Opinion ID: 804324
Heading Depth: 4
Heading Rank: 1

Heading: The Loss Amount Finding

Text: The amount of loss to be used in calculating the GSR was a hotly contested issue at sentencing. The government and the defendants submitted memoranda describing their positions on the issue of loss, and the court held an evidentiary hearing on the issue. The government argued that pursuant to Application Note 3(F)(v) to § 2B1.1 of the United States Sentencing Guidelines (USSG), the amount of loss should be calculated as the total 3 As noted, McNally was the quality control manager for the Ready-Mix Concrete Division. Blais, Farrar, and Thomas were each dispatch managers or assistant managers in the Division. -11- amount paid by the government for the concrete that failed to meet project specifications, with no credit provided for the value of the goods and services actually provided. Thus, the government took the number of 10/9 loads delivered to the Big Dig between 1999 and 2004, 2,637 -- a number that was identified in Aggregate's records -- and added to it another 2,700 loads, an estimate of the number of 10/9 loads delivered prior to 1999 and on nights and weekends. Finally, the government also included an estimated 1,200 loads of 10/9 concrete sent to other public construction projects within Massachusetts. In total, these loads included approximately 64,163 yards of non-specification concrete. The government asserted that the average price paid by the government per yard of concrete was $80.90. Accordingly, the government argued that the appropriate loss amount for Prosperi and Stevenson was approximately $5.2 million.4 In contrast, Prosperi and Stevenson argued that there was no loss attributable to them, because the Commonwealth got what it contracted for and expected to receive. In particular, they noted that the MTA certified to federal authorities that post- 4 The government characterized this as a conservative estimate, noting that it did not take into account concrete delivered to the Big Dig that did not contain required fly ash or to which water had been impermissibly added. It also argued that this figure was low because it did not include an amount for reasonably foreseeable repairs necessitated by the use of nonspecification concrete, although it did not attempt to estimate what repairs would be needed. -12- construction testing showed that the materials used in the project conformed with applicable plans and specifications. The MTA did so after the conduct at issue in this case came to light. Additionally, Prosperi and Stevenson pointed to independent testing commissioned by the government that focused on the areas of the Big Dig believed to have received non-specification concrete. These tests showed that, when completed, those sections of the project met or exceeded standards for concrete strength and permeability. Prosperi and Stevenson also noted that, considered as a whole, little of the total amount of concrete sent to the Big Dig failed to meet the relevant specifications. From their perspective, the proper measure of loss was the cost of repairs necessary to fix or replace inferior work. Given their claim that the finished product met safety standards and required no repairs, they argued that there was no monetary harm. They also pointed out that there was no actual doublebilling for concrete, since the government did not pay for concrete by the load, but instead paid by construction unit (e.g., per foot of completed tunnel) without regard to the amount of concrete actually used. Furthermore, they noted that pecuniary harm is not an element of the crimes charged and that the government did not attempt to prove pecuniary harm during trial. The district court issued a memorandum explaining its decision on the issue of loss. After summarizing the parties' -13- positions, it stated, Needless to say, much of this is not helpful. In a case like this it is difficult to apply a mechanical rule of sentencing. United States v. Prosperi, No. 06-10116, at 5 (D. Mass. May 6, 2010) (Memorandum and Order on Calculation of Loss for Purposes of Sentencing) (Loss Order). The district court noted that part of the rationale for using loss amount to determine the GSR was to eliminate disparities between white- and blue-collar offenders: One of the goals of the Sentencing Guidelines was to give greater equivalence between penalties for white collar crimes like fraud and violent crimes like robbery. One means chosen by the Sentencing Commission to accomplish this goal was by giving greater weight to the amount of loss involved in a scheme to defraud. Id. at 2. Cognizant of this purpose, it explained: Loss is certainly important, but the crimes at issue do not fit the usual white collar crime profile. There was no intent on defendants' part to enrich themselves personally. Nor is there any evidence that defendants intended to do harm to the [Big Dig] project or to the taxpaying public in any specific sense. Id. at 5. The court adopted the government's loss figure of $5.2 million, stating simply that, [a]lthough neither the government or the defendants' methodology can be termed precise, I think on the whole the government's method of calculating loss is closest to the mark. Id. However, after making this choice, the district court -14- put the parties on notice that it would not allow the loss figure to drive its sentencing decision, stating that I do not believe the estimated loss figure -- given the nature of the case -- has pivotal significance in fashioning an appropriate sentence, something the parties might keep in mind in composing their sentencing arguments and recommendations. Id. The Probation Department shared the court's concern about the significance of the loss amount. After the court issued its Loss Order, the Probation Department revised the Presentence Reports for both Prosperi and Stevenson in light of the court's conclusion. The final paragraph of the Presentence Reports for both Prosperi and Stevenson notes that [t]he Court may wish to consider whether the loss in this instance is overstated.