NOT PRECEDENTIAL 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

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No. 19-3558 

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UNITED STATES OF AMERICA

v. 

GARY FRANK, 

 Appellant 

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Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D. C. No. 2-19-cr-00180-001) 

District Judge: Honorable Gerald J. Pappert 

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Submitted under Third Circuit LAR 34.1(a) 

on July 7, 2022 

Before: SHWARTZ, KRAUSE and ROTH, Circuit Judges 

(Opinion filed: June 13, 2023) 

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OPINION*

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ROTH, Circuit Judge 

*

 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not 

constitute binding precedent.
2

Gary Frank pleaded guilty to charges of wire fraud, bankruptcy fraud, and money

laundering. The District Court sentenced Frank to 210 months’ incarceration. Frank

challenges four of the District Court’s sentence enhancements, including one based on the

District Court’s finding of intended loss under U.S.S.G. § 2B1.l(b)(l). In view of our

holding in United States v. Banks, we will affirm the judgment of the District Court except

as to the enhancement based on intended loss.

I.

Frank was the owner and CEO of the Legal Coverage Group, Ltd. (LCG). Frank 

formed LCG in the mid-1990s after he graduated from Villanova Law School. From 2006 

to 2018, Frank executed a fraudulent scheme in which he tricked investors into believing 

that LCG’s business, which generated several hundred thousand dollars of annual revenue 

and employed approximately ten staff members, generated hundreds of millions of dollars 

of annual revenue and employed hundreds of people. Through his lies and creation of 

phony documents, Frank defrauded sophisticated banks and financial institutions, 

including DNB First, N.A. (DNB) and the Prudential Insurance Company of America and 

Prudential Retirement Insurance and Annuity Company (collectively, Prudential). Frank 

also tricked many individuals, including a close friend and his wife. He deceived LCG’s 

customers, employees, vendors, lawyers, and accountants, as well as his fellow board 

members at several prominent nonprofit organizations. Through this fraud, Frank obtained 

more than $30 million in loans, which he used to fund his own extravagant lifestyle over a 

twelve-year period. When loan repayment became due, he sought an additional $80 to 
3

$100 million in financing. Eventually, the Federal Bureau of Investigation searched LCG’s 

offices, and the U.S. Bankruptcy Court froze LCG’s and Frank’s bank accounts. 

After Frank pleaded guilty to charges of wire fraud, bankruptcy fraud, and money 

laundering, the court sentenced him to 210 months’ incarceration and ordered him to pay 

$33,702,900 in restitution. This sentence was below the advisory sentencing guideline 

range, which the court calculated as 262 to 327 months’ incarceration. However, the 

sentence included several enhancements to which Frank objected at sentencing. Frank 

challenges four of these enhancements on appeal.

II.

The four enhancements Frank challenges are (1) a two-level enhancement for use 

of sophisticated means under U.S.S.G. § 2B1.1(b)(10)(C), (2) a two-level enhancement for 

use of a special skill under § 3B1.3, (3) a two-level enhancement under § 2B1.1(b)(2)(A)(i) 

because the offense involved ten or more victims, and (4) a 24-level enhancement under § 

2B1.1(b)(1)(M) for an intended loss amount of more than $65 million but not more than 

$150 million. We will affirm the District Court’s ruling as to the first three challenges. 

Based on our holding in United States v. Banks,

1 however, we will vacate the sentence 

based on the fourth challenge and remand for resentencing.

2

 

A. Sophisticated Means

First, Frank argues that the District Court erred in applying a two-level upward 

1 55 F.4th 246 (3d Cir. 2022). 

2 The District Court had subject-matter jurisdiction under 18 U.S.C. § 3231. We have 

jurisdiction under 28 U.S.C. § 1291. We also have jurisdiction to review a criminal 

sentence under 18 U.S.C. § 3742.
4

adjustment for use of sophisticated means under § 2B1.l(b)(10)(C). Despite Frank’s 

arguments to the contrary, the standard of review is clear error.3

 We hold that the District 

Court correctly found that his offense involved sophisticated means based on his lawsuit 

against Prudential, the use of fake confidentiality agreements, the filing of a bogus 

bankruptcy petition, the falsification of wire transfer confirmations, financial records, due 

diligence documents, employee records, and the filtering of his lies through lawyers and 

investment bankers.

As the District Court properly found, “Frank’s 12-year-long fraud, his strategic 

abuse of the civil justice system, elaborate misdirection and the mountain of fraudulent 

documents he created prove that his offenses involved greater planning and concealment 

than a typical fraud of this kind.”4

 

From causing his investment banker to create unknowingly false financial records 

for LCG to filing a frivolous lawsuit against Prudential to conceal his fraud and then filing 

for bankruptcy to stay the civil litigation, Frank’s scheme involved an exceptional degree 

of planning and concealment. On the basis of these facts, the District Court stated that it 

was “extremely easy to conclude by a preponderance of the evidence that . . . Frank’s 

conduct showed a greater level of planning and concealment than a typical fraud of its 

3 See United States v. Fountain, 792 F.3d 310, 318 (3d Cir. 2015) (examining a challenge 

to a sophisticated means adjustment under § 2B1.1 on undisputed facts under clear error 

standard); United States v. Fish, 731 F.3d 277, 279 (3d Cir. 2013) (examining a challenge 

to a sophisticated means enhancement under § 2B1.1 on undisputed facts under clear error 

standard).

4 Appx. 1345.
5

kind.”5 

B. Special Skills

Second, Frank argues that the District Court erred in applying a two-level upward 

adjustment for use of a special skill under § 3B1.3. We review de novo a district court’s 

legal interpretation of the Guidelines, including whether a defendant possesses a “special 

skill” under § 3B1.3.

6 For the two-level special skills adjustment to apply, two factors

must be present: “(1) the defendant possesses a special skill; and (2) the defendant used it 

to significantly facilitate the commission or concealment of the offense.”7

 Both factors are 

met here.

Frank had skills in law and accounting, both of which qualify as “special skills” 

under § 3B1.3. The District Court found that Frank acquired these skills “through his 25 

years of experience in [the legal services] industry.”8

 

The District Court properly found both that Frank possessed special skills under

Section 3B1.3 and that Frank used these special skills to commit and conceal his crimes. 

The District Court “easily” found by a preponderance of the evidence that Frank’s 

knowledge of accounting helped him make the fraudulent financial documents “look as 

good as they did.”9

 The District Court also found that Frank used his special skills to 

“strategically abuse[] the civil justice system and fabricate a plausible business model 

5 Appx. 1344.

6 United States v. Urban, 140 F.3d 229, 234 (3d Cir. 1998). 7 United States v. Tai, 750 F.3d 309, 318 (3d Cir. 2014) (quotation omitted).

8 Appx. 1351.

9 Appx. 1351.
6

requiring huge loans.”10 These actions facilitated the commission and concealment of 

Frank’s fraudulent scheme.

C. Ten or More Victims

Third, Frank argues that the District Court clearly erred by adding a two-level 

enhancement when there were not ten or more victims of the offense under

§ 2B1.1(b)(2)(A)(i). We exercise plenary review over the District Court’s interpretation 

of the Guidelines and review findings of fact that support enhancements for clear error.11 

Frank initially argues that neither DNB bank nor his friend’s wife, D.S., are victims under 

the Guidelines. We disagree.

Frank argues that DNB is not a victim because the bank received full credit against 

its loss. Application Note 3(E)(ii) applies because Frank’s condominium secured DNB’s 

$600,000 loan to LCG. This note states:

In a case involving collateral pledged or otherwise provided by the 

defendant, [loss shall be reduced by] the amount the victim has recovered at 

the time of sentencing from disposition of the collateral, or if the collateral 

has not been disposed of by that time, the fair market value of the collateral 

at the time of sentencing.12

At the time of Frank’s sentencing, DNB had recovered no funds from the disposition of 

Frank’s condominium because the bank had been unable to sell it. Therefore, the District 

Court needed to determine the fair market value of the condominium and give Frank any 

credit for this value. After reviewing the evidence, the District Court made a factual finding 

10 Appx. 1351.

11 United States v. Smith, 751 F.3d 107, 118 (3d Cir. 2014) (citing United States v. Grier, 

475 F.3d 556, 570 (3d Cir. 2007) (en banc)).

12 U.S.S.G. § 2B1.1 app. note 3(E)(ii).
7

that the fair market value was $550,000. 

Having made this factual finding on fair market value, the District Court then 

reduced DNB’s $600,000 loss by the $550,000 value of the collateral and concluded that 

DNB’s actual loss was $50,000. The District Court did not commit clear error in finding 

DNB was a victim given the loss of $50,000.

Frank initially contested the District Court’s inclusion of D.S. as a victim in its 

calculation of whether Frank had ten or more victims. However, D.S. was no doubt a

victim as she received Frank’s misrepresentations indirectly through her husband and was 

the person who transferred loaned funds to Frank in August 2017. In his reply brief, Frank 

then withdrew his argument that D.S. was not a victim, but contends that she was not a 

foreseeable victim. That argument also fails. The District Court properly noted that 

because Frank was pursuing loans from D.S.’s husband, R.K., it was reasonably 

foreseeable that D.S., as his partner, would suffer some pecuniary harm. There was no 

clear error in reaching this conclusion.

D. Intended Loss

Finally, Frank challenges the District Court’s enhancement based on intended loss 

under U.S.S.G. § 2B1.l(b)(l). Our holding in United States v. Banks compels vacatur of 

the sentence because the District Court used the intended loss instead of the actual loss to 

calculate this sentencing enhancement. We review this legal issue de novo,13 and we 

review the District Court’s factual findings in support of the intended-loss enhancement 

13 United States v. Nasir, 17 F.4th 459, 468 (3d Cir. 2021) (en banc). 
8

for clear error.14 

Section 2B1.1 provides a graduated sentencing enhancement scale based on victims’ 

monetary losses. In Banks, we held that, to decide the level of sentencing enhancement 

based on this scale, courts must use actual loss—not intended loss.15

Here, the District Court found that the intended loss was between $65 and $150 

million.16 In accordance with § 2B1.1, it then added twenty-four levels to the offense level. 

This use of intended loss to calculate Frank’s sentencing enhancement was error. 

Unfortunately, the District Court did not make a finding on the actual loss. It did 

note that the “presentence investigation report calculate[d] the actual loss at $34,725,000 

[and Frank] assert[ed] that the actual loss is only $24,244,443.”17 The court explained that, 

because it understood the guidelines to require it to apply the greater of the actual and 

intended loss, it did not need to make a finding on the actual loss.18 The intended loss 

greatly exceeded both figures. Because the District Court used intended loss to determine 

the offense level and made no finding on actual loss, we will vacate the judgment of 

sentence and remand this case to the District Court to recalculate the sentence in light of 

Banks. 

IV.

14 United States v. Huynh, 884 F.3d 160, 165 (3d Cir. 2018). 

15 Banks, 55 F.4th at 258 (explaining that the use of “intended loss” in the Sentencing 

Guideline’s Commentary is an impermissibly expansive definition of “loss” in the 

Guidelines itself). 

16 Appx. 1321. 17 Appx. 1315. 

18 Appx. 1314–1315. 
9

For the foregoing reasons, although we conclude that the District Court properly 

ruled on Frank’s first three challenges to his sentence, we will vacate and remand for 

resentencing because the District Court erred in applying an enhancement based on 

intended loss under U.S.S.G. § 2B1.l(b)(l).