Opinion ID: 743028
Heading Depth: 4
Heading Rank: 1

Heading: Meaning of Loss

Text: 19 As a preliminary matter, we recognize that this court has never determined the appropriate definition of loss in the context of a conviction under 7 U.S.C. § 2024. But see United States v. Scott, 929 F.2d 313, 315 n. 2 (7th Cir.1991) (addressing loss in food stamp fraud case without defining the term). Section 2F1.1, Application Note 7 of the U.S.S.G. initially directs us to consider § 2B1.1, Application Note 2, which reads,  'loss' [is] the value of the property taken, damaged, or destroyed. Both Barnes and the Government seem to suggest that this is the proper measure of loss for purposes of sentencing enhancement in food stamp fraud cases such as this one. However, § 2F1.1 goes on to note that there are ... instances where additional factors are to be considered in determining the loss....In a case involving diversion of government program benefits, loss is the value of the benefits diverted from intended recipients or uses. U.S.S.G § 2F1.1, Application Note 7(d) (emphasis added). Every circuit that has heretofore conclusively addressed the applicable valuation of loss pursuant to a 7 U.S.C. § 2024(b) conviction has endorsed this more specific definition embodied in Application Note 7(d), and we find no reason to disagree with them. See United States v. Caba, No. 96-1069(L), 1996 WL 685764 (2d Cir. Nov.29, 1996); United States v. Cooper, No. 95-50435, 1996 WL 478724 (9th Cir. June 4, 1996). 20 Barnes does not necessarily dispute the validity of the Government's formula vis-a-vis the U.S.S.G.'s definition of loss. In other words, he does not contend that the methodology of subtracting food sales from Barnes Grocery's and Family Market's aggregated food stamp redemptions fails to capture the value of the benefits diverted from recipients or uses. U.S.S.G. § 2F1.1, Application Note 7(d). Rather, Barnes argues that, assuming there existed a cash-for-food stamp coupon exchange rate of $0.67 on the dollar, it follows that he dispersed approximately two-thirds of the face value of all such coupons to their intended beneficiaries. His approach would result in a loss calculation of only $941,481.33, 9 justifying an eleven-level sentencing enhancement under § 2F1.1(b)(1). We think it clear that Barnes' reasoning misses the mark. Section 2F1.1, Application Note 7(d) makes plain that the definition of loss applicable herein is the value of benefits from intended recipients or uses. True, as Barnes suggests, the Food Stamp Program's intended recipients did receive sixty-seven percent of their benefits after he received his thirty-three percent commission. What Barnes fails to recognize, however, is that his fraudulent scheme diverted a full one-hundred percent of the value of the food stamp coupons he purchased from their intended use--the purchase of specified food products from authorized retailers. In Liparota v. United States, 471 U.S. at 426, 105 S.Ct. at 2088, the Supreme Court explained: 21 [Section] 2024(b)(1) declared it criminal to use, transfer, acquire, alter, or possess food stamps in any manner not authorized by statute or regulations. The statute provides further that [c]oupons issued to eligible households shall be used by them only to purchase food in retail stores which have been approved for participation in the food stamp program at prices prevailing in such stores. 7 U.S.C. § 2016(b) (emphasis added); see also 7 CFR § 274.10(a) (1985). This seems to be the only authorized use. 22 Indeed, food stamp coupons are dispersed to those less fortunate for the sole purpose of ensuring that every citizen of this nation receives sufficient nutrition to enjoy a healthy existence. The defendant's fraudulent actions in this case have not only frustrated that goal, but they have cost the American taxpayers countless thousands of dollars and, in turn, contributed to several of modern society's many ills. That is, it almost goes without saying that food stamp recipients sell their allotments to retailers like Barnes so that they might later be able to purchase products other than the approved food items. One can only speculate what such items would include--alcohol, drugs and the like. We are confident that these are not the uses the Food Stamp Act envisioned, and as such, we shall neither reduce the $2,974,444.00 loss calculation by sixty-seven percent nor find clear error on the sentencing court's behalf. 23