Opinion ID: 783752
Heading Depth: 1
Heading Rank: 3

Heading: The Mail Fraud Loss Issue.

Text: 11 Shevi argues the district court erred in calculating the portion of the total mail fraud loss attributable to his bankruptcy fraud. The government concedes that the actual loss attributable to the Carver boat loan is the secured lender's net loss after sale of the collateral, $110,973, not the total debt of $256,000 that was discharged in bankruptcy. See § 2F1.1, comment. (n. 7(b)). This adjustment reduces the actual loss resulting from the bankruptcy fraud from $278,320 to $133,293. If the total mail fraud loss is correspondingly reduced, and if all other sentencing factors remain unchanged, Shevi's combined offense level would fall from 21 to 20, which would reduce his guidelines sentencing range to 33-41 months, below the 42-month sentence imposed by the district court. 12 Mail fraud loss under § 2F1.1 is the greater of the loss the defendant intended to inflict and the actual loss inflicted. See § 2F1.1, comment. (n. 7); United States v. Anderson, 68 F.3d 1050, 1054 (8th Cir.1995). To avoid the impact of the above-described error in calculating actual loss, the government first argues that Shevi intended to discharge the entire Carver boat debt, leaving the secured lender to its own devices, and therefore $256,000 was the intended loss. Agent Shoup testified that Shevi stripped the Carver boat of various accessories before filing for bankruptcy, suggesting that he knew the secured lender would foreclose on the boat to reduce its actual loss. However, intended loss is a question of fact reviewed for clear error. Anderson, 68 F.3d at 1054. Thus, the district court may address this issue in the first instance on remand. 13 Next, the government argues that, even if the district court erred in determining that the total mail fraud loss exceeded $200,000, the fraud loss at least includes the $133,293 left unpaid to Shevi's creditors following his fraudulent bankruptcy, and therefore the loss calculation error is harmless because the multiple grouping rules would offset this error with a one-level increase to the combined offense level under § 3D1.4. The government's interpretation of the complex multiple grouping rules may well be correct. 2 However, its assertion that the revised bankruptcy fraud loss is at least $133,293 cannot be upheld on this sentencing record. 14 When a defendant has concealed assets to perpetrate bankruptcy fraud, the intended loss normally may not exceed the value of the liabilities the debtor hoped to discharge or otherwise avoid. See United States v. Dolan, 120 F.3d 856, 870 (8th Cir.1997); United States v. Edgar, 971 F.2d 89, 95 (8th Cir.1992). If the concealed assets were worth less than the debts sought to be discharged, the intended fraud loss is limited to the value of the concealed assets the creditors would presumably have recovered, not the total amount of their debts. Wheeldon, 313 F.3d at 1073. On the other hand, if the debtor's concealed assets plus his disclosed assets totaled more than his debts, then asset concealment was essential to establishing insolvency, and the debtor was not entitled to bankruptcy protection at all. In this situation, the defrauded creditors may have incurred consequential damages that should be included in calculating fraud loss. See § 2F1.1, comment. (n. 8(c)). 15 In Wheeldon, the debtor was clearly insolvent, and the concealed assets were worth far less than his scheduled debts. In this case, the net debts discharged in Shevi's fraudulent bankruptcy, taking into account what the secured creditor realized in foreclosing on the Carver boat, totaled $133,293. But the district court made no finding as to the value of the assets Shevi concealed, and the record on appeal does not permit us to determine if they were worth more or less than the debts left unpaid. Therefore, we may not accept the government's assertion that the fraud loss, at a minimum, totaled $133,293. The case must be remanded for redetermination of the mail fraud loss. As in Wheeldon, 313 F.3d at 1073, the district court is free to accept and consider further evidence regarding the value of Shevi's concealed assets. 16