Court Opinion

ID: 3214430
Source: CourtListenerOpinion
Date Created: 2016-06-17 20:01:41.724185+00
Date Added: 2024-06-11T14:50:37.085728
License: Public Domain

FILED

uNITED sTATEs DISTRICT CQURT JUN 1 7 2016

FOR THE DISTRICT OF COLUMBIA mem us assist & Bankmptcy

watts fm the District of Co!umbla
UNITED STATES OF AMERICA, §
v. § Criminal Action No. 15-173 (RBW)
TARSEM SINGH, §
Defendant. §
 
MEMORANDUM OPINION

On December 17, 2015, the defendant in this criminal matter pleaded guilty to
Conspiracy to Commit Major Fraud on the United States in violation of 18 U.S.C. §§ 371, 1031
(2012), S_e_e_ information at 6, as a result of "execut[ing] a scheme to defraud the Small Business
Administration [(‘SBA’)] and the General Services Administration (‘GSA’)," Statement of
Offense at 5. The defendant is now pending sentencing and the parties have submitted
memoranda in aid of sentencing, drawing into question the sentencing range applicable to the
defendant under the United States Sentencing Guidelines ("the Guidelines"). S_ee Govemment’s
Memorandum in Aid of Sentencing ("Gov.’s Mem."); Defendant Tarsem Singh’s Memorandum
in Aid of Sentencing ("Def.’s Mem."). Specifically, the parties disagree as to the value of the
loss sustained by the government resulting from the defendant’s conduct, Gov.’s Mem. at ll;
Def.’s Mem. at 9, as well as to the propriety of imposing a sentencing enhancement for the
defendant’s purported aggravated role as an organizer, leader, manager, or supervisor in the
conspiracy to which he pleaded guilty, Gov.’s Mem. at 25; Def.’s Mem. at 22. Upon careful
consideration of the parties’ submissions, the Court concludes that the amount of loss that must

be used in calculating the defendant’s guidelines is the full amount of the contracts that the

defendant fraudulently procured, and that the Guideline enhancement for playing an aggravated
role in the conspiracy is not applicable in this case.‘

I. BACKGROUND

The following factual allegations are drawn from the Statement of Offense submitted by

the government, which the defendant agreed to, pursuant to Federal Rule of Criminal Procedure

ll. Statement of Offense at l.

The SBA operates what is referred to as the "8(a) program,"z which "is a development
program that was created to help small, disadvantaged businesses compete in the American
economy and access the federal procurement market." § at l. Under the program, federal
agencies award contracts to S(a)-qualified firms "on either a set-aside basis, where the only
competitive bidding is among similarly eligible firms, or on a sole-source basis, without
competitive bidding." Ld. at l-2. To qualify for the program, a firm must be a small business
and be at least fifty-one percent-owned and controlled by a United States citizen "of good

character who meet[s] the SBA’s definition of socially and economically disadvantaged." I_cL at
l. Firms "must apply and qualify for participation in the S(a) program through a formal SBA-
administered application process" and "submit annual reviews" to demonstrate continued
eligibility. § at 2. Firms may participate in the 8(a) program for up to nine nears, at which
point they are considered by the SBA to have "graduated" and are "no longer eligible" for
government contracts issued under the program, l@ Once a firm has graduated from the

program, it may still "provide business development assistance to firms who are in the

' ln addition to the documents previously referenced, the Court considered the following submissions: (l) the
Presentence lnvestigation Report; (2) Defendant Tarsem Singh’s Supplemental Memorandum in Aid of Sentencing
("Def.’s Supp."); and (3) Defendant Tarsem Singh’s Notice of Supplemental Authority with Regard to Sentencing

("Def.’s Notice").

2 "S(a)" refers to Section S(a) of the Small Business Act. Statement of Offense at l.

W, 508 U.S. 223, 239 (1993), a court can make "no more than a guess as to what Congress
intended," Ladner v. United States, 358 U.S. 169, 178 (1958). But here, based upon the clear

language set forth in 15 U.S.C. § 632(w)(l), no such ambiguity remains. And as the Court has
already noted, the Ninth Circuit did not consider or reference this legislation in its analysis, §

generally Martin, 796 F.3d at 1101-12, and thus, the Court does not find that Circuit’s rule of

lenity application persuasive.

The Fifth Circuit followed Martin’s rationale in United States v. Harris, __ F.3d , ,

2016 WL 1720046 (5th Cir. 2016), concluding that "procurement frauds involving contracts
awarded under the 8(a) set-aside program, like procurement frauds generally, should be treated
under the general rule for loss calculation, not the government benefits rule," id_. at *14. In

Harris, the Fifth Circuit explained:

While a government contract awarded under an affirmative action program may
be, in some sense, a "benefit" to the company awarded the contract, it does not
share the common features of grants, loans, and entitlement program payments.
Unlil803 F.3d 167 (3d Cir. 20l5). In §_agl_e_, the Third Circuit reviewed the sentence given to criminal
defendants convicted of fraudulently procuring contracts under a Pennsy1vania-administered
program that awarded contracts on a preferential basis to "disadvantaged business enterprises."

Ld. at l7l-72. ln calculating the amount of loss associated with the fraud, the Third Circuit

ll

concluded that it "need not decide whether the [disadvantaged business enterprise] program is a

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‘government benefit because Note ?)(E)(i) of the Guidelines would apply to the loss calculation
regardless and thus a court "must subtract the ‘fair market value’ of the ‘services rendered’ by
[the defendants’ companies] on the contracts before arriving at a final loss value." I_d. at 180,
182. But this finding does not influence the Court’s decision because the state-administered
procurements at issue in lggl_e were neither administered by the SBA nor subject to 15 U.S.C. §
632(w)(l). Therefore, the Third Circuit had no reason to consider the impact of that legislation.
In sum, the Court is persuaded by the reasoning adopted by the circuits that have
interpreted the Guidelines’ use of the tenn "loss" in the defendant’s circumstances as the total
amount of the contract at issue. Interpreting the Guidelines otherwise would be inconsistent with
the aforementioned provisions of the Small Business Jobs Act of 2010. Therefore, the Court will
treat the loss in this case to be $8,533,562.86, § Statement of Offense at 9, which requires an
adjustment of eighteen levels under the Guidelines, g U.S.S.G. § 2Bl.l(b)(1)(J).4
B. The Aggravated Role Enhancement

The parties also disagree as to whether the defendant should receive an increase of his

offense level for playing an aggravated role in the offense. Gov.’s Mem. at 25; Def.’s Mem. at

" While the amount of the loss used in calculating the appropriate Sentencing Guidelines range will not be reduced
based upon the work performed by the defendant’s company on the contracts at issue in this case, nothing precludes
the defendant from requesting a downward departure in light of the circumstances presented here. Indeed, as the
government notes in its sentencing memorandum, "it is a goal of the Guidelines to avoid unwarranted sentencing
disparities," Gov.’s Mem. at 30 (citing U.S.S.G. § l.Al.1(3)), and "even in circuits . . . that base loss on the full
value of the contracts, it appears that sentencing courts routinely sentenced below the applicable Guidelines range_
and often significantly below the range," § at 31 (citing Blanchet, 518 Fed. Appx. at 955; Nagle, 2014 WL
4672448) (other citations omitted). And "when one examines the sentences actually imposed, it appears that
regardless of whether loss for purposes of the Guidelines calculation is based on the full value of the contracts or
some other metric, the sentences ultimately imposed seem to be more consistent with loss being based on the profit
that the defendants generated from the schemes." ld_. at 32. While the Court will not determine the actual sentence
it will impose until the sentencing hearing, it emphasizes that the resolution of this Guidelines issue in favor of the
government may not ultimately influence the length of the defendant’s sentence if the Court concludes that a
significant downward departure is appropriate.

12

22. According to the Guidelines, a defendant’s offense level is increased by two levels "[i]f the
defendant was an organizer, leader, manager, or supervisor in any criminal activity" that
involved less than five participants and was not "otherwise extensive." U.S.S.G. § 3Bl.l(c).
When evaluating the propriety of applying this enhancement to a defendant’s Guidelines range,
the Court must consider the following factors:
the exercise of decision making authority, the nature of participation in the
commission of the offense, the recruitment of accomplices, the claimed right to a
larger share of the fruits of the crime, the degree of participation in planning or

organizing the offense, the nature and scope of the illegal activity, and the degree
of control and authority exercised over others.

lg, cmt. n.4; see also United States v. Graham, l62 F.3d l 180, 1185 n.5 (D.C. Cir. 1998)

(factors are relevant to whether any aggravated role enhancement applies). No single factor is

dispositive. Graham, 162 F.3d at ll85. "At sentencing, it is the Government’s burden to

demonstrate by a fair preponderance of the evidence that [the] enhancement is warranted."

United States v. Bapacl<, 129 F.3d 1320, 1324 (D.C. Cir. ]997) (discussing U.S.S.G. § 3Bl.l(c)).

The aforementioned factors aside, this Circuit has emphasized that there is a threshold
requirement such that "[t]he defendant must manage or supervise one or more other participants
in the criminal activity-not simply the property or assets of the conspiracy . . . -in order to
warrant an aggravated role enhancement." United States v. Olejiya, 754 F.3d 986, 990 (D.C.
Cir. 2()14) (citing U.S.S.G. § 3Bl.l, cmt. n.2); s_e§_a_ls_o U.S.S.G. § 3Bl.l, cmt. n.Z ("To qualify
for an adjustment under this section, the defendant must have been the organizer, leader,
manager, or supervisor of one or more other participants."). And as defined in the commentary

to this Guideline, "[a] ‘participant’ is a person who is criminally responsible for the commission

of the offense, but need not have been convicted." U.S.S.G. § 3Bl .l, cmt. n.l (emphasis added).

Thus, for the enhancement to apply, there must be "proof that [the defendant] was hierarchically

superior to [his] co-conspirators." United States v. Quigley, 373 F.3d l33, 140 (D.C. Cir. 2004)

13

(emphasis added); s_e@l_sg United States v. Clark, 747 F.3d 890, 896-97 (D.C. Cir. 20l4) ("[W]e
are convinced by the district court’s discussion of [the defendant]’s cousin’s criminal
involvement that the court found that [the defendant] controlled at least one criminal
participant.").

While the defendant here clearly exercised managerial authority in the administration of
the companies that fraudulently secured contracts under the S(a) program, nothing in the record
before the Court suggests that he exercised control over any co-conspirator subject to criminal
liability. For example, the Presentence Investigation Report reasons that the adjustment is
warranted because:

The defendant exercised management responsibility over the contracts for

[Company B], had signatory authority over [Company B]’s bank account,

recruited employees from [Company A] to perform contract work for [Company

B], and directed those employees to represent that they were employees of
[Company B], when they were actually employed by [Company A].

Presentence Investigation Report at l0. Similarly, the government contends that the adjustment
is warranted because:

l) [the] [d]efendant was a vice-president of Company B . . . ; 2) [the] [d]efendant
took several actions, and directed others to take actions, that disguised the
[d]efendant’s and others’ true affiliation as Company A employees, including
creating Company B email accounts and obtaining and using Company B
magnetic logos for use on a Company A vehicle; 3) the [d]efendant obtained
signature authority over Company B’s bank account; and 4) the [d]efendant made
significant business decisions for Company B, including deciding whether to bid
on contracts, preparing bids or directing someone else to do so, and deciding how
to staff contracts received.

Gov.’s Mem. at 26-27 (citations omitted). Furthermore, the government notes that "the
[d]efendant regularly signed documents in his role as vice-president of Company B," "signed
checks for Company B," "prepared bids and proposals on Company B letterhead," and "emailed

[the] GSA regarding individuals who would work on projects on certain occasions, directed

14

Person A to do so on other occasions, and made decisions such as to whether employees would
work or not." I_d. at 27.

Nowhere in the Statement of the Offense, the Presentence Investigation Report, or the
Govemment’s Memorandum in Aid of Sentencing is it suggested that another person is
criminally liable for the conduct at issue in this case over whom the defendant exercised any
control. While it is true that subordinate employees of Companies A and B may have assisted in
the perpetration of the fraudulent bidding process and otherwise performed on the contracts
awarded to the defendant’s company, nothing in the record demonstrates that these employees
were anything other than unwitting accomplices. And "supervision of an unwitting individual
cannot justify an enhancement under U.S.S.G. § 3Bl.l(c)." United States v. McCoy, 242 F.3d
399, 410 (D,C. Cir. 2001). As the government has not demonstrated that the defendant
"manage[d] or supervise[d] one or more other participants in the criminal activity," the
aggravated role enhancement is not appropriate in this case. S@,ig;, O_lej_iya, 754 F.3d at 990
(citation omitted).5

III. CONCLUSION
For the foregoing reasons, this Court finds that the amount of the loss to the Government

under the fraudulently procured contracts is based on the full value of the contracts awarded.

The Court also concludes that application of the two-level aggravated role enhancement set forth

in Guideline 3Bl.l(c) is not appropriate in this case.é

5 Of course, the defendant’s managerial capacity at these companies may still be considered during the sentencing
process. As the commentary to the Guidelines indicates, "[a]n upward departure may be warranted . . . in the case of
a defendant who did not organize, lead, manage, or supervise another participant, but who nevertheless exercised
management responsibility over the property, assets, or activities of a criminal organizati0n." U.S.S.G. § 3Bl.l,
cmt. n.2.

6 The Court will contemporaneously issue an order consistent with this Memorandum Opinion.

l5

so ORDERED this 17‘“ day ofJune, 2016.

RE IE B. WALTON
United States District Judge

development stage of the 8(a) Business Development Program" through a related mentor-protégé
program. l_d._ at 4.

From at least January l2, 2000, the defendant acted as the Vice President of "Company
A"3 which "specialize[d] in construction and renovating and altering buildings" from at least
January 12, 2000 to December 2006. l_d. at 4-5. Compa_ny A received its 8(a) certification on
January 12, 2000, and "was lawfully awarded approximately $23 million in contracts from [the]
GSA . . . ." I_d_. at 5-6. After nine years, Company A graduated from the 8(a) program on
January 12, 2009. l_d. at 5. On that same day, a second company-"Company B"_submitted an
application for S(a) certification g at 6. "Company A loaned Company B the registration fee
and referred Company B to a SBA Consultant to assist with the application." ld_. ln June 2009,
Company B named the defendant as a Vice President of that company and "entered into a
l\/Ientor/Protégé Agreement" with Company A. l;d.

Between July 2009 and March 2012, the government awarded Company B twenty-six
federal contracts under the 8(a) program, totaling $8,533,562.86. Ld. at 9. During this time,
Company B had only one employee who actually performed work on any of the 8(a) contracts
Ld. at 7. lnstead, the

[d]efendant engaged in and directed others to engage in the following practices:
0 Obtaining magnetic logos bearing the name of Company B[;]

¢ Directing a Company A employee to place Company B’s magnetic logos on a
Company A vehicle when the vehicle would be used at construction sites for
projects awarded by [the] GSA[;]

¢ Using and directing other Company A employees to use Company B email
accounts when corresponding with the government about contracts awarded to
Company B. Emails sent from these Company B accounts transmitted across

3 The parties have chosen to anonymize the names of the companies in public filings during these proceedings. §e_e
generally Statement of Offense.

state lines with the communications terminating in the District [of
Columbia][;]

¢ Instructing Company A employees to tell GSA representatives that they were
representing Company B on certain jobs; and

0 Providing to GSA representatives lists of employees for Company B that
included individuals who were actually employed by Company A.

l;d. at 7-8. Furthermore, the defendant "used a combination of Company A personnel and
subcontractors to staff projects awarded to Company B on which Company A was working." l;d.
at 8. "On the contracts for which it made a profit, Company A’s profits were, at least,
$90,397.15," and the defendant’s personal compensation attributable to those contracts was, at
least, $28,768.28. I;d. at l0.
II. ANALYSIS
In assessing what sentence a defendant should receive, "[a] district court begins by

calculating the appropriate Guidelines range, which it treats as ‘the starting point and the initial
benchmark’ for [the] sentenc[e]." United States v. Akhigbe, 642 F.3d 1078, 1084 (D.C. Cir.

201 l) (quoting Gall v. United States, 552 U.S. 38, 49 (2007)). When making the Guidelines
calculation, the "commentary in the Guidelines Manual that interprets or explains a guideline is
authoritative unless it . . . is inconsistent with, or a plainly erroneous reading of, that guideline."
Stinson v. United States, 508 U.S. 36, 38 (1993). "Then, after giving both parties an opportunity
to argue for whatever sentence they deem appropriate," the court considers all of the sentencing
factors listed in 18 U.S.C. § 3553(a) and undertakes "an individualized assessment based on the
facts presented." Akhigbe, 642 F.3d at 1084 (citing _G_all, 552 U.S. at 49~50).

A. T0tal Loss Calculation
According to the Guidelines, the base offense level for the defendant’s fraudulent

conduct is six. §_eg U.S.S.G. § 2Bl.l(a)(2). This base offense level is then enhanced by a

graduated tier of increases based upon the amount of "loss" involved in the fraud, §§ U.S.S.G. §
2Bl . l (b), with the commentary defining actual loss as "the reasonably foreseeable pecuniary
harm that resulted from the offense," Q;, cmt. n.3(A)(i). For purposes of identifying the correct
adjustment, the amount of the loss is typically reduced by "the services rendered[] by the
defendant or other persons acting jointly with the defendant[] to the victim before the offense
was detected." I;d., cmt. n.3(E)(i). Notwithstanding this adjustment, the commentary prescribes
"Special Rules" for determining the amount of the loss, one requiring that "[i]n a case involving
government benefits . . . loss shall be considered to be not less than the value of the benefits
obtained by unintended recipients or diverted to unintended uses . . . ." l;d., cmt. n.B(F)(ii). The
government argues that the "loss [in this case] is the full value of the contracts obligated in
connection with the scheme, which the parties have agreed is $8,533,562.86," "result[ing] in an
[eighteen]-level adjustment." Gov.’s Mem. at ll; _s__e_e_als_o U.S.S.G. § 2Bl.l(b)(l)(J). ln
contrast, the defendant contends that he "provided valuable services to the government, gaining
only $28,768.28 [in profit] from the relevant contracts," Def.’s Mem. at 8, resulting in only a
four-level adjustment, U.S.S.G. § 2Bl.l(b)(l)(C).

This Circuit has not considered whether the Special Rule pertaining to govemment
benefits applies to set-aside procurement programs administered by the SBA, but decisions from
three circuits support this conclusion. § United States v. Blanchet, 518 Fed. App’x 932, 956-
57 (l lth Cir. 2013); United States v. Leahy, 464 F.3d 773, 790 (7th Cir. 2006); United States v.
Bros. Constr. Co., 219 F.3d 300, 317-318 (4th Cir. 2000). In Blanchet, two criminal defendants
were convicted of fraudulently procuring a "$100 million, small business set-aside contract with
the federal govemment" after it was revealed that their "company did not meet the necessary

federal standards to be considered a small business." 518 Fed. App’x at 934. Citing the Special

Rule regarding government benefits, the Eleventh Circuit concluded that "the amount of loss in
cases involving government benefits programs equals the entire amount of the contract at issue"
and therefore it was appropriate to attribute "the entire amount of the contract iSSue_$IOO
million_to the [d]efendants as loss." I;d. at 957. That Circuit reasoned that:
the small business set-aside contract at issue . . . was set aside to provide
exclusive opportunities to small businesses . . . . Despite the [d]efendants’
argument that the government benefitted from the contract rather than losing from
it, Congress has emphasized that there is a concem in ensuring that small
businesses have a fair proportion of federal contracts because of the benefit that
the nation receives from having a strong class of small businesses. By defrauding
the government to obtain the contract, the [d]efendants prevented the government

from awarding the contract to a legitimate small business, and therefore, deprived
other small businesses of the ability to obtain this contract.

ld_. at 956-57 (citations omitted).

The Seventh Circuit addressed the same question in _l;e_a_liy, albeit with respect to state-
administered programs with "funds slotted for minority- and women-owned businesses." 464
F.3d at 778. Citing the Special Rule regarding govemment benefits, that Circuit explained:

This was an affirmative action program aimed at giving exclusive opportunities to

certain women and minority businesses. The contracts which these businesses
received pursuant to this type of program constitute government benefits.

Ld. at 790. The Seventh Circuit concluded that the district court erred when "it used the contract
loss formula of ‘contract price minus the benefit provided"’ and that it should have "comput[ed]
the total ‘value of the benefits diverted from intended recipients or uses’ in its analysis." l_d.
And relying upon similar logic, the Fourth Circuit arrived at the same conclusion in Brothers
Construction. 219 F.3d at 317-18 ("[The defendants] conspired in a scheme that was intended to
divert this money to . . . a non-[disadvantaged business enterprise]. If not for the audit that
revealed [the defendants’] failure to participate, the [disadvantaged business enterprise] funds

would not have eventually reached a [disadvantaged business enterprise]. These facts

demonstrate a loss under . . . the guidelines because the conspiracy would have diverted the
funds entirely from any [disadvantaged business enterprise] but for the audit.").

This reading of the Guidelines by the Fourth, Seventh, and Eleventh Circuits comports
with the unambiguous intentions of Congress as articulated in the Small Business Jobs Act of
20lO, Pub. L. No. lll-240, 124 Stat. 2504 (2010). As part of that legislation, Congress codified
the following presumption:

In every contract . . . which is set aside, reserved, or otherwise classified as

intended for award to small business concerns, there shall be a presumption of

loss to the United States based on the total amount expended on the contract . . .

whenever it is established that a business concern other than a small business
concern willfully sought and received the award by misrepresentation.

15 U.S.C. § 632(w)(l) (2012). The regulation implementing this provision is instructive, as it
reiterates that "there shall be a presumption of loss to the United States based on the total amount
expended on the contract," 13 C.F.R. § l2l.l08(a) (2016), and explains that "[p]ersons or

concerns are subject to severe criminal penalties for knowingly misrepresenting the small

business size status of a concern in connection with procurement programs . . . ," ii §

121 .108(€)(3) (emphasis added) (also noting that penalties for misrepresentation may include
civil penalties and suspension or debarment from future procurements). And when publishing
the final rule in the Federal Register, the SBA again explained that "the presumption of loss

provisions will be utilized in civil and criminal Federal court proceedings." Small Business Size

and Status lntegrity, 78 Fed. Reg. 38811, 38812 (June 28, 2013) (emphasis added); accord § at

38816 ("[l]t is SBA’s intent that the presumption of loss shall be applied in all manner of

criminal, civil, administrative, contractual, common law, or other actions, which the United

States government may take to redress willful misrepresentation." (emphasis added)); see also

Envtl. Def. Fund lnc. v. Blum, 458 F. Supp. 650, 658 (D.D.C. 1978) (relying on an agency’s

 

preamble to a regulation published in the Federal Register to "buttress[]" its interpretation of that
regulation).

The Court recognizes that the statute and regulation both indicate that there is only a
"presumption" that the loss should amount to the total contract value. 15 U.S.C. § 632(w)(1)
(2012); 13 C.F.R. § l2l.108(a) (2016). The defendant contends that this presumption in the
statue and regulation may be rebutted by evidence that the defendant "provided valuable services
to the government." Def.’s Mem. at 13. However, there is simply no legal authority_and the
defendant cites none in his sentencing memorandum-which supports the proposition that this
statutory presumption may be rebutted by such evidence. Contrary to the defendant’s assertions,
the SBA’s regulation clarifies the matter_the presumption of loss "may be determined not to
apply in the case of unintentional errors, technical malfunctions, and other similar situations that
demonstrate that a misrepresentation of size was not affirrnative, intentional, willful[,] or
actionable under the False Claims Act . . . ." 13 C.F.R. § 121.108(d) (2016). Indeed, when
publishing the final rule in the Federal Register, the SBA noted that it had originally proposed
language that would have made the presumption "irrefutable," but determined that this would be
inappropriate in light of due process requirements because the "SBA’s regulations limit liability

in the case of unintentional error, technical malfunction, or other similar situations," and "an
‘irrefutable’ presumption would be inappropriate in these instances." Small Business Size and
Status Integrity, 78 Fed. Reg. 38811, 38812 (June 28, 2013). The Court construes this
explanation to indicate that the o_nly permissible means by which the presumption of loss may be
rebutted would be through the introduction of evidence establishing that one of those

circumstances enumerated in 13 C.F.R. § 121.108(d) is applicable to the case. C+f. Christensen

v. Harris Cty., 529 U.S. 576, 583 (2000) ("We accept the proposition that ‘when a statute limits a

937

thing to be done in a particular mode, it includes a negative of any other mode. (quoting
Raleigh & Gaston R. Co. v. Reid, 13 Wall. 269, 270 (1872)) (brackets omitted)); Pauley v.
BethEnergy Mines, Inc., 501 U.S. 680, 703 (1991) (noting that "the delineation of two methods
of rebuttal may support an inference that the drafter intended to exclude rebuttal methods not so
specified," but affording judicial deference to an agency’s reasonable interpretation that
additional methods of rebuttal were specified in the controlling authority). Therefore, other
forms of evidence, such as evidence suggesting that the defendant performed according to the
government contract, does not provide a basis for rebutting this presumption.

The defendant cites decisions from three Circuits that suggest that the Special Rule
pertaining to government benefits does not apply to his conduct, none of which are persuasive.
In United States v. Martin, the Ninth Circuit considered the appropriate Guidelines range for a
criminal defendant convicted of "fraudulently obtain[ing] govemment contracts" through SBA
programs and "a state-administered Disadvantaged Business Enterprise [] program." 796 F.3d
l l0l, 1103-04 (9th Cir. 2015). The Ninth Circuit found the govemment benefits Special Rule
inapplicable because "[t]he examples given~loans, grants, and entitlement program payments_
confirm that this comment deals with unilateral government assistance, such as food stamps, not
a fee-for-service business deal." I_d. at 1109. The Ninth Circuit also explained that "if there is
any lingering ambiguity as to whether [the] program is a ‘govemment benefit,’ then the
application note cannot apply" based upon the rule of lenity. l;d. Therefore, the Ninth Circuit
instructed the district court on remand to consider the defendant’s performance under the

contract as a credit against pecuniary loss under the Guidelines. § § at l l l0.

The Court respectfully disagrees with the Ninth Circuit’s analysis in Martin. With

respect to that Circuit’s interpretation of the scope of the tenn "government benefits" based upon

the examples provided, it is certainly true that "[t]he plainness or ambiguity of statutory language
is determined [not only] by reference to the language itself, [but as well by] the specific context
in which that language is used, and the broader context of the statute as a whole," Robinson v.
Shell Oil Co., 519 U.S. 337, 341 (1997). But this particular canon of statutory interpretation is

applicable only where the term at issue is, in fact, ambiguous. See, e.g., BedRoc Ltd. LLC v.

 

United States, 541 U.S. 176, 183 (2004) ("The preeminent canon of statutory interpretation
requires us to presume that [the] legislature says in a statute what it means and means in a statute
what it says there. Thus, our inquiry begins with the statutory text, and ends there as well if the
text is unambiguous." (emphasis added) (citations omitted)). Here, the Ninth Circuit did not
even consider 15 U.S.C. § 632(w)(1), and the unambiguous language of this statutory provision
makes clear that there is a presumption that the amount of the loss in circumstances such as these
is "based on the total amount expended on the contract." The Ninth Circuit’s interpretation is

simply inconsistent with this language. And this language compels this Court to reject l\/Iartin’s

reasoning because "the Sentencing Commission does not have the authority to override or amend
a statute." United States v. Novey, 78 F.3d 1483, 1486 (l0th Cir. l996) (citing Neal v. United

States, 516 U.S. 284, 290 (1996)); see also Stinson, 508 U.S. at 37~38 ("[C]ommentary in the

Guidelines Manual that interprets or explains a guideline is authoritative unless it violates the
Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that
guideline." (emphasis added)). Thus, to the extent that there are any discrepancies between the
Guidelines and Congressional legislation_as would be the case if the Court were to follow

Martin’s analysis-it is the legislation that must ultimately prevail.

Martin’s reliance on the rule of lenity in the alternative is similarly flawed. The rule of

lenity applies only if, "after seizing everything from which aid can be derived," Smith v. United

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