* This order and judgment is not binding precedent except under the

doctrines of law of the case, res judicataand collateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### JUN 16 1998 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT
UNITED STATES OF AMERICA, Plaintiff-Appellee,
v. JOHN HENRY FIVAZ, a/k/a James Hardway, Defendant-Appellant. No. 97-8082 (D.C. No. 96-CR-75-J) (D. Wyo.)

ORDER AND JUDGMENT *
Before SEYMOUR, BRORBY , and BRISCOE , Circuit Judges.
After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not materiallyassist the determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The c ase is therefore ordered submitted without oral argument.
Mr. John H. Fivaz, a/k/a John Hardway, appeals his sentence imposed after-2-

his guilty plea to conspiracy to commit mail fraud in violation of 18 U.S.C. § 371. We exercise jurisdiction under 28 U.S.C. § 1291, an d affirm.
Mr. Fivaz participated in an extensive Ponzi scheme whereby he and others collected at least $7 million from 929 investors inreturn for promised yields of four percent to seven percent per month. Nearly al l representations made to investors enticing them to invest were false. Inst ead of applying the funds as represented, Mr. Fivaz and others used the money fr om recent investors to pay "interest" payments to earlier investors. They enc ouraged potential investors to contact earlier investors who received substantial interest payments as a lure to investing in their scheme. Meanwhile, Mr. Fivaz si phoned substantial funds for his own use.
After his arrest, Mr. Fivaz entered into a plea agr eement with the Government. In this agreement, the parties agreed the fraudulent conduct involved $7 million.

The calculation of Mr. Fivaz' sentence in his Pre-S entence Investigation Report ("PSR") included a fourteen-level increase u nder United States Sentencing Guidelines Manual ("U.S.S.G.") § 2F1.1(b)(1)(O), be cause the total loss involved-3-

in the fraudulent conduct was between $5 million an d $10 million. After taking into account other adjustments and the impact of th e plea agreement, Mr. Fivaz' total offense level was 19, with a criminal historycategory of III, resulting in a recommended sentence between thirty-seven to forty- six months. Mr. Fivaz made several written objections to the PSR, but he did n ot object to the loss calculation under § 2F1.1(b)(1)(O).
Just prior to Mr. Fivaz' sentencing hearing, at the court's request, the Government submitted a restitution memorandum showi ng a reported actual net loss of $589,846.50. The Government calculated thi s amount from the reports of sixty-nine victims.
At sentencing, Mr. Fivaz objected to the fourteen-l evel increase under U.S.S.G. § 2F1.1(b)(1)(O), arguing the appropriate loss under the Guideline should be the amount of restitution, $589,846.50, n ot the total amount of money involved in his fraudulent conduct, $7 million. Th e district court overruled Mr. Fivaz' objection. It found, based on the plea agre ement, the PSR, and the restitution memorandum, the total loss was in the n eighborhood of approximately $7 million. Applying the fourteen-level increase u nder § 2F1.1(b)(1)(O), the court sentenced him to forty months incarceration f ollowed by two years of1 The Government claims Mr. Fivaz waived this issue because he failed to

raise it until the sentencing hearing. Although we encourage objections to be made prior to sentencing, objections to a PSR may b e made at the hearing without waiving the issue on appeal. See United States v. Deninno , 29 F.3d 572, 580 (10th Cir.) (ruling failure to object to PSR prior to sentencing or at the hearing, waives the issue for appeal), cert. denied, 513 U.S. 1158 (1994). Consequently, Mr. Fivaz did not waive this issue.

2The 1995 edition of the Guidelines Manual was use d in this case.
-4- supervised release. Mr. Fivaz was also ordered to pay restitution of $589,846.50.
On appeal, Mr. Fivaz renews his argument that the d istrict court erroneously used the total amount involved in his f raudulent scheme, $7 million, to compute the fraud loss for purposes of U.S.S.G. § 2F1.1(b)(1)(O), instead of the amount of restitution ordered, $589,846.50. 1 We review the district court's legal interpretation of U.S.S.G. § 2F1.1 de novo . S ee United States v. Kunzman , 54 F.3d 1522, 1531 (10th Cir. 1995). Under U.S.S.G . § 2F1.1(b)(1) (1995), 2the base offense level for a fraud offense is increasedaccording to the amount of loss to the victims. The Guidelines clearly do not limi t the § 2F1.1 loss to the amount of restitution. Unlike restitution, which must be measured by the actual losses sustained by victims as of the sentencing date, see 18 U.S.C. § 3663(b)(1), the loss calculation under § 2F1.1 measures "the magnitude of the crime at the time it was committed." United States v. Janusz , 135 F.3d 1319, 1324 (10th Cir. 1998);-5-

see also United States v. Messner , 107 F.3d 1448, 1455 (10th Cir. 1997) (distinguishing between the amount of loss for rest itution orders from "loss" for purposes of sentencing).

Mr. Fivaz also contends the district court incorrec tly calculated the loss for purposes of § 2F1.1 because the $7 million figure w as not reduced for payments made back to investors to reflect the net value of the loss. It is within the district court's discretion to determine the method of loss calculation it will use when calculating a loss for purposes of § 2F1.1. See U.S.S.G. § 2F1.1, comment. (n.8) (permitting the court to consider a number of facto rs in estimating the loss). We review the district court's factual determination f or § 2F1.1 under the clearly erroneous standard, giving due deference to the dis trict court's application of the Guidelines to the facts. Janusz , 135 F.3d at 1324.
The parties do not dispute that out of the $7 milli on invested, $6 million was paid to Mr. Fivaz, his co-conspirators, and inv estors. Nonetheless, relying on the plea agreement and the PSR, the district court concluded the intended loss was the $7 million since "all we have is the investmentthat was made by all of these individuals and the fact that everyone has acknowle dged that funds returned to victims were not principal of the investment, but r ather income." A court may-6-

appropriately refuse to deduct interest payments pa id to investors in calculating the investors' loss if it also chooses not to incre ase the loss for promised interest. See Kunzman , 54 F.3d at 1532. Mr. Fivaz claims he never stipu lated that the funds returned to investors constituted interest. However, the district court relied on Mr. Fivaz' plea agreement, where Mr. Fivaz agree d the preliminary loss for purposes of § 2F1.1(b)(1) was approximately $7 mill ion. The court also relied on the PSR, which indicated the $6 million withdrawn f rom the funds invested "includes monies used for alleged 'interest' payments made to lull investors into further participation in the [fraudulent] scheme as well as monies used to pay the salesmen/initiators commissions." Under these circ umstances, the district court's conclusion the money returned to investors was inte rest was not unreasonable.
Furthermore, we note the district court relied on the restitution memorandum, which listed sixty-nine victims' net lo sses, out of 929 victims, as $589,846.50, to support its finding that over $7 mi llion was invested. In light of the § 2F1.1 commentary, which allows the court to c onsider the number of victims and the average loss as to each victim, and the inf ormation contained in Mr. Fivaz' plea agreement and PSR, the court could have reasonably found a loss of $7 million. See U.S.S.G. § 2F1.1, comment. (n.8). Hence, we concl ude the-7-

district court's loss calculation was not clearly e rroneous.
Accordingly, we AFFIRM
. Entered for the Court
WADE BRORBY United States Circuit Judge