Opinion ID: 765751
Heading Depth: 3
Heading Rank: 2

Heading: The Four Converters for NASA

Text: 102 The District Court adopted the PSI's calculation that the four converters (a type of electronic component) contemplated in Electrodyne's restitution agreement had a value of $57,245.70, the cost of buying four new converters. The restitution agreement provided that Electrodyne would provide NASA with either (1) $14,595.65 and three functioning converters, or (2) $42,650.05 and one functioning converter. The Probation Office apparently added the two dollar amounts together to come up with a total value, presumably on the theory that $14,595.65 was the value of one converter and $42,650.05 was the value of three, although $42,650.05 is not three times $14,595.65. Electrodyne does not challenge the inclusion of the converters' value in the loss calculation as such; rather, it disputes the valuation of particular converters. Thus, we need not address how the converters became part of the loss initially. 103 The parties agree that two of the converters were already in NASA's possession. 9 They were damaged during the criminal investigation when government investigators opened them to look for foreign-manufactured components. Electrodyne argues that the restitution agreement contemplated that Electrodyne would fulfill part of its obligation by repairing those two converters, which it did at a cost of $2000. Electrodyne also provided NASA with a sample converter already in stock; it represents that the cost of that converter was de minimis. Therefore, Electrodyne argues, the appropriate value of the particular four converters involved in this case is $14,595.65 (one converter) plus $2000 (repairs to two converters) plus zero (the fourth, sample converter), because this reflects the cost of restitution to Electrodyne. 104 The government again responds that Electrodyne obtained the underlying contract through fraud by promising American-made components for the contract price and thus can be charged with the full contract price. This ignores the distinction in our caselaw between fraud and theft; NASA's gains have to be counted against the loss. 105 We are persuaded by Electrodyne's argument about the repairs, but not by its argument about the sample converter. NASA had two converters that were damaged by Electrodyne's criminal conduct. 10 As part of its restitution, Electrodyne repaired the harm for $2000. It seems logical that the proper measure of harm is the cost of repairs when that was all that was required, and not the full cost of the converters. See United States v. Sablan, 92 F.3d 865, 869 (9th Cir. 1996) (charging the defendant with the cost of repairs when the result of her activity was damage, not destruction). Indirect support for this proposition is provided by Maurello, supra, in which we held that customers who were satisfied by the services of a defendant who fraudulently represented that he could practice law did not suffer losses. Though the defendant's actions risked harm to them, if that harm did not materialize he could not be assessed with a loss. Similarly, if the harm that materialized was a need for repairs and not a need to replace the entire machine, then the repairs should serve as the measure of the loss. The government does not dispute that the repairs were worth approximately $2000. 106 When it comes to the sample converter, though, Electrodyne is mistaking its costs (which may well be de minimis) with the harm inflicted on NASA. If NASA was deprived of a converter by Electrodyne's criminal conduct, then it was harmed by the value of one converter, which is apparently worth about $14,000 to a buyer. It was not clear error to value the converter at approximately $14,000, reflecting its market value, even if it was not worth as much to Electrodyne, the manufacturer. 107 Basing our calculation of loss on actual harm, it appears from the record that NASA was harmed by being deprived of two converters and by needing repairs to two others. Therefore, the total amount associated with the NASA converters would be approximately $30,000, the value of two converters plus $2000 in repairs.