraud several banks by falsely representing that his business owned substantial assets, and by seeking to take out an 83 million dollar loan secured ag ainst those assets. The defendant was charged with securities, bank, and wire fraud after his deception was discovered. At sentencing, the

U.S. S en tencing Guidelines Manual § 2B1.1 cmt. n. 3(A).8

district court considered evidence that the defendant had also perpetrated several other, uncharged frauds. The di strict cour t calculated the ‚intended loss‛ of the fraud as $83 million, the size of the loan the defendant attempted to procure from Citigroup; the district court did not calculate the ‚actual loss‛ caused by the
defendant’s various frauds. See i d. at 15 3

— 55. Nonetheless, the district court counted both the banks and the targets of the uncharged frauds as victims under the Sentencing Guidelines. Id. Again, we remanded . Citing Abiodun , we explained that ‚‘victims,’ within the meaning of subsection (b) (2), are only those perso ns or entities who sustained
‘actual loss determined’ by the court ‘under subsection (b)(1).’‛ Id. at 153. Because the district court had not calculated the actual loss caused by the defendant’s schemes, the banks and targets of the uncharged frauds could not have suffered a ‚part of the actual loss determined under subsection (b)(1).‛ Id. at
154

- 55. Accordingly, we remanded to the district court to calculate the actual loss caused by the defendant’s frauds and, if necessary, to recount the number of victims who had suffered part of this actual loss. Id. at 155

— 56.9

Relying on Abiodun and Skys , Iovino argues that the district court erred by counting the individual tenants of Bedford Terrace as victims. As relevant here,
the dis trict court calculated that the actual loss caused by Iovino’s theft w as $139,292.00, the amount that Iovino withdrew from the condominium
association’s bank accounts. Because this amount was taken from Bedford Terrace’s accounts, Iovino contends that the only person or entity that ‚sustained

. . . part of the actual loss determined‛ by the district court was Bedford Terrace itself. Although Iovino acknowledges that the individual tenants had to pay higher common charges as a result of his theft, he argue s that these higher common charges were not included in the actual loss calculated by the district court. Accordingly, he reasons, the individual tenants do not qualify as victims under the reasoning of Abiodun and Skys

. Iovino’s argument is without meri t. The district court found

— and Iovino does not dispute

— that Bedford Terrace increased its common charges because it needed to ‚replenish‛ the bank accounts depleted by Iovino’s fraud. Appellant’s App. 72. The individual tenants therefore sustained actu al, out

- of

- pocket losses when they were required to pay these higher charges as a result of Iovino’s fraud.10

Moreover, these losses were ‚part of the actual loss determined under subsection (b)(1)‛ because , as the district court found, the higher common ch arges directly replaced the funds that Iovino had stolen from the condominium association’s
bank accounts. This case is thus distinguishable from Abiodun and Skys , both of which involved victims who had suffered ‚losses‛ entirely separate from the losses that
the district court ‚determined under subsection (b)(1).‛ In Abiodun , the district court focused on the strictly financial loss caused by the defendants’ fraud. But it did not include in its calculation the monetary value of the time the individuals expended to secure reimbursement from the banks. Had it done so, adding the value of the individuals’ lost time would have increased the total actual loss, and the individual victims would therefore have qualified as victims. And the district
court in Sk

ys did not calculate any actual loss at all, instead relying solely on the
‚intended loss‛ of the defendant’s scheme. Here, by contrast, Iovino concedes, as he must, that the district court correctly totaled the actual loss as $139,292.00, the amount that Iovino stole from the Bedford Terrace accounts. The individual tenants paid higher common11

charges to replenish these accounts. But this replenishment does not change the ‚actual loss‛ caused by Iovino’s fraud. Instead, every dollar paid by a tenant in the form of higher co mmon charges was one dollar reimbursed to Bedford
Terrace. As such, the total loss

— the sum of the increased common charges paid by the individual tenants and the loss absorbed by Bedford Terrace to the extent
that the tenants have not fully replenished the accounts

— remains $139,292.00

. And while Iovino is right that the district court did not calculate this amount by totaling up the higher common charges paid by the individual tenants, the district court nonetheless correctly measured the loss collectively sustained by Bedford
Terrace and the individual tenants.

B ecause it is undisputed that the tenants paid higher common charges to replenish the association’s depleted bank accounts, the individual tenants ‚sustained *a+ part of the a ctual loss determined under subsection (b)(1),‛ and were properly counted as victims. 2 Accordingly, the judgment and sentence of the
district court are hereby AFFIRMED

.

2 The government urges us to find that the individual tenants qualify as victims because they suffered a loss based on their shared interest in the money Iovino stole from the Bedford Terrace bank accounts. B ecause the tenants here12

sustained direct, out

- of

- pocket losses when they were forced to pay higher common charges, we do not reach this argument.