Opinion ID: 685668
Heading Depth: 2
Heading Rank: 3

Heading: Mende's Base Offense Level.

Text: 16 Because Mende's base offense level under the Federal Sentencing Guidelines depends in large part upon the amount of actual and intended loss inflicted by his fraud, U.S.S.G. 2F1.1(b), Application Notes 7, 8, the district court held two separate hearings to determine the amount of that loss. The district court found that Mende had intended to defraud his victims out of $70,000,000, and that his victims had incurred $17,000,000 in actual losses. The banks' losses include $3,000,000 in advance fees, $13,000,000 incurred from defaulted loans guaranteed by Mende's companies, stock losses of $647,000, and additional actual losses of $500,000. The district court found the amount of total loss in excess of $80,000,000, resulting in an eighteen-level increase in Mende's base offense level under U.S.S.G. 2F1.1(b)(1)(S). Mende was subsequently sentenced to 155 months imprisonment. 17 Mende contends that the district court erred by including in the calculation of actual loss the $13,000,000 in losses that the banks incurred when Mende's company failed to honor its loan guarantees. Mende argues that only the advance fees paid by the banks should have been included as actual loss. The losses suffered from defaulted loans guaranteed by his company, he maintains, should be viewed as incidental and consequential damages and therefore should not be included in the calculation of actual loss under the Guidelines. We review the district court's interpretation and application of the Federal Sentencing Guidelines de novo, and its underlying findings of fact for clear error. United States v. Shaw, 3 F.3d 311, 312 (9th Cir.1993). 18 Mende relies on United States v. Wilson, 993 F.2d 214 (11th Cir.1993), in which the Eleventh Circuit held that loss within the meaning of the Federal Sentencing Guidelines did not encompass incidental and consequential damages. However, Wilson is inapposite. The type of loss sustained by the victim banks in this case runs well beyond application fees. Mende's companies fraudulently contracted to guarantee these loans in exchange for an advance fee, and the victim banks issued loans in reliance on those guarantees. It is clear that without a binding guarantee of repayment, none of the victim banks would have issued the loans. It is equally clear that once the borrowers defaulted, the victim banks incurred $13,000,000 in losses as a direct result of Mende's companies' refusal to honor their contractual obligations. Unlike Wilson, there can be no doubt that Mende's fraud cost his victims more than just advance fees. In this case the district court found the victim banks' losses to be the direct result of the defendants' fraudulent misrepresentations, rather than mere consequential and incidental damages. We do not find the district court's finding clearly erroneous; rather, we find these findings to be soundly based on the record.