Opinion ID: 2789095
Heading Depth: 3
Heading Rank: 2

Heading: Losses from Other Loans

Text: The sentence imposed by the district court was not entirely based on the loan that was the subject of the conviction, however. The district court also used losses from other loans to calculate Aaron’s total offense level, increasing the total offense figure by an additional 8 levels. Based on the principles articulated above, the clear and convincing standard of proof should have been applied to determine the amount of the losses from the other loans. Aaron did not plead guilty to fraud for the other loans. He was not charged with a conspiracy, nor did he admit in his plea agreement that he had participated in a scheme to defraud involving multiple transactions. Losses from these loans were based on conduct for which he was not convicted. Aaron did not have a guilt-phase trial where the government 12 UNITED STATES V. HYMAS was required to prove beyond a reasonable doubt that he committed fraud on the other loan applications. Similar to the analysis of Count Four, the fifth and sixth Valensia factors support the use of the heightened standard for the other loans, even though the first four factors may not require that result. Inclusion of the losses from the other loans ultimately resulted in an increase of 8 offense levels, from 10 (based on the loss from the Count Four loan by itself) to 18. This additional 8-level increase more than doubled the Guidelines imprisonment range. Under our precedents, we conclude that the district court should have employed a heightened clear and convincing standard of proof with regard to the losses from those other loans. In United States v. Munoz, for example, we held that the district court was required to use the clear and convincing evidence standard when calculating losses from uncharged conduct. 233 F.3d 1117, 1127 (9th Cir. 2000), superseded on other grounds by statute as stated in United States v. Van Alstyne, 584 F.3d 803, 817–18 (9th Cir. 2009). Two defendants were indicted on ten counts but convicted of only two counts of fraud in connection with specific sales of bus shelters as part of a Ponzi scheme. Id. at 1123. The district court, applying a preponderance of evidence standard, included within the loss calculation the losses from hundreds of sales made to other investors not included in the two counts of conviction. Id. at 1124. We vacated the sentence and remanded for resentencing, holding that, while the sales to the other investors were relevant conduct, the heightened standard of proof should have been used because the enhancement had a “disproportionate effect on the sentence.” Id. at 1127. The same is true here. UNITED STATES V. HYMAS 13 The district court in this case concluded that the appropriate standard of proof was preponderance of evidence based upon a line of cases that applied that lower standard when determining the extent of losses from a conspiracy. The decisions cited by the district court – Treadwell, 593 F.3d at 1001; Berger, 587 F.3d at 1048–49; and United States v. Armstead, 552 F.3d 769, 777 (9th Cir. 2008) – hold that where losses are based on the extent of a criminal conspiracy, those losses need not be proven by clear and convincing evidence because the defendants had the opportunity at trial to challenge evidence of the extent of the fraud conspiracy. In this case, however, the government did not charge Aaron with a conspiracy to defraud that included the other acts of fraud alleged in the indictment. He only pled guilty to one count of fraud regarding a specific loan transaction. He had neither need nor opportunity to contest the alleged conspiracy, and he cannot be sentenced using the lower standard as if he had challenged a conspiracy charge. To be sure, the allegations against the Hymases bore similarities to a conspiracy, and the multiple counts resembled each other by alleging similar misrepresentations in similar loan applications. But the representations were not identical in all applications. Most of the losses included in the district court’s calculation were based on loans that did not contain the specific false representations in Count Four acknowledged in the Plea Agreement. Even as to the loan applications that included the same statements, Aaron argues with justification that his admission that the statements were false in 2007 did not mean he admitted that those same statements were false in earlier years, before the family’s financial circumstances deteriorated. 14 UNITED STATES V. HYMAS The government argues that, even if the district court applied the wrong standard, its decision to impose a 24-month sentence was harmless beyond a reasonable doubt because the sentence varied significantly below the guidelines range. We decline to engage in such guesswork. It is true that the district court might have made the same loss calculation applying the clear and convincing standard, but it might not have, either. The court made a point of stating that it was applying the preponderance standard, and the court’s emphasis on the standard could imply that a higher standard would have resulted in a different loss calculation. Sometimes a district court says in finding a loss amount that it would reach the same result under either standard, but the court in this instance did not. Similarly, the district court might have imposed the same sentence even if it had calculated a lower loss figure under the clear and convincing standard and, as a result, a lower sentencing Guidelines range, but that possible outcome is too uncertain for us to rely upon it. It is also inconsistent with our normal approach to sentencing. “[T]he district court must correctly calculate the recommended Guidelines sentence and use that recommendation as the ‘starting point and initial benchmark.’” United States v. Munoz-Camarena, 631 F.3d 1028, 1030 (9th Cir. 2011) (per curiam) (quoting Kimbrough v. United States, 552 U.S. 85, 108 (2007)) (internal quotation marks omitted). We cannot say on this record that the failure to calculate the correct recommended Guidelines sentence was harmless error because the district court’s analysis for the extent of the variance was not based on the correct range. Id. at 1030–31. Accordingly, we vacate Aaron Hymas’s sentence and remand the matter to the district court. On remand, the court should apply the clear and convincing standard in calculating losses attributable to the other loans. UNITED STATES V. HYMAS 15