Court Opinion

ID: 9931677
Source: CourtListenerOpinion
Date Created: 2024-02-09 18:01:13.606323+00
Date Added: 2024-06-11T13:26:21.093666
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 23-1204
UNITED STATES OF AMERICA,
                                                   Plaintiff-Appellee,
                                 v.

JUNAID GULZAR,
                                               Defendant-Appellant.
                     ____________________

         Appeal from the United States District Court for the
         Northern District of Indiana, South Bend Division.
          No. 3:22-cr-00018 — Robert L. Miller, Jr., Judge.
                     ____________________

  ARGUED DECEMBER 13, 2023 — DECIDED FEBRUARY 9, 2024
               ____________________

   Before WOOD, KIRSCH, and LEE, Circuit Judges.
    PER CURIAM. Junaid Gulzar was convicted of wire fraud
and sentenced to a below-Sentencing Guidelines term of
18 months’ imprisonment. Central to the Guidelines calcula-
tions was the determination of the amount of the victim’s
“loss.” A fraud defendant’s offense level is increased under
U.S.S.G. § 2B1.1(b)(1) if the “loss” amount exceeds $6,500. At
issue is when the loss should be measured. The district court,
relying on the Guidelines commentary, determined that the
2                                                  No. 23-1204

victim’s loss here should be measured at the time she detected
the loss. Because the district court was correct to defer to the
Guidelines commentary, we affirm.
                               I
    In 2021, Junaid Gulzar convinced Ariana Small, a child-
hood friend, to invest money in Indiana gas stations that he
would own and operate. He persuaded her and her father-in-
law to wire $310,000, and he promised her that he would in-
vest the money and pay her back on fixed dates. But instead
of investing the money, Gulzar wagered it at a Michigan ca-
sino.
    Small soon suspected something had gone awry. Under
their agreement, Gulzar owed her a certain amount by June 1,
but he missed the deadline and fabricated excuses for the de-
lay. On June 4, Small sent text messages to Gulzar accusing
him of scamming her. Over the next several days, she re-
peated her demands for repayment and threatened to report
him for bank fraud. On June 11, at Gulzar’s request, Small
drove from New York to Indiana to collect payment. That
day, he handed her several checks but only $115,000 cleared
the bank. On June 23, he wired her another $1,500.
    Small took legal recourse to recoup her investment. She
reported Gulzar to the police, and on July 2, she sued him in
Indiana for fraud. At his deposition in that case three weeks
later, Gulzar offered to repay Small and her family. The next
day, he paid her $268,500—the entire outstanding amount
plus $75,000 in profit.
   In March 2022, Gulzar was charged with three counts of
wire fraud under 18 U.S.C. § 1343. Six months later, a jury
found him guilty of each count.
No. 23-1204                                                    3

    At sentencing, the parties disputed the appropriate loss
amount. Fraud offenses carry a base offense level of 7 but are
subject to an increase depending on the amount of “loss”
caused by the defendant. U.S.S.G. § 2B1.1(a)(1) & (b)(1).
Note 3(A) to § 2B1.1 clarifies that “loss” means either the
greater of the victim’s actual loss or intended loss. Actual loss
means “the reasonably foreseeable pecuniary harm that re-
sulted from the offense,” § 2B1.1 cmt. n.3(A)(i); intended loss
is “the pecuniary harm that the defendant purposely sought
to inflict,” id. cmt. n.3(A)(ii). The commentary further in-
structs that the loss amount should be reduced by the money
returned to the victim before the crime was detected. Id. cmt.
n.3(E)(i).
    The district court considered three competing loss
amounts, each corresponding to a different offense level.
First, the probation officer who prepared the Presentence In-
vestigation Report recommended a loss amount of $195,000—
reflecting the full amount Small gave Gulzar, less what he re-
paid on June 11. This sum correlated with a 10-level increase
(and a sentencing range of 24–30 months).
    Second, the government proposed a loss amount of
$310,000, covering the total amount that Gulzar fraudulently
raised from Small. The government noted that there was an
ambiguity about the timing when the victim’s “loss” should
be measured. A victim’s losses may fluctuate at various times
during the commission of the offense, and the Guidelines do
not specify the moment in time at which the court should
measure the loss amount. Although application note 3 to
§ 2B1.1 states that defendants should receive credit for any re-
payment before the scheme is detected, Gulzar had not repaid
any money as of June 4—when Small detected the scheme.
4                                                      No. 23-1204

The government, relying on the proviso in Stinson v.
United States, 508 U.S. 36, 45 (1993), that the commentary
should be given controlling weight if it is not plainly errone-
ous or inconsistent with the Guidelines, argued that Gulzar
intended for the victim to lose $310,000, corresponding to a
12-level increase (and sentencing range of 30–37 months).
    Third, Gulzar argued, under Kisor v. Wilkie, 139 S. Ct. 2400
(2019), that deference to Guidelines commentary is not war-
ranted unless the Guidelines are genuinely ambiguous. Kisor
explains that courts—before consulting the commentary—
should exhaust all the traditional tools of statutory interpre-
tation, including analysis of the text, history, and purpose of
the Guidelines. Id. at 2415–16. Gulzar insists that the plain-text
meaning of loss is “actual loss” and that the earliest time to
measure the loss is the date of indictment, reflecting the start
of the criminal proceeding. By that time, Small already had
profited from the scheme, so she had not suffered any actual
loss. He argued for a sentencing range of 0–6 months.
    The district court sided with the government, assessed the
loss amount at $310,000, and applied a 12-level increase. The
court characterized the meaning of “loss” in § 2B1.1 as ambig-
uous but determined that the ambiguity was resolved
through recourse to application note 3. Based on the Supreme
Court’s holding in Stinson, 508 U.S. at 45, the court deter-
mined that application note 3 deserved controlling weight.
See id.; United States v. Rollins, 836 F.3d 737, 742 (7th Cir. 2016).
The district court looked to the evidence submitted at trial
about the timing of Small’s detection that Gulzar had de-
frauded her. The court identified the date of detection as
June 4, when she accused him by text message of scamming
her. By that date, Gulzar had not made any repayment. The
No. 23-1204                                                   5

court assessed her loss at $310,000, which significantly in-
creased Gulzar’s offense level, leading to a sentencing range
of 30–37 months. The court then sentenced him to 18 months.
The court acknowledged the “unusual” nature of this fraud
(in that the victim was repaid before the start of any criminal
proceedings), but it deemed the fraud serious and highlighted
Gulzar’s repeated lies to carry it out.
                               II
    On appeal, Gulzar maintains that the district court erred
by increasing his total offense level based on Small’s loss at
the time she detected his fraud. He argues that the court
should have followed Kisor and exhausted all the traditional
tools of statutory interpretation before deferring to Guide-
lines commentary. See 139 S. Ct. at 2415. He asks us to con-
clude that Kisor overruled the Supreme Court’s earlier deci-
sion in Stinson, 508 U.S. at 45, an issue presently subject to a
circuit split. We have yet to take a position. United States v.
States, 72 F.4th 778, 791 n.12 (7th Cir. 2023).
    We need not weigh in on this split because either approach
would result in deferring to the Guidelines commentary here.
Section 2B1.1 does not specify the time at which a victim’s loss
should be calculated, and no amount of statutory interpreta-
tion would resolve that ambiguity. We have previously relied
on an earlier version of application note 3 to determine the
time at which to calculate a victim’s loss amount.
See United States v. Saunders, 129 F.3d 925, 931 (7th Cir. 1997)
(fraudulent bonds); United States v. Mau, 45 F.3d 212, 216
(7th Cir. 1995) (check kiting). Before resorting to the applica-
tion note, a court would necessarily have determined that
§ 2B1.1 was ambiguous even if no opinion has expressly
6                                                     No. 23-1204

stated as much. See, e.g. Mau, 45 F.3d at 216 (explaining origins
of the application note and its relevance to fraud cases).
    Gulzar next argues that the district court should have re-
jected the Guidelines commentary’s time of detection and
measured the victim’s loss at the time of sentencing. He ar-
gues that any other time—including the time of detection—
would be arbitrary because it lacks any grounding in the
Guidelines.
    Our case law offers several reasons to defer to the time-of-
detection language in application note 3 to § 2B1.1. Payments
to victims after a fraudulent scheme may reflect a desire to
avoid punishment and not genuine remorse for wrongdoing.
See United States v. Philpot, 733 F.3d 734, 749 (7th Cir. 2013). In
addition, payment after the detection of fraud may indicate
acceptance of responsibility but “does not change the fact of
loss.” Id. (quotation omitted); United States v. Lane, 323 F.3d
568, 589 (7th Cir. 2003) (“[T]he district court cannot reduce the
amount of actual loss because the defendant, or any other
party, makes restitution after the [fraudulent] scheme has
been exposed.”). And measuring actual loss at the time of sen-
tencing, as Gulzar proposes, would lead to perverse incen-
tives: A defendant could simply repay the victims in full that
day to assure himself the lowest of the possible sentencing
ranges. See Saunders, 129 F.3d at 931. Of course, a district court
may consider a defendant’s efforts to repay his victims, even
after detection, under 18 U.S.C. § 3553(a) when fashioning a
sentence. But we decline to adopt Gulzar’s suggestion that a
victim’s loss should be measured at the time of sentencing to
calculate the applicable sentencing range.
                                                      AFFIRMED