Opinion ID: 3012913
Heading Depth: 2
Heading Rank: 2

Heading: The Sentencing Guidelines Calculation

Text: Since the District Court uses the greater of actual or intended loss when imposing a sentencing enhancement, see U.S.S.G. § 2F1.1, application note 8, we must affirm the District Court’s imposition of a seven (or eight, as discussed supra) offense level increase if that increase was based on a finding that Feldman intended a loss (greater than the amount of actual loss) even though we concluded above that the District Court erred in determining the actual loss caused by Feldman’s crime.4 Indeed, a defendant can be sentenced based on his intended loss even if it was impossible for any loss to have occurred. See United States v. Geevers, 226 F.3d 186, 195 (3d Cir. 2000) (“[W]e join the majority of courts of appeals in holding that impossibility is not in and of itself a limit on the amount of intended loss for purposes of calculating sentences under the guidelines.”).5 Thus, even if Feldman could not have caused any loss by concealing exempt assets, he could still be subject to a sentencing enhancement if he thought he would cause a loss by concealing the assets. 4. This case is governed by the 2000 version of the Sentencing Guidelines. 5. We note that a later version of the Sentencing Guidelines defines intended loss as “includ[ing] intended pecuniary harm that would have been impossible or unlikely to occur (e.g. as in a government sting operation, or an insurance fraud in which the claim exceed the insured value.)” U.S.S.G. § 2B1.1, application note 2. 14 Feldman claims that the government failed to meet its burden of proving by a preponderance of the evidence that he intended to cause a loss to his creditors; he asserts that once he presented evidence suggesting that he thought his creditors would be unaffected by the concealment of what he believed to be exempt assets, the government was obligated to present evidence to the contrary. See United States v. Hayes, 242 F.3d 114, 119 (3d Cir. 2001) (holding that the government has the burden of proving loss); Napier, 273 F.3d at 279 (“The government bears the burden to prove by a preponderance of the evidence the facts in support of a sentence enhancement.” (citing Evans, 155 F.3d at 253)). The government argues that it met the burden of proof and urges us to adopt a bright line rule that “[i]ntended loss includes the value of assets concealed from creditors and the bankruptcy court.” The government maintains that by filing a petition for bankruptcy, Feldman demonstrated his intent to be discharged from the debt he owed to the credit card companies; Feldman also admittedly concealed assets to “speed along” the process. Thus, the argument continues, Feldman committed a crime with the intent that it would lead to the discharge of the entire amount of debt owed. Once again the government cites a string of cases from other jurisdictions, which, it asserts, stands for the proposition that intended loss is the amount of debt from which the defendant sought to be discharged. See United States v. Holland, 160 F.3d 377, 381 (7th Cir. 1998) (“In imposing sentence, the district judge found that the acts of bankruptcy fraud were an attempt to conceal . . . assets in order to obtain a discharge of $454,000”); United States v. Graham, 60 F.3d 463, 468 (8th Cir. 1995) (“The fact that his scheme was flawed does not persuade us that he intended for the bankruptcy estate to lose any less than the amount he stood to gain had his deception been better executed.”); United States v. Shadduck, 889 F. Supp. 8, 10 (D. Mass. 1995) (“[The defendants] intentionally concealed assets from the Bankruptcy Court and their creditors, and the value of those assets is properly considered intended loss.”). See also United States v. Gunderson, 55 F.3d 1328 15 (7th Cir. 1995); United States v. Edgar, 971 F.2d 89 (8th Cir. 1992). We do not believe, however, that these cases stand for the proposition that intended loss is always the amount of debt from which the defendant sought to be discharged, and the cited cases do not involve a claim by the defendant that he thought the assets he concealed were exempt. We think our decision in United States v. Kopp, 951 F.2d 521 (3d Cir. 1991), is instructive on this point. Kopp clarified the meaning of intended loss under the Sentencing Guidelines where the defendant pled guilty to procuring a bank loan by fraud. We held that the defendant’s intent to repay a fraudulently obtained loan should be considered when determining the amount of intended loss. In Kopp, it appeared that the defendant had intended to repay (with interest) the fraudulently obtained loan. The defendant in Kopp lied about the rental income from his business, and the bank indicated that it would not have loaned him the money if he had been honest, but he did give collateral for the loan and made payments on it before he defaulted. Id. at 536. In that case, we did not adopt a bright line rule that intended loss is the amount of the loan the defendant fraudulently obtained. We could have accepted the argument that the defendant intended to obtain a loan and accomplished that goal by committing fraud, so that he intended to cause a loss of the amount of the loan (this is essentially what the government asks us to do here), but we did not because we concluded that “[i]ntended loss refers to the defendant’s subjective expectation.” See Yeaman, 194 F.3d at 460 (citing Kopp, 951 F.3d at 529-531). The government asserts that in United States v. Shaffer, 35 F.3d 110, 115 (3d Cir. 1994), we limited the holding in Kopp to situations “where misrepresentations are accompanied by an intent to perform lawfully.” However, Shaffer involved only the calculation of actual loss (in particular the question whether actual loss is determined at the time of sentencing or when the crime was detected) and the panel in Shaffer only discussed Kopp’s language concerning actual loss. Thus, we do not believe that Shaffer limits our use of Kopp to determine the meaning of intended loss. Id. at 113 (“The present case does not involve an intended loss.”). 16 The essential flaw in the government’s argument is in its failure to recognize that Feldman must have intended that a loss be caused by the commission of a crime. It is not enough that Feldman intended to be discharged from debt in general; indeed that is the whole point of filing a petition for bankruptcy. Instead we must look at what Feldman sought to gain from committing the crime. If Feldman honestly thought that the only thing he would gain from the concealment of assets was a more speedy discharge in bankruptcy, then he arguably did not intend any monetary loss to his creditors. In the case at bar, as in Kopp, the District Court had to carefully examine what Feldman intended to happen when he concealed assets. That said, we do not believe that to meet its burden of proof the government must disprove Feldman’s claim that he thought his creditors would receive the same payment if he concealed assets. We conclude that Feldman’s intent can be inferred from the fact that he concealed a large amount of assets; it is appropriate for the District Court to consider the reason why most people would conceal assets and determine that it is simply unbelievable that Feldman would hide over a million dollars in assets only to achieve a faster discharge. Most people would not risk committing a crime to make the bankruptcy process more efficient. See Geevers, 226 F.3d at 192-93 (“The District Court must determine [the defendant’s] subjective intention, and it can draw reasonable inferences from the nature of the crime that he sought to perpetrate. . . . [T]hen [the defendant] is free to come forward with evidence to demonstrate that he actually intended something less.”). Moreover, the fact that Feldman concealed two Jaguar vehicles that were not even arguably exempt suggests that he concealed all of the assets to prevent his creditors from receiving payment. The District Court expressed disbelief of Feldman’s stated intent during the initial sentencing hearing: [W]e have to assume that no one would rob a bank that they knew had no money in it, right? I mean that’s what he did here. He undervalued property because he was trying to defraud his creditors . . . not because he believed that had he listed it it wouldn’t be part of the estate. I mean that seems to me — I don’t see how 17 anybody could argue to the contrary. So he intended that the estate be decreased by the amount that he was failing to disclose, right? That was his intent. . . . People don’t do things like that just to simplify the procedure. The District Court never made a determination of whether the assets Feldman claimed were held by him and his wife as tenants by the entireties would have been exempt if he had acted lawfully, which would bear upon the credibility of Feldman’s claim that he did not intend to cause a loss. However, loss under the Sentencing Guidelines is determined by calculating the greater of actual or intended loss, and intended loss includes loss that was impossible. See Geevers, 226 F.3d at 195. We can therefore affirm the District Court’s finding that the government had met its burden of proving by a preponderance of the evidence that Feldman intended to cause a loss of the full amount of debt owed, even though we concluded that the District Court erred in determining actual loss. The District Court impliedly found that Feldman intended to inflict a loss in the amount of the entire debt from which he sought to be discharged and that finding is supported by assumptions about the nature of Feldman’s crime and the fact that he concealed other assets that were not even arguably exempt from bankruptcy. Therefore the sentence imposed must be upheld.