Opinion ID: 167108
Heading Depth: 2
Heading Rank: 6

Heading: Allocation of Loan Proceeds in Determining Amount of Loss

Text: 110 In the first of his challenges to his sentence, Mr. Wittig argues that the district court erred in applying the gross receipts provision of the Guidelines in determining the amount of loss and arriving at an offense level. His argument concerns the proper interpretation of the Guidelines, and we therefore engage in de novo review. United States v. Brown, 314 F.3d 1216, 1222 (10th Cir.2003). USSG § 2B1.1(b)(12) provides that: 111 (Apply the greater) If— 112 (A) the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense, increase by 2 levels; 113 (B) the offense substantially jeopardized the safety and soundness of a financial institution, increase by 4 levels. 114 If the resulting offense level determined under subdivision (A) or (B) is less than level 24, increase to level 24. 115 The commentary to the Guidelines provides a definition of gross receipts: 116 Gross Receipts Enhancement Under Section (b)(12)(A) 117 (A) In General — For purposes of subsection (b)(12)(A), the defendant shall be considered to have derived more than $1,000,000 in gross receipts if the gross receipts to the defendant individually, rather than to all participants, exceeded $1,000,000. 118 (B) Definition -Gross receipts from the offense includes all property, real or personal, tangible or intangible, which is obtained directly or indirectly as a result of such offense. See 18 U.S.C. § 982(a)(4). 1 119 USSG § 2B1.1 cmt. n. 9 (2001) (emphasis added). 120 At sentencing, the district court relied on § 2B1.1(b)(12) to conclude that, by receiving the $1.5 million increase in his line of credit before the funds were transferred to Mr. Weidner's real estate investment in Arizona, Mr. Wittig received gross receipts of more than $1 million. 121 Mr. Wittig now contends that the district court erred because it also attributed the same $1.5 million in receipts to Mr. Weidner. This double attribution, Mr. Wittig maintains, is inconsistent with the principle set forth in the Guideline commentary that, in order for the enhancement to level 24 to apply, the gross receipts to the defendant individually, rather than to all participants, exceeded $1,000,000. Id. 122 Mr. Wittig invokes a line of cases applying this Guideline provision and concluding that no part of the amount found to have been derived by one defendant can be counted as having been derived by another defendant. United States v. Kohli, 110 F.3d 1475, 1477 (9th Cir.1997); see also United States v. Castellano, 349 F.3d 483, 486 (7th Cir.2003) (applying § 2B1.1(b)(12) and concluding that the defendant must receive proceeds individually); United States v. Nesenblatt, 171 F.3d 1227, 1229-30 (9th Cir.1999) (same); United States v. Millar, 79 F.3d 338, 346 (2d Cir.1996) (remanding for factual findings to establish the amount of gross receipts [that the defendant] derived individually—not jointly). 123 In response, the government invokes a Third Circuit decision stating that it is irrelevant how [the defendant] spent the money [ i.e., the gross receipts] of the offense, once he obtained it. United States v. Bennett, 161 F.3d 171, 193 (3d Cir.1998). Thus, the government's position is that Mr. Wittig himself received more than $1 million in gross receipts of the offense, and that the fact that Mr. Wittig chose to loan this money to Mr. Weidner is irrelevant. 124 In our view, the various decisions cited by Mr. Wittig and the government are distinguishable from the instant case in important respects. The decisions upon which Mr. Wittig relies do indicate that the same receipts cannot be counted against more than one defendant. However, unlike this case against Mr. Wittig and Mr. Weidner, none of these cases involved a series of offenses in which each defendant successively used the receipts in a separate fashion (with one defendant, Mr. Wittig, obtaining money from a bank and then earning interest by loaning that money to his codefendant Mr. Weidner, and the codefendant, Mr. Weidner, using the proceeds of the loan to profit from a real estate investment). 125 Conversely, the Third Circuit decision on which the government relies does not involve the attribution of the same receipts to codefendants or to the defendant and another person who somehow participated in the criminal scheme. In Bennett, the defendant argued that he did not receive certain receipts of the offense of conviction because he subsequently transferred much of the money to consultants and others who did work for [his company]. Id. In rejecting that argument, the Third Circuit did state that it is irrelevant how [the defendant] spent the money after he obtained it. Id. However, there is no indication in the Third Circuit's opinion that the individuals to whom the defendant transferred the receipts were codefendants or otherwise participated in the criminal scheme. Thus, Bennett does not offer the government a way around the Guideline language stating that the sentencing court may consider gross receipts to the defendant individually, rather than to all participants.  USSG § 2B1.1 cmt. n. 9 (2001) (emphasis added). 126 In light of the ambiguity of the Guideline language, the lack of case law resolving the issue of how to attribute receipts in these circumstances, and the lack of a persuasive argument from the government, we conclude that the district court erred in attributing the $1.5 million in gross receipts to both Mr. Wittig and Mr. Weidner. See Castellano, 349 F.3d at 486 (discussing § USSG 2B1.1(b)(12) and stating that [n]othing in the Sentencing Guidelines specifies what it means to receive proceeds `individually'); United States v. Gay, 240 F.3d 1222, 1232 (10th Cir.2001) (The rule of lenity requires courts to interpret ambiguous statutes, including the Sentencing Guidelines, in favor of criminal defendants.). 2 127 Prior to the Supreme Court's decision in Booker, our conclusion that a Guideline provision was ambiguous required us to remand with instructions to follow the interpretation of the Guidelines that would produce the lesser sentence. See United States v. Bazile, 209 F.3d 1205, 1207 (10th Cir.2000). Post- Booker, however, our approach is somewhat different. In particular, after Booker, the district courts are [r]elieved of the mandatory application of the guidelines and are now permitted to give more sway in sentencing to the factors enumerated in 18 U.S.C. § 3553(a). United States v. Resendiz-Patino, 420 F.3d 1177, 1184 n. 6 (10th Cir.2005). 128 The § 3553(a) factors include the nature and circumstances of the offense. 18 U.S.C. § 3553(a)(1). In our view, the circumstances of these offenses include those noted by the government here—that Mr. Wittig and Mr. Weidner each used the $1.5 million from the line of credit increase in different ways and derived some benefit from it. Thus, the district court may properly consider this aspect of the offenses in resentencing under the post- Booker regime.
129 Mr. Weidner makes only a cursory challenge to the gross receipts enhancement of his sentence. He argues that because the loan from Mr. Wittig arose out of a legitimate borrower/lender relationship, Wittig's Br. at 33, the $1.5 million was obtained from Mr. Wittig and not from a financial institution, as required by USSG § 2B1.1(b)(12). 130 This argument merely restates Mr. Weidner's challenge to the sufficiency of the evidence. As we have noted, there was ample evidence from which the district court could conclude that the $1.5 million transferred to Mr. Weidner's Arizona real estate investment was funded by the $1.5 million increase in Mr. Wittig's line of credit. Thus, the district court properly concluded that the $1.5 million was obtained from a financial institution. 131