$11,000,000 in investor losses were caused by the bank fraud and
therefore could be considered in determining Loutos's offense
level. Id. at 1003.

It was determined that Loutos had a total offense level
of 21 and a criminal history category of I. That resulted in a
sentencing range of 37 to 46 months incarceration. Id. at 1005.
Loutos was sentenced to a total term of incarceration of 37
months to be followed by a three-year term of supervised release.
He was also ordered to pay a fine of $1000.00.

On appeal, Loutos contended that he should have been
permitted to withdraw his guilty plea. The Seventh Circuit

rejected that contention. See United States v. Loutos, 383 F.3d

615, 618-19 (7th Cir. 2004) ("Loutos IV"). lLoutos also contended
that the court's treatment of the investment fraud as relevant
conduct for the bank fraud constituted an abuse of discretion in
that the court effectively rejected the Plea Agreement. See id.
at 619-20. The Seventh Circuit also rejected this contention.
"The district court's decision here does not [a]ffect the
validity of the defendant's plea agreement nor does it [a]ffect
the court's decision to deny his motion to withdraw because the
plea agreement itself says 'it is understood by the parties that
the sentencing judge is neither a party to nor bound by this

Agreement and, subject to the limitations of the sentencing

guidelines, may impose the maximum penalties as set



any decision to sentence outside the range must be reasonable.
See United States v. George, 403 F.3d 470, 472-73 (7th Cir.
2005); Smith, 359 F. Supp. 2d at 772-73.

Here, the court previously resolved all factual and legal
issues regarding the applicable sentencing range under the
Guidelines. As previously discussed, Loutos was already provided
a full opportunity to present evidence supporting his factual
contentions regarding the appropriate Guidelines sentencing
range. Neither due process nor the Seventh Circuit's remand
requires that that process be reopened. Loutos will not be
provided a second opportunity to present evidence purportedly
showing that he did not knowingly participate in the investment
scheme. Neither Loutos nor the government point to any case law
from before or after the Loutos III ruling that convinces this
court that it should modify the findings or holdings of Loutos
IIl. The difference on remand is that the applicable
sentencing range will no longer be treated as being binding and
mandatory. At the upcoming sentencing hearing, Loutos and the
government may argue, based on any appropriately considered
factor, that the court should sentence Loutos below or above the
sentencing range. As to new and pertinent facts upon which
Loutos may rely, Loutos should promptly inform the probation

officer.

- 10 -


See United States _v. Booker, 125 S. Ct. 738 (2005). The Supreme

Court resolved constitutional problems with the Sentencing
Guidelines by holding two statutory provisions of the Guidelines
would not be enforced.

(W]e must sever and excise two specific
statutory provisions: the provision that
requires sentencing courts to impose a sentence
within the applicable Guidelines range (in the
absence of circumstances that justify a
departure), see 18 U.S.C. § 3553(b) (1) (Supp.
2004), and the provision that sets forth
standards of review on appeal, including de novo
review of departures from the applicable
Guidelines range, see § 3742(e) (main ed. and
Supp. 2004). . . . With these two sections
excised (and statutory cross-references to the
two sections consequently invalidated), the
remainder of the Act satisfies the Court's
constitutional requirements.

Id. at 764.

Following the Supreme Court's ruling in Booker,? the
parties were provided the opportunity to address the question of
appropriate procedures for resentencing Loutos, as well as what
factors and possible additional evidence should be considered in
resentencing Loutos. Although not clearly articulated, defendant
apparently contends that the court should again hear evidence on
the question of whether he is responsible for the $11,000,000 in

losses and that proof beyond a reasonable doubt should be

3Unless indicated otherwise, further references to Booker
will be referring to the Supreme Court's opinion.


forth... .'" Loutos IV, 383 F.3d at 620 (emphasis in
opinion).
Loutos was sentenced in September 2003, prior to the

Supreme Court's ruling in Blakely v. Washington, 124 Ss. Ct. 2531

(2004). Following Blakely, and prior to the Seventh Circuit's
ruling in Loutos IV (Sept. 8, 2004), the Seventh Circuit held in

United States v. Booker, 375 F.3d 508 (7th Cir. July 9, 2004),

that (absent waiver of the right to a jury determination) it was
improper to apply Guidelines enhancements based on facts found by
the sentencing judge, but not found by the jury or admitted ina
plea. Since the Guidelines sentencing range that was applied in
sentencing Loutos was based in part on additional facts found by
the court, the Seventh Circuit affirmed Loutos's conviction but
remanded the case for resentencing in light of the Seventh
Circuit ruling in Booker. Loutos IV, 383 F.3d at 620. Loutos
was released on bond pending resentencing and remains out on
bond. He was incarcerated approximately nine and one-half months
before being released on bond.

Prior to the Loutes IV remand, the Supreme Court had

already granted certiorari in Booker. See United States v.

Booker, 125 S. Ct. 11 (Aug. 2, 2004). The mandate for Loutos IV
was issued on October 21, 2004. This court held resentencing in
abeyance while awaiting the Supreme Court's decision in Booker.

The Supreme Court issued its Booker decision on January 12, 2005.


negatively affect (from the defendant's perspective) a mandatory
aspect of sentencing. Following Booker, the Sentencing
Guidelines are not mandatory and courts retain discretion to
sentence within the applicable statutory range. See Booker,

125 $. Ct. at 765-67; United States v. Schlifer, 403 F.3d 849,

853 (7th Cir. 2005). Facts affecting the statutory range must be
proved beyond a reasonable doubt or be admitted by the defendant
(in a plea agreement or otherwise). Facts establishing the
nonmandatory Guideline sentencing range may still be found by the

court by a preponderance of the evidence. McRe nolds_ v. United

States, 397 F.3d 479, 481 (7th Cir. 2005); United States v.

Smith, 359 F. Supp. 2d 771, 773 (B.D. Wis. 2005). "Asa
practical matter, . . . sentences would be determined in the same
way [as before Blakely and Booker]; the only change would be the
degree of flexibility judges would enjoy in applying the
guideline system." McReynolds, 397 F.3d at 481.

Under the present post-Booker sentencing regime, the
district court first determines the sentencing range under the
Sentencing Guidelines. Any factual issues that are not
conclusively established by a trial, plea agreement, or
stipulation are resolved by the court. Then, taking into account
any pertinent factors set forth in 18 U.S.C. § 3553(a), the court
determines whether to sentence within the Guidelines sentencing

range. The court is not bound to sentence within the range, but


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

)
)
}
)
v. ) No. 01 CR 852-3
)
PETER A. LOUTOS, SR.,

)

)

Defendant.

MEMORANDUM OPINION AND ORDER

In 2001, an indictment was returned charging defendant
Peter Loutos and five codefendants with one count of a money
laundering conspiracy, eight substantive counts of wire fraud,*
and seven substantive counts of money laundering. On October 30,
2002, however, Loutos pleaded guilty to one count of a
superseding indictment charging him with making a false statement
on an application for the purpose of influencing a federally
insured bank in violation of 18 U.S.C. §§ 1014 and 2.? The
preliminary Sentencing Guideline calculation contained in the

Plea Agreement determined a total offense level of four and a

1In prior opinions and continuing in the present opinion,
this wire fraud scheme has been referred to as "investment
fraud."

2In prior opinions and continuing in the present opinion,
this charge and conduct have been referred to as "bank fraud.”


A sentencing hearing will be held on June 8, 2005 at
11:30 a.m. By May 31, 2005, the probation officer shall provide
the court with a supplemental PSR, including any updated
information and any recommendation regarding the sentence to be
imposed.

IT IS THEREFORE ORDERED that sentencing for defendant
Loutos is set for June 8, 2005 at 11:30 a.m. By May 31, 2005,
the probation officer shall provide a supplemental presentence

report.

ENTER:

WithnT Mork

UNITED STATES DISTRICT JUDGE

DATED: MAY bb , 2005

-ill-


required in order to attribute that loss to him. Apparently in
the alternative, defendant suggests that, consistent with the
Plea Agreement and in order to avoid the need for a lengthy
evidentiary hearing, the court simply sentence defendant to the
time he has already served. In his brief, defendant also sets
forth some facts about his family, education, and work history,
his own health, and his wife's poor health, apparently suggesting
that these factors also be considered in determining his

new sentence. In response, the government sets forth that,
consistent with the Plea Agreement and its obligations
thereunder, it continues to take the position that the investment
fraud is not relevant conduct and that defendant should be
sentenced based on a 0-6 month sentencing range. The government
concedes that the investment fraud involved a $11,000,000 loss,
put contends that should not be considered when sentencing this
defendant.

The positions taken by the parties are inconsistent with
sentencing procedures following the Supreme Court's decision in
Booker and are also inconsistent with prior rulings in this case
which were not overturned in Loutos IV.

Contrary to Loutos's contention, Booker does not require
that all factual issues that may affect the sentence that is
imposed be proved beyond a reasonable doubt. Sentencing facts

need only be proved beyond a reasonable doubt if they would


telephone conversations, and some documentary evidence. See
Loutos III, 284 F. Supp. 2d at 996-97.

Loutos did not dispute that the scheme to defraud charged
in the original indictment occurred, that his codefendants
participated in it, and that it involved more than $11,000,000 of
investor funds. See id. at 998. Loutos, however, contended that
he did not knowingly participate in the scheme. See id. at
998-99. The court, though, found to the contrary.

On the evidence before the court, it is
found by a preponderance of the evidence that
Loutos was aware that investor funds were
deposited into the Lennox Account, that they were
obtained based on false representations, and that
they were being diverted to his codefendants'
personal use. It is found that Loutos aided and
abetted the investment fraud and that he was a
knowing participant.

Although [codefendant] Benson was not an
owner of Lennox, Loutos committed the bank fraud
by aiding and abetting false statements to that
effect so that Benson could open an "escrow"
account in Lennox's name. That account was then
used to funnel more than $11,000,000 in unlawful
proceeds from the investment fraud and also aided
that fraud by providing an appearance that the
money was safe because in an escrow account over
which an attorney had some control.

Id. at 1001. See also id. at 998-1001.
It was further held that the investment fraud was
relevant conduct for purposes of determining the Sentencing

Guidelines offense level for the bank fraud charge. See id. at

1002-03. Alternatively, it was found and held that the


whether Loutos had participated in the investment fraud and, if
so, whether the investment fraud was relevant conduct or should
otherwise be considered in sentencing Loutos on the bank fraud
charge.

In Loutos I, Loutos and the government were informed of
the sentencing issues that would need to be addressed prior to
Loutos being sentenced. In light of the ruling in Loutos I,
there was a distinct possibility that Loutos would be subject to
a sentencing range higher than the 0-6 month range contemplated
by the Plea Agreement. About a month after Loutos IT was issued,
Loutos moved to withdraw his guilty plea. The motion to withdraw
his guilty plea was denied. See Loutos Il, 284 F. Supp. 2d 942.

As to his sentencing proceedings, Loutos was provided
adequate notice of the additional factual issues that would be
considered in determining the appropriate sentencing range under
the Guidelines. See Loutos I, 2003 WL 168627 at *2-3; United
States v. Loutos, 284 F. Supp. 2d 994, 996 (N.D. Ill. 2003)
("Loutos III"). Prior to a determination of the applicable
sentencing range, Loutos and the government were provided the
opportunity to present whatever additional evidence they desired
to present for purposes of sentencing. Loutos was provided the
opportunity to call witnesses, but instead chose to submit
certain depositions (of himself and others) that were taken in

related civil proceedings, transcripts of certain recorded


criminal history category of I for a sentencing range of zero to
six months. At the time of the plea colloquy, the court accepted
Loutos's plea of guilty, but deferred ruling on acceptance of the
Plea Agreement itself until after consideration of the
Presentence Report ("PSR"), which was also expected to be after
the trial of the codefendants had been completed. See United
States v. Loutos, 284 F. Supp. 2d 942, 946-51 (N.D. Ill. 2003)
("Loutos II").

After hearing the evidence that was presented at the
trial of Loutos's codefendants and having considered the initial
PSR, the parties' supplemental submissions, and possible

Guidelines applications, on January 23, 2003, the court accepted

Loutos's Plea Agreement. See United States v. Loutos, 2003 WL

168627 (N.D. Ill. Jan. 24, 2003) ("Loutos I" ). See also

Loutos II, 284 F. Supp. 2d at 949-51 & n.9. The question of the
appropriate sentencing range, however, was left open to be
determined in further proceedings. It was made clear that the
court was not bound by the preliminary Guidelines calculations
contained in the Plea Agreement nor the stipulations contained
therein. Loutos I, 2003 WL 168627 at *4-5. It was also made
clear that additional facts would have to be considered before a
determination was made as to the appropriate sentencing range
under the then-binding Sentencing Guidelines. See id. at *3-10.

Of particular importance to be resolved were the questions of