Opinion ID: 196027
Heading Depth: 2
Heading Rank: 1

Heading: The Anatomy of the Departure Decision.

Text: 12 In fraud cases controlled by the guidelines, the amount of the victims' monetary loss (actual or intended) is a proxy for the seriousness of the offense, and, thus, a key determinant of the severity of the perpetrator's sentence. See United States v. Lilly, 13 F.3d 15, 17, 19 (1st Cir.1994); United States v. Tardiff, 969 F.2d 1283, 1285 (1st Cir.1992). Recognizing, however, that no proxy is perfect, the applicable edition of the sentencing guidelines cautions that: 13 In a few instances, the total dollar loss that results from the offense may overstate its seriousness. Such situations typically occur when a misrepresentation is of limited materiality or is not the sole cause of the loss ... In such instances, a downward departure may be warranted. 14 U.S.S.G. Sec. 2F1.1, comment. (n. 11) (Nov.1987). 15 The defendants in this case all moved for downward departures based on application note 11. The district court accommodated their requests, linking its largesse to a linchpin finding that numerous factors, apart from the defendants' conduct, inflated the losses sustained by the FDIC. The court premised its linchpin finding primarily on three subsidiary findings. (1) The court remarked the bank's gadarene rush to participate in the condominium boom despite the obvious risks. To the court's way of thinking, this overeagerness was driven by greed--after all, the bank based incentive compensation for top officials on loan production and fomented a lend at all costs mentality that led senior managers to condone the defendants' shenanigans. The court expressed great skepticism about senior management's professed lack of knowledge or responsibility, concluding that, at the very least, management had acted negligently, particularly in authorizing loan approvals, and had bent its policies grotesquely to retain the Rostoff group's business. In the court's view, these shortcomings contributed mightily to the extent of the eventual losses. (2) Next, the court found that the buyers were neither dupes nor victims in the traditional sense. To the contrary, the court thought they had become willing participants in the defendants' scheme. Their cupidity drove up prices in the condominium market and, thus, contributed substantially to the amount of money eventually lost. (3) Finally, the court observed that economic forces not under the control of, or precipitated by, the defendants, especially the sudden, unforeseen collapse of the New England real estate market--a collapse that decimated the demand for residential condominiums--increased the magnitude of the losses. 16 The district court believed that these factors, in combination, contributed so directly to the extent of the loss that the defendants were entitled to a substantial measure of relief. In the sections that follow, we test the legal and factual sufficiency of the court's stated ground. Finally, we examine the reasonableness of the actual departures insofar as they affect Harris, DiCologero, and Bonaiuto. 17