Court Opinion

ID: 9492107
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:32:23.854845+00
Date Added: 2024-06-11T17:55:07.016016
License: Public Domain

STEPHEN H. ANDERSON, Circuit Judge,
dissenting in part:
The majority reverses the ten-level enhancement for an intended loss of $540,-000, finding that our prior decisions in United States v. Galbraith, 20 F.3d 1054 (10th Cir.1994) and United States v. Santiago, 977 F.2d 517 (10th Cir.1992), are indistinguishable from this case and compel the conclusion that the intended loss was zero. Because I conclude that those decisions are distinguishable and do not compel that conclusion, I respectfully dissent from Part A of the majority opinion.
Galbraith involved a government sting operation, in which the defendant attempted to purchase stock in a company, drive up the price, and then sell it to a European pension fund. Unbeknownst to the defendant, the European pension fund did not exist and the FBI terminated the sting operation and arrested the defendant before any stock was actually bought or sold. We held in that case that “The intended or probable loss was zero” because:
the loss defendant subjectively intended to cause is not controlling if he was incapable of inflicting that loss. Because this ivas an undercover sting operation which was structured to sell stock to a pension fund that did not exist, defendant could not have occasioned any loss even if the scheme had been completed.
Galbraith, 20 F.3d at 1059 (emphasis added).
In so holding, we relied in part on Santiago, in which the defendant attempted to defraud his insurance company by falsely reporting that his car, with a “blue book” value of $4,800, had been stolen, and submitting a claim for $11,000 for the “stolen” car. Because an acquaintance involved in the scheme notified law enforcement authorities, the scam did not succeed. After noting that no actual loss occurred because of police intervention, we held that the “intended [and] probable loss” was $4,800 because the “insurance company would not have paid more than the car’s $4,800 blue book value in any circumstances.” Santiago, 977 F.2d at 524, 526.1
Considering Santiago and Galbraith together, I do not believe that the intended loss is zero whenever the actual loss is zero, even where, as here, the scheme to defraud is doomed from the beginning. There is a distinction between a scheme, as in Galbraith, which is structurally and inherently incapable of causing any loss (an undercover reverse sting operation involving the sale of overvalued stock to a non-existent entity) and a scheme such as Mr. Ensminger’s which, while extremely unlikely to result in any loss, nonetheless could have occasioned a loss had the scheme succeeded. The majority opines that Mr. Ensminger’s plan was incapable of success because, while he had successfully persuaded a deputy clerk to sign the “Special Execution” document, the properties had in fact already been sold to third parties, and Mr. Ensminger would therefore have been unable to obtain them. But that is no different from Santiago, in which the acquaintance had notified authorities, who then notified the insurance company, so that the defendant would in fact have been unable to collect any insurance proceeds. Indeed, if a person presents an instrument to a bank with the intent of defrauding it of $100,000, but the bank in fact has no money, the person has no less attempted the fraud, and intended a loss, even though in fact no loss could have, occurred.2
*1150Other courts have recognized the narrow holding of Galbraith. Indeed, in United States v. Studevent, 116 F.3d 1559, 1564 (D.C.Cir.1997), the court expressed its disagreement with what it viewed as Galbraith’s holding but noted that Galbraith itself was correctly decided under any view of intended loss:
The victim in Galbraith-a, pension fund to which overvalued stock was to be sold-was a Potemkin institution fabricated by law enforcement officials. Galbraith thus never could have defrauded anyone. Studevent, on the other hand, stole checks from real entities and thus had real potential victims who could have been defrauded but for the intervention of the FBI.
Studevent, 116 F.3d at 1563 n. 3; see also United States v. Rizzo, 121 F.3d 794, 802 (1st Cir.1997) (“Unlike the fictitious victim in Galbraith, the intended victims of Riz-zo’s counterfeit check scheme were actual corporations.”); United States v. Coffman, 94 F.3d 330, 337 (7th Cir.1996) (“[E]ven if ... [Galbraith ] were decided correctly, [it] would not carry the day for the defendants[] [because it is a case] where the fraud would have done no harm even if the defendants had not been interrupted[ ] [whereas h]ere the fraud had a real victim in its sights but was interrupted before it could do any harm.”); United States v. Falcioni, 45 F.3d 24, 27 (2d Cir.1995) (noting Galbraith’s “limited exception to use of the intended loss figure” and stating that “Falcioni’s plan failed to result in loss, not because his victim was a non-existent entity, but rather because [an acquaintance] notified law enforcement authorities”); cf. United States v. Sheets, 65 F.3d 752, 753-54 (8th Cir.1995) (holding defendant liable for intended loss created by filing false tax return for someone else, even though intended victim demonstrated to IRS that tax return was bogus).
In sum, rather than implicitly criticize our holding in Galbraith, as does the majority, I would simply confine Galbraith to its narrow factual setting. And, following Santiago, I would calculate the intended loss of Mr. Ensminger’s scheme not at zero, as does the majority, but, as did the district court, at the fair market value of the real property which was the object of his attempted fraud.

. The reference to “probable” loss in Santiago and Galbraith stems from that fact that, prior to November 1, 1991, Application note 7 to § 2F1.1 referred to "probable or intended loss.” Effective November 1, 1991, “probable” was deleted. U.S.S.G.App. C, amend. 393.

. The majority suggests that Galbraith is inconsistent with application note 10 to § 2F1.1, which authorizes a downward de*1150parture "where a defendant attempted to negotiate an instrument that was so obviously fraudulent that no one would seriously consider honoring it.” If a downward departure is authorized for an obviously fraudulent scheme, so the argument goes, the guidelines must have assumed that the unlikelihood of success is irrelevant to the calculation of intended loss. But the extreme unlikelihood of success is still different from structural and absolute impossibility. The fact that a scheme's success may depend on the stupidity or naivete of others does not mean that it is incapable of success. Even the most harebrained of schemes may, perchance, succeed, whereas a government sting of the sort employed in Galbraith could never, under any circumstance, result in a loss to anyone.