Opinion ID: 612373
Heading Depth: 4
Heading Rank: 2

Heading: The Tasker Street property

Text: The Government sought to assess $574,000 worth of losses for rental income and unnecessary improvements to the property on Tasker Street, which Fumo induced Citizens Alliance to purchase and lavishly furnish, and then used as his Senate office with little payment from the Senate for rent or maintenance. The District Court, however, credited against that figure the fair market value of the property, which ultimately resulted in a significant credit to Fumo. The Government appeals that decision and its reasoning, and argues in the alternative that if Fumo is given credit for the 8 Judge Garth disagrees that the District Court did not err. He would hold that the evidence introduced by the Government, and the exhibits that were put in evidence by the Government, detailing the cost of tools that were purchased and were used by Fumo for personal purposes ($93,409.52) should have been added to the loss calculation in full. The District Court‟s ruling in this regard eliminated the findings made by the jury beyond a reasonable doubt and significantly the court did not issue its own factual findings until after the sentencing hearings were over. In so doing, the Government was not able to argue that the Court‟s findings were clearly erroneous. 41 fair market value of the building, the District Court should set against it the costs of acquiring, maintaining, and improving the building. Application Note 3(E)(i) to Section 2B1.1 of the Guidelines provides that “[l]oss shall be reduced by . . . [t]he money returned, and the fair market value of the property returned and the services rendered, by the defendant or other persons acting jointly with the defendant, to the victim before the offense was detected.” (emphasis added). The use of the word “returned” signifies that for a credit to apply, the defendant must have either returned the very same money or property, or have provided services that were applied to the very same money, value, or property that was lost or taken during the fraud. See also United States v. Radtke, 415 F.3d 826, 842 (8th Cir. 2005) (noting that fringe benefits paid to defrauded employees by the defendant were “not . . . the sort of credit against loss contemplated by the guidelines” because they were “other benefits provided to employee-victims that do not correlate directly with the amounts withheld from the third-party administrator as part of the fraud.” (emphasis in original)). Here, the Government argues that the money or value taken was the maintenance and improvement costs as well as the rent that Fumo was not charged by Citizens Alliance as owner of the property. Fumo did not pay or refund any of the maintenance, improvements, or lost rent himself, which would have been “money returned” under Application Note 3(E). Nor did he render services related to these loses, such as assisting with the maintenance or improvements himself. The Government did not argue that the loss from the fraud included the funds spent by Citizens Alliance on purchasing the property. Thus, because neither that property itself nor its monetary value were ever alleged to have been taken as part of the fraud in the first place, they could not be “returned” to Citizens Alliance under Application Note 3(E) and credited against the losses. To explain the error in the District Court‟s ruling in a 42 less technical way, the maintenance, improvements, and rental income the Government identified as losses were conceptually independent and collateral to any value received because of the purchase of the building. They would have been costs even if Citizens Alliance had owned the building beforehand, or even if it had been a lessee rather than owner, who subleased the space to Fumo. Fumo essentially seeks to set the value of an independent “good” he purportedly secured for Citizens Alliance against the costs his frauds inflicted on it.9 He offers no cases in support of this theory of loss calculation, which is unsurprising, as it would allow, for instance, an officer of a corporation who embezzled from his employer to claim credits against the loss caused by the embezzlement for overall increases in the company‟s assets under his watch. Accordingly, we conclude that the District Court‟s decision to credit the value of the Tasker Street property against the losses resulting from Citizen Alliance‟s lost rent, improvements, and maintenance costs was an abuse of discretion.