Opinion ID: 197215
Heading Depth: 3
Heading Rank: 1

Heading: Calculation of the Loss

Text: 27 Defendants next challenge the court's seven level enhancement under U.S.S.G. § 2F1.1(b)(1), 1 based on its calculation of a $124,000 loss to the victims of defendants' fraud. 2 They maintain that because Dailey's pension fund purchased Scott's mortgage from CCU for the full $160,000, this figure should not enter into the loss calculation. This was not a purchase for value, however, but a form of laundering. 28 We previously examined the mechanics of loss calculation as pertaining to § 2F1.1 in some detail in United States v. Bennett, 37 F.3d 687 (1st Cir.1994), and again in United States v. Kelley, 76 F.3d 436 (1st Cir.1996), and see no need to engage in lengthy analysis here. In Bennett, we concluded that Application Note 7(b) controls the methodology for calculating loss under § 2F1.1(b)(1). 37 F.3d at 695. Note 7(b) provides that in the case of a fraudulent loan, [t]he loss is the amount of the loan not repaid at the time the offense is discovered, reduced by the amount the lending institution has recovered (or can expect to recover) from any assets pledged to secure the loan. Id. (emphasis supplied). Because CCU discovered the fraud before Dailey's law firm's pension fund acquired the mortgage, the full $160,000 was correctly included in the loss calculation. 29 Defendants also contend that the court erred in including the $60,000 Dupont mortgage in the loss calculation because the amount of the loss attributed to Dupont was speculative. We agree with the government, however, that with an appraised value of only $96,000 at the time of discovery and a first mortgage to the pension fund of $160,000, Dupont's second mortgage was worthless.