Opinion ID: 754307
Heading Depth: 2
Heading Rank: 1

Heading: Actual or Intended Loss

Text: 8 Riley's first contention on appeal relates to the district court's determination that his sentence should be based on the intended loss from the scheme, and not the actual loss. Under § 2F1.1 of the sentencing guidelines, the offense level for a tax fraud conviction is determined in large part by assessing the amount lost--the higher the loss, the higher the offense level. Application note 7 provides that if an intended loss that the defendant was attempting to inflict can be determined, this figure will be used if it is greater than the actual loss. U.S.S.G. § 2F1.1, application note 7. 9 In United States v. Lorenzo, 995 F.2d 1448, 1460 (9th Cir.1993), we specifically rejected the argument that in the context of a tax fraud scheme,  'loss' under section 2F1.1 means only actual loss. Instead, we held in Lorenzo that the sentencing court should use the amount of the intended loss (where higher) in determining the proper sentence. We reaffirmed this position in United States v. Robinson, 94 F.3d 1325, 1328 (9th Cir.1996). 10 Nevertheless, Riley contends that some of our recent decisions have signaled a shift in fraud cases to the so-called economic reality approach, under which a court bases its sentence in part on the amount of actual loss. In support of this contention, Riley cites to United States v. Harper, 32 F.3d 1387 (9th Cir.1994). As Harper and other similar cases make clear, however, the economic reality approach is simply one means of arriving at a fair measure of the actual or intended loss. The approach is particularly useful in certain types of fraud cases in which the value of the property obtained, or sought to be obtained, by means of the fraud bears little or no relation to the amount of loss the defendant actually inflicted or intended to inflict. 1 See, e.g., United States v. Allison, 86 F.3d 940, 944 (9th Cir.1996) (calculating the loss from credit card fraud by subtracting payments the defendant made to the credit card accounts). In those fraud cases, the intended losses cannot be calculated as in theft cases, that is, by simply looking at the value of the object of the fraud. Instead, the intended loss calculation requires a more sophisticated examination of other factors, including the amount of actual loss. In any event, the objective under the economic reality approach is to arrive at a fair assessment of the loss the defendant actually inflicted or intended to inflict, as contemplated by the guidelines. 11 In this case, it is clear that the amount set forth on the face of the claims for refund is the precise amount of loss Riley intended to inflict. All that is required is a simple mathematical calculation, and there is no reason to use any more sophisticated method of determining the loss. Accordingly, we conclude that the district court did not err in calculating the amount of the intended loss or Riley's base offense level.