Filed: Jun. 10, 2008
Latest Update: Mar. 02, 2020
Summary: 06-3201-cr U.S. v. Confredo UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2007 Heard: February 5, 2008 Decided: June 10, 2008 Docket No. 06-3201-cr - - - - - - - - - - - - - - - - - UNITED STATES OF AMERICA, Appellee, v. GARY J. CONFREDO, Defendant-Appellant. - - - - - - - - - - - - - - - - - Before: NEWMAN, WINTER, and PARKER, Circuit Judges. Appeal from the June 29, 2006, amended judgment of conviction from the United States District Court for the Southern District of New Y
Summary: 06-3201-cr U.S. v. Confredo UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2007 Heard: February 5, 2008 Decided: June 10, 2008 Docket No. 06-3201-cr - - - - - - - - - - - - - - - - - UNITED STATES OF AMERICA, Appellee, v. GARY J. CONFREDO, Defendant-Appellant. - - - - - - - - - - - - - - - - - Before: NEWMAN, WINTER, and PARKER, Circuit Judges. Appeal from the June 29, 2006, amended judgment of conviction from the United States District Court for the Southern District of New Yo..
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06-3201-cr
U.S. v. Confredo
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2007
Heard: February 5, 2008 Decided: June 10, 2008
Docket No. 06-3201-cr
- - - - - - - - - - - - - - - - -
UNITED STATES OF AMERICA,
Appellee,
v.
GARY J. CONFREDO,
Defendant-Appellant.
- - - - - - - - - - - - - - - - -
Before: NEWMAN, WINTER, and PARKER, Circuit Judges.
Appeal from the June 29, 2006, amended judgment of conviction
from the United States District Court for the Southern District of New
York (Leonard B. Sand, District Judge), sentencing the Defendant to
205 months for fraud offenses. Defendant challenges the loss
calculation and an enhancement for offenses committed while released
on bail.
Remanded for reconsideration of loss calculation.
James H. Feldman, Ardmore, Penn. (Peter
Goldberger, Law Offices of Alan Ellis,
Ardmore, Penn., on the brief), for
Defendant-Appellant.
Robin W. Morey, Asst. U.S. Atty., New
York, N.Y. (Michael J. Garcia, U.S.
Atty., Celeste L. Koeleveld, Asst. U.S.
Atty., New York, N.Y., on the brief),
for Appellee.
JON O. NEWMAN, Circuit Judge.
This sentencing appeal primarily concerns a loss calculation
under the provision of the Sentencing Guidelines governing an
“intended loss” for fraud offenses. See U.S.S.G. § 2F1.1 (1997). The
appeal also presents a challenge to an enhancement for offenses
committed while released on bail. See
id. § 2J1.7. Gary Confredo
appeals from the June 29, 2006, amended judgment of the District Court
for the Southern District of New York (Leonard B. Sand, District
Judge) sentencing him to imprisonment for 205 months following his
plea of guilty to various offenses involving fraudulent loan
applications. We remand for reconsideration of the intended loss
amount.
Background
Criminal conduct and guilty plea. Doing business through an
entity called Granite Financial Services, Confredo and his associates
coordinated the submission of more than 200 fraudulent loan
applications to New York City area banks, including approximately 100
applications seeking in excess of $21 million from Citibank, N.A., on
behalf of hundreds of small businesses who were his customers.
Confredo’s customers knew that the loan applications were fraudulent.
To carry out the scheme, Confredo exploited his educational
-2-
training in finance and his experience as a former loan officer for a
bank; he knew what banks looked for when deciding whether to extend a
business loan; and he drafted or procured the drafting of the
fictitious loan applications, tax returns, financial statements, and
other supporting documents accordingly. On paper, the loan applicants
were well-established and profitable businesses; in reality, many of
them were not even going concerns but merely vehicles concocted by
Confredo and his associates for the sole purpose of securing loans for
their customers.
The majority of Confredo’s customers were not credit-worthy, and
would not have obtained loans without the false information supplied
to the banks by Confredo and his associates. Defense counsel alleged
at a proceeding before Judge Sand in May 2006, without dispute from
the Government, that in the majority of instances, individuals and/or
institutions with good credit co-signed the loan applications.
However, there is no indication that any of the approximately $12
million in loans that were ultimately granted were secured by bona
fide assets pledged as collateral.
For the services provided by Confredo and his co-conspirators,
Granite Financial Services received a fee that typically amounted to
between ten and fifteen per cent of the loan amount. Customers paid
a portion of the fee up front; if the bank denied a customer’s loan
application, Confredo or his associates would sometimes return the
customer’s payment and sometimes retain it. The presentence report
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(“PSR”) estimates that, after payments to his associates and staff,
Confredo’s personal share of the proceeds from the scheme was
“approximately $2,276,467.”
While on bail following his arrest, Confredo purported to give
truthful information during proffer sessions with the Government, but
the Government became suspicious and enlisted a cooperator to meet
with Confredo and record their discussion. During that meeting,
Confredo told the cooperator that he was still arranging fraudulent
loan deals while on bail, had been lying during the proffer sessions,
and had been involved in loan sharking.
In light of his post-arrest criminal conduct and his discussion
with the cooperator, the Government presented additional evidence to
the grand jury, which returned a superseding indictment (the
“indictment”) in October 1998, certain counts of which related to
offenses Confredo had committed while released on bail.
In February 1999, pursuant to a plea agreement, Confredo pled
guilty to one count of bank fraud (18 U.S.C. § 1344), two counts of
false statements on a loan application (18 U.S.C. § 1014), one count
of false statement to a federal law enforcement officer (18 U.S.C.
§ 1001), and one count of witness tampering (18 U.S.C. § 1512(b)(3)).
The last four offenses were committed after Confredo’s initial arrest
and release in November 1997. The plea agreement includes no
stipulations as to amount of loss or the applicable sentencing range
under the Sentencing Guidelines.
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The loss calculation. The PSR calculated the loss amount to be
the “total amount requested in [the] various loan applications”
involved in Confredo’s scheme, which it estimated to be $24.2 million.
Citibank was the target of the majority of the fraudulent applications
(more than 100), and it loaned approximately $11 million to Confredo’s
customers. The PSR noted that the actual loss to the banks was
“extremely difficult to ascertain due to the amount of loans involved,
the continual loan payments received by the banks from the customers
of the loans and the negotiations of settlement agreements between the
banks and these customers.” But the Probation Office did obtain loss
statements from a few banks. One Citibank official reported payments
of about $2.5 million, and hence an expected actual loss of $8.5
million; but another Citibank official reported a total loss of $9.5
million. The combined actual loss reported by the other banks from
whom the Probation Office obtained statements was slightly higher than
$1 million. Confredo did not file any objections to the PSR.
The first sentencing. Using the 1997 Guidelines, applicable to
Confredo’s offense conduct, Judge Sand began with a base offense level
of 6, see § 2F1.1(a)1, added 12 levels not challenged on this appeal,
added 16 levels for an intended loss of more than $20 million but less
than $40 million, see § 2F1.1(b)(1)(Q), and added 3 more levels
1
All references are to the 1997 Guidelines, unless otherwise
noted.
-5-
because four counts of Confredo’s conviction involved offenses he
committed while on release after his arrest, see § 2J1.7. The
adjusted offense level of 37 in Criminal History Category I yielded a
sentence range of 210 to 262 months.2
With respect to the loss enhancement, the Government argued, and
the probation officer agreed, that Judge Sand should determine the
enhancement based on the intended loss attributable to Confredo’s
conduct, which they contended was represented by the combined face
value of the loan applications, $24.2 million. Confredo conceded that
the actual loss caused by his scheme was in excess of $10 million, but
less than $20 million.3 Judge Sand ruled that intended, rather than
actual, loss was the proper measure of the amount of loss under
U.S.S.G. § 2F1.1(b)(1)(Q), and that the amount of the intended loss
was the total of all the loan applications. Judge Sand also adopted
the PSR’s restitution recommendation, ordering restitution in the
2
The Probation office had determined the adjusted offense level
to be 39, which included a 2-level sophisticated means enhancement
pursuant to U.S.S.G. § 2F1.1(b)(5)(C) (1998). Judge Sand did not
apply this enhancement on ex post facto grounds because it was
authorized after Confredo’s offense.
3
Apparently Confredo concedes that the larger $9.5 million loss
figure reported by Citibank is accurate, bringing the total actual
loss to an amount in excess of $10 million.
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amount of $9,338,479.81.
Although Confredo did not dispute the amount of intended loss for
purposes of determining the appropriate loss enhancement, defense
counsel did discuss the amount of loss at the first sentencing in the
context of Confredo’s request for a downward departure. Among the
grounds advanced to justify a departure was a claim that the amount of
loss calculation overstated the true amount of loss for various
reasons, including Confredo’s alleged “intention . . . that the loans
would be paid for the most part.”
The three-level enhancement for offenses committed while on
release was not discussed at the first sentencing, but is challenged
on appeal under Apprendi v. New Jersey,
530 U.S. 466 (2000), decided
after the sentencing.
Judge Sand denied Confredo’s request for a downward departure and
orally announced a sentence of 262 months, which was the top of the
applicable Guidelines range. Judge Sand also entered 262 months as
the total term of imprisonment on the judgment form. However, Judge
Sand’s distribution of the sentence among Confredo’s five counts of
conviction yielded a total of only 230 months, as reflected in the
summary order disposing of Confredo’s prior appeal. See United States
v. Confredo, 1 Fed. Appx. 68, 70 (2d Cir. Jan. 12, 2001) (“Confredo
I”). In addition, with respect to the four counts to which the
section 2J1.7 enhancement applied, Judge Sand did not apportion the
sentence between the underlying offenses and the enhancement, as
-7-
required by 18 U.S.C. § 3147.
First appeal. Confredo appealed, raising numerous claims. As to
two of the issues raised on the first appeal-–the confusion about
whether the total sentence was 230 or 262 months, and the absence of
a section 3147 apportionment--the Government conceded that a remand
for resentencing was necessary. As additional grounds for
resentencing, Confredo presented the two claims that are the subject
of this appeal: (1) the District Court’s loss calculation was
erroneous; and (2) the section 2J1.7 enhancement was unlawful under
Apprendi, decided after the first sentencing, because the indictment
did not charge that he had committed offenses while on release.
On the first appeal, we remanded for resentencing on the first
two grounds just discussed. See Confredo I, 1 Fed. Appx. at 70. As to
Confredo’s Apprendi claim, we declined to consider it, stating, “We
find it more appropriate to allow the district court to consider it in
the first instance on remand.”
Id. at 71 n.3. As to Confredo’s claim
regarding the loss amount, we noted that Confredo “did not object to
the loss calculation in the presentence report or object to the
district court’s loss calculation at sentencing.”
Id. at 71. However,
because the loss amount issue had been discussed in connection with
Confredo’s request for a downward departure, we deemed it appropriate
to permit the District Court to revisit the issue on remand.
Confredo’s conviction in the Eastern District of New York. The
United States Attorney’s Office for the Eastern District of New York
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prosecuted Confredo for laundering some of the proceeds generated by
his fraudulent loan application scheme. Confredo pled guilty, and, in
March 2001, the late Judge Jacob Mishler imposed a 57-month sentence.
Judge Mishler ordered this sentence to run concurrently with whatever
sentence Judge Sand would impose on remand in this case.
Resentencing. In June 2006, Judge Sand resentenced Confredo.4
At the resentencing hearing, the only disputed issues as to the
applicable sentencing range were the loss amount calculation and the
section 2J1.7 enhancement. As to loss amount, the Government argued
that Judge Sand should follow the Probation Office’s recommendation of
a 16-level enhancement for a loss amount of between $20 and $40
million. The Government’s position was based entirely on the loan
applications; it maintained that because Confredo’s customers had
applied for a combined value of more than $20 million in loans, the
“intended loss” was more than $20 million. Confredo argued for a 15-
level enhancement on the theory that his intended loss was between $10
and $20 million; he contended that he did not intend a loss in excess
of $20 million to occur because he expected the banks to reject some
4
The delay between remand and resentencing was caused by several
factors, as Judge Sand recounted orally at resentencing. The
principal reasons for the delay appear to have been defense counsel’s
requests for extensive discovery related to loss amount, and, once
Blakely v. Washington,
542 U.S. 296 (2004), was decided, “the parties’
desire to await the Booker decision and address its impact.”
-9-
of the loan applications and expected at least some of his customers
to pay back all or some of their loans. Confredo cited evidence that
many applications were denied and some loan repayments had occurred,
leaving the actual loss between $10 million and $20 million, and in
fact closer to $10 million.
As he had at the first sentencing, Judge Sand agreed with the
Government’s loss calculation. As a threshold matter, Judge Sand
ruled that Confredo had “waived” his loss amount argument by not
raising it at the first sentencing, but then rejected Confredo’s
argument on the merits. In summary, Judge Sand found the expectation-
of-repayment point unpersuasive because
[Confredo] undertook no obligation himself to pay off the loans
he secured. His “cut” was paid when the loans were secured; it
did not matter whether they were paid back. Confredo is not a
borrower who used fraud to obtain a loan which he then paid back
in full. See generally United States v. Schneider,
930 F.2d 555
[(7th Cir. 1991)]. Confredo secured loans for dozens of
entities and he retained no control whether those loans were
paid off, nor did his remuneration change depending on whether
the borrowers paid any of the funds back.
Consequently, Judge Sand again ruled that in this case the
“intended loss” was the combined face value of all the loans for which
Confredo’s customers had applied, which the PSR estimated to be $24.2
million. He stated that he had rejected all of Confredo’s arguments,
including the statutory and Apprendi objections to the section 2J1.7
enhancement, and was staying with the original 210-262 month
Guidelines range. Confredo’s counsel asked the Judge to impose a
sentence at the low end of the range, taking into account various
mitigating factors, including the fact that several million dollars of
-10-
loans provided to Confredo’s customers by Citibank had been repaid,
reducing the bank’s losses.
Judge Sand then orally delivered a formal opinion explaining his
reason for giving a non-Guideline sentence, consistent with what he
understood his obligations to be under United States v. Rattoballi,
452 F.3d 127 (2d Cir. 2006). Because Judge Mishler lacked authority
to have the Eastern District sentence run concurrently with a sentence
that had not yet been imposed, cf. Santa v. Tippy,
14 F.3d 157, 160
(2d Cir. 1994) (citing Mack v. Nelson,
455 F. Supp. 690, 692 (D. Conn.
1978)), Judge Sand implemented Judge Mishler’s intent by subtracting
57 months, which Confredo had already served, from the top of the
applicable guideline range, 262 months, which Judge Sand would
otherwise have used. He then imposed a sentence of 205 months,
resulting in the same amount of time to be served as if he had imposed
a sentence of 262 months to which Judge Mishler’s 57-month sentence
would have run concurrently.5
Discussion
I. Amount of Loss
Availability of claim. As noted, Judge Sand ruled at the
resentencing that Confredo had “waived” (more accurately, forfeited)
his challenge to the loss amount calculation by failing to raise it at
the first sentencing. It is true that Confredo filed no objections to
5
The amended judgment being appealed was further amended by a
judgment entered July 20, 2006, to correct a clerical mistake.
-11-
the PSR, and his counsel appeared to concede at the first sentencing
both that the intended loss controlled and that the amount of this
loss was more than $20 million. But it is also true that Confredo
sought a departure in part on the ground that he intended some of the
loans to be repaid, which in fact they were. Even if the loss claim
was not properly asserted in the District Court, we will entertain the
claim under all the circumstances on the somewhat relaxed application
of plain error review that we and other courts have on occasion deemed
appropriate for unpreserved sentencing errors. See United States v.
Simmons,
343 F.3d 72, 80 (2d Cir. 2003); United States v. Cortes-
Claudio,
312 F.3d 17, 24 (1st Cir. 2002); United States v. Sofsky,
287
F.3d 122, 125 (2d Cir. 2002).
Merits. Confredo challenges the aggregation of all the loan
applications to arrive at the intended loss amount for two reasons:
(1) based on his experience as a loan officer, he did not expect that
all of the loans for which he prepared applications would be granted,
let alone at the full amounts sought, and (2) he expected some of the
loans to be repaid by his customers. Conceding an intended loss of
more than $10 million but less than $20 million, he contends that the
loss enhancement should have been 15 levels, see § 2F1.1(b)(1)(P),
instead of 16. Although the dispute concerns only one level of
enhancement, the difference between the resulting maximums of the two
arguably applicable ranges is 27 months.
In considering Confredo’s claim, we encounter some uncertainty as
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to the standard of review, arising from uncertainty as to whether
Judge Sand’s 16-level enhancement was based on a finding of fact,
which we would review only for clear error, see United States v.
Rubenstein,
403 F.3d 93, 99 (2d Cir. 2005), or was based, at least in
part, on an interpretation of the relevant guideline, which we would
review de novo, see id.; cf. United States v. Rutkoske,
506 F.3d 170,
178 (2d Cir. 2007) (court of appeals has obligation to determine if
trial court’s method of calculating loss was legally acceptable).
Even though a non-Guidelines sentence was imposed in order to
effectuate Judge Mishler’s attempt to make his sentence concurrent,
any error in making the initial calculation of the applicable
guideline range will normally undermine the validity of the resulting
sentence, especially in a case like Confredo’s where the non-
Guidelines sentence is calculated precisely with reference to what a
Guidelines sentence would have been. See United States v. Fagans,
406
F.3d 138, 141 (2d Cir. 2005).
If Judge Sand found as a matter of fact that Confredo intended to
cause a loss equal to the face amount of all of the loans, such a
finding would likely be affirmed on review only for clear error.
Similarly, if Judge Sand concluded that Confredo had failed to present
evidence putting his intent in issue, we would likely affirm a
conclusion that the aggregate amount of the loans was the intended
loss. However, the rationale for Judge Sand’s decision appears to be
based, at least in part, on his view that a presenter of fraudulent
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loan applications will be deemed as a matter of law to have intended
a loss equal to the aggregate amount of the loans whenever the
presenter is not the borrower. Whether that is a correct
interpretation of the fraud guideline requires consideration of the
somewhat varied case law on the subject.
Prior to 1991, we had stated that the proper measure of intended
loss was the total value of the loan obtained or sought, without
regard to whether the defendant had intended to repay the lender. See
United States v. Brach,
942 F.2d 141, 143 (2d Cir. 1991). The
rationale was that the defendant’s crime was analogous to theft, see
United States v. Kopp,
951 F.2d 521, 528-29, 533 (3d Cir. 1991), a
rationale supported by the pre-1991 version of Application Note 7 of
the fraud guideline, which appeared to treat fraud offenses like theft
offenses when calculating the loss amount, see U.S.S.G. § 2F1.1,
comment. (n.7) (1990) (cross-referencing commentary to guideline for
theft offenses, U.S.S.G. § 2B1.1 (1990));
Brach, 942 F.2d at 143.
In 1991, the Sentencing Commission amended Application Note 7.
See U.S.S.G. App. C, Amend. No. 393, at 222-23 (1991). The Note had
instructed the sentencing court to determine loss based on “a probable
or intended loss.” U.S.S.G. § 2F1.1, comment. (n.7) (1990). The
amended version deletes the word “probable,” but preserves the general
rule, applicable in both fraud and theft cases, that the sentencing
court should use the loss amount that the defendant intended if that
amount exceeds the actual loss and can be determined. See U.S.S.G.
-14-
§ 2F1.1, comment. (n.7) (1991). It also acknowledges that
“[f]requently loss in a fraud case will be the same as in a theft
case.”
Id. But the amended version recognizes that there might be
types of fraud where an analogy to theft would not be appropriate; in
such cases “additional factors are to be considered in determining the
loss or intended loss.”
Id.
Among such cases are “Fraudulent Loan Application and Contract
Procurement Cases,” which are treated in subsection (b) of Note 7.
The 1997 version of Note 7(b), applicable here, provides the general
rule for loss calculation in fraudulent loan application cases:
In fraudulent loan application cases and contract procurement
cases, the loss is the actual loss to the victim (or if the loss
has not yet come about, the expected loss). For example, if a
defendant fraudulently obtains a loan by misrepresenting the
value of his assets, the 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. However,
where the intended loss is greater than the actual loss, the
intended loss is to be used.
U.S.S.G. § 2F1.1, comment. (n.7(b)) (1997) (emphasis added). Thus,
amended Note 7(b) gives the defendant credit for objective facts--
payments prior to discovery of fraud and assets pledged to secure the
loan--that might alter a loss calculation if based solely on face
amounts of loan applications.
Although Note 7(b) sensibly takes into account differences
between theft offenses and fraudulent loan applications, it does not
specifically provide a method for determining intended loss in a case
like the present one, where (a) no collateral is involved, and (b) the
-15-
defendant is not a borrower but a preparer of fraudulent loan
applications who claims to have expected that a number of loans would
be denied and at least some portion of the loans granted would be
repaid.
In Brach, a case governed by the pre-amendment version of section
2F1.1, we upheld the use of the face value of a fraudulently obtained
loan as the loss amount, even though the defendant, who was the
borrower, had in fact repaid the entire loan, and we assumed that he
had intended to repay the loan when he applied for it. See
Brach, 942
F.2d at 143. Consistent with the pre-amendment version of Note 7, we
applied the commentary to the guideline for theft offenses, concluding
that a defendant’s intent to repay a fraudulently obtained loan was
immaterial to the loss calculation because “‘loss’ includes the value
of all property taken, even though all or part of it was returned.”
Id. Based on the text of the pre-amendment version of the Note, we
also observed that “loss” in a fraud case may consist of the “probable
loss resulting from the fraud,”
id. (internal quotation marks
omitted), which we equated with the potential loss that the
defendant’s conduct could have caused, see
id.
Brach was rejected by several courts, notably the Third Circuit
in a thoughtful opinion by the late Judge Becker. See United States
v. Kopp,
951 F.2d 521 (3d Cir. 1991); United States v. Moored,
38 F.3d
1419, 1426-27 (6th Cir. 1994); United States v. Shaw,
3 F.3d 311, 313
(9th Cir. 1993). Kopp involved a defendant who had fraudulently
-16-
procured a $13.75 million loan that was secured by real property. See
id. at 524. The defendant claimed he had intended to repay, but the
loan went into default; when the bank sold the property securing the
loan, it recovered more than the value of the loan. See
id.
Nevertheless, the district court ruled that the face amount of the
loan was the appropriate measure of the loss intended by the
defendant, and sentenced him accordingly. See
id. at 525.
Judge Becker’s opinion disagreed with Brach and sided with a
Seventh Circuit opinion authored by Judge Posner, see
id. at 529, 532-
33, which had observed that it was “simple” but “irrational” to treat
all frauds as equivalent to thefts, preferring an approach that took
account of whether the defendant actually intended to pocket the face
value of the amount he had fraudulently procured, see United States v.
Schneider,
930 F.2d 555, 558-59 (7th Cir. 1991). In addition, based
on a careful analysis of the then-applicable version of section 2F1.1,
Judge Becker rejected an approach that equated the Guidelines-approved
measures of “probable” or “intended” loss with “the worst case
scenario [of] potential loss (here, the face value of the loan).”
Kopp, 951 F.2d at 529; see also
id. at 533. Finally, Judge Becker
observed that the approach taken by Brach was inconsistent with the
1991 amendments to Note 7. See
id. at 534-35.
After Kopp, the Third Circuit has consistently held that
“[i]ntended loss refers to the defendant’s subjective expectation, not
to the risk of loss to which he may have exposed his victims.” United
-17-
States v. Yeaman,
194 F.3d 442, 460 (3d Cir. 1999); see United States
v. Geevers,
226 F.3d 186, 192 (3d Cir. 2000). Judge Becker’s opinion
in Geevers devised a sensible approach for district courts to use in
determining the defendant’s “intended loss” in cases where the
Government seeks to equate possible loss with intended loss: The
district court may presume that the defendant intended the victims to
lose the entire face value of the instrument, but the defendant may
rebut the presumption by producing “evidence to demonstrate that he
actually intended” to cause a lesser loss. See
id. at 193-94.
Since the Commission amended Note 7, we have left open the
possibility that a defendant is free at sentencing to present evidence
of his intent regarding the issue of loss. In United States v.
Ravelo,
370 F.3d 266, 270-274 (2d Cir. 2004), where the defendant made
numerous unsuccessful attempts to get cash advances on credit cards in
excess of cash advance limits, we approved use of the aggregate
amounts he would have obtained if he had succeeded on each attempt in
the absence of evidence of contrary intent. See
id. at 273. Ravelo
cited Geevers as having “adopted [a] similar approach[] in analogous
circumstances.” See
id. at 273 n.6.
In United States v. Singh,
390 F.3d 168 (2d Cir. 2004), a doctor
caused his office to submit to medicare and medicaid insurers bills
that were higher than the fixed rates established by the Government
for the services provided. See
id. at 176-77, 193. The district court
determined intended loss based on the combined total of the face value
-18-
of the bills. See
id. at 193. The defendant argued that he never
intended to receive full reimbursement because he knew the rate
schedules were carved in stone. Consistent with the Geevers approach,
Singh held that the defendant “should have a further opportunity on
remand to show, if he can, that the total amount he expected to
receive from the insurers was indeed less than the amounts he actually
billed.”
Id. at 194.
We conclude that, after adoption of amended Note 7, the defendant
should have an opportunity to persuade the sentencing judge that the
loss he intended was less than the face amount of the loans. A
defendant who applied for, or caused someone else to apply for, a
$1 million loan, fully expecting at least $250,000 to be repaid,
intended a loss of no more than $750,000 (although, if no repayment is
made, he would be subject to punishment for an actual loss of $1
million). Similarly, a defendant who applied for, or caused others to
apply for, ten $1 million loans, expecting at least three to be
rejected, intended a loss of no more than $7 million (although, if all
were accepted and none was repaid, he would be subject to punishment
for an actual loss of $10 million).
We will therefore remand to afford Judge Sand an opportunity to
reconsider the intended loss in accordance with this opinion. Either
on the present record, or after receipt of additional evidence in the
Judge’s discretion, the Judge should determine the extent, if any, to
which Confredo has proven a subjective intent to cause a loss of less
-19-
than the aggregate amount of the loans, in which event the applicable
loss calculation should be based only on the intended loss, unless the
actual loss is higher. As with all loss calculations, absolute
precision is not required. See § 2F1.1 comment. (n.8).
II. The Section 2J1.7 Enhancement
The 1997 version of section 2J1.7,6 which was applied here to
enhance Confredo’s offense level by three levels, provided:
If an enhancement under 18 U.S.C. § 3147 applies, add 3 levels
to the offense level for the offense committed while on release
as if this section were a specific offense characteristic
contained in the offense guideline for the offense committed
while on release.
As is clear from its text, section 2J1.7 was designed to
implement 18 U.S.C. § 3147, which provides, in relevant part:
A person convicted of an offense committed while released under
this chapter shall be sentenced, in addition to the sentence
prescribed for the offense to --
(1) a term of imprisonment of not more than ten years if
the offense is a felony . . . .
A term of imprisonment imposed under this section shall be
consecutive to any other sentence of imprisonment.
18 U.S.C. § 3147; see United States v. Stevens,
66 F.3d 431, 435-36
(2d Cir. 1995).
Confredo did not challenge the section 2J1.7 enhancement at his
first sentencing because the conceptual basis for his argument is
6
In 2006, the Commission deleted section 2J1.7 and moved it in
substance to Chapter Three of the Guidelines, see U.S.S.G. § 3C1.3
(2007); Supplement to Appendix C, Amendment 684, at 154-58 (2006).
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Apprendi, which was decided later. He raised the issue for the first
time in his initial appeal and then at his resentencing, and does so
again on this appeal. Although the Government contends that plain
error review applies, Judge Sand considered the enhancement on the
merits at the resentencing following the remand order that suggested
he do so.
Whether or not the Apprendi objection was preserved, it is
without merit, although the matter requires some discussion. The
initial issue is whether Apprendi applies to Confredo’s sentence. It
is undisputed that the sentence does not exceed the statutory maximum
punishment Judge Sand could have imposed, based on Confredo’s guilty
plea, even without the three-level section 2J1.7 enhancement. This
reason has prompted numerous courts to reject Apprendi challenges to
section 2J1.7 enhancements in analogous cases. See United States v.
Samuel,
296 F.3d 1169, 1172-76 (D.C. Cir. 2002); United States v.
Randall,
287 F.3d 27, 30-31 (1st Cir. 2002); United States v. Ellis,
241 F.3d 1096, 1103-04 (9th Cir. 2001); United States v. Parolin,
239
F.3d 922, 930 (7th Cir. 2001). However, our Court has ruled that
Apprendi applies not only where an enhanced sentence exceeds the
statutory maximum but also where an enhancement exposes the defendant
to the risk of a sentence that exceeds the statutory maximum. See
United States v. Gonzalez,
420 F.3d 111, 128-29 (2d Cir. 2005) (“The
Apprendi rule applies to the resolution of any fact that would
substitute an increased sentencing range for the one otherwise
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applicable to the case.”). Whether Confredo was “exposed” to a higher
maximum sentence than the maximum for the offenses to which he pled is
not as clear as one might suppose. Consideration of that issue
requires an examination of the interplay between the guideline,
section 2J1.7, and the related statute, 18 U.S.C. § 3147.
The three level enhancement of section 2J1.7 is to be added “[i]f
an enhancement under 18 U.S.C. § 3147 applies.” U.S.S.G. § 2J1.7.
Section 3147 is entitled “Penalty for an offense committed while on
release,” and several courts have held that it does not create a
separate offense but merely provides a sentence enhancement. See
United States v. Jackson,
891 F.2d 1151, 1152-53 (5th Cir. 1989);
United States v. Di Pasquale,
864 F.2d 271, 279-80 (3d Cir. 1988);
United States v. Sink,
851 F.2d 1120, 1121 (8th Cir. 1988); United
States v. Patterson,
820 F.2d 1524, 1526 (9th Cir. 1987); cf.
Samuel,
296 F.3d at 1173 (expressing uncertainty as to whether section 3147
creates a separate offense).
Because Judge Sand did not impose a specific sentence under
section 3147 on any of the counts charging offenses committed while on
release, it is arguable that section 3147 has not been “applie[d].”
However, Judge Sand recognized that section 2J1.7 represents the
Sentencing Commission’s method for implementing section 3147’s
requirement of additional consecutive punishment. Understanding why
this is so requires consideration of the Commission’s statements in
the Background explanation of section 2J1.7 and the Commission’s
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technique, explained in Application Note 2 to this section, for
determining and imposing a sentence for an offense committed while on
release.
The Background explanation includes the following
[T]he court is required to impose a consecutive term of
imprisonment under [section 3147], but there is no
requirement as to any minimum term. [Section 2J1.7] is
drafted to enable the court to determine and implement a
combined “total punishment” consistent with the overall
structure of the guidelines, while at the same time
complying with the statutory requirement [i.e.,
consecutiveness].
U.S.S.G. § 2J1.7 comment. (backg’d).
Application Note 2 states:
Under 18 U.S.C. § 3147, a sentence of imprisonment must
be imposed in addition to the sentence for the underlying
offense, and the sentence of imprisonment imposed under 18 U.S.C. § 3147 must runs consecutively to any other
sentence of imprisonment. Therefore, the court, in order to comply
with the statute, should divide the sentence on the judgment form
between the sentence attributable to the underlying offense and the
sentence attributable to the enhancement. The court will have to
ensure that the “total punishment” (i.e., the sentence for the offense
committed while on release plus the sentence enhancement under 18
U.S.C. § 3147) is in accord with the guideline range for the offense
committed while on release, as adjusted by the enhancement in this
section. For example, if the applicable adjusted guideline range is
30-37 months and the court determines “total punishment” of 36 months
is appropriate, a sentence of 30 months for the underlying offense
plus 6 months under 18 U.S.C. § 3147 would satisfy this requirement.
U.S.S.G. § 2J1.7, comment. (n.2).7
As the Seventh Circuit has usefully explained, the correct way to
7
As we have pointed out, the Commission’s example in the last six
lines of Note 2 is incorrect under the Commission’s own recommended
procedure. See
Stevens, 66 F.3d at 436.
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perform the task required by Note 2 comprises several steps: (1)
determine the applicable sentencing range for the offense committed on
release without the section 2J1.7 enhancement, (2) determine the
applicable sentencing range with the enhancement, (3) select an
appropriate sentence within the enhanced sentencing range, (4)
apportion any part of the sentence that falls within the unenhanced
range to the offense committed while on release, (5) apportion the
remainder of the sentence to the enhancement, and (6) impose the term
apportioned to the enhancement to run consecutively to the term
apportioned to the unenhanced sentence. See United States v. Wilson,
966 F.2d 243, 249 (7th Cir. 1992). We have endorsed the Seventh
Circuit’s methodology. See
Stevens, 66 F.3d at 434-36.
Judge Sand endeavored to follow Application Note 2 and the Wilson
methodology. He recognized, however, that, because of the adjustment
to account for the sentence imposed by Judge Mishler--reducing by 57
months what would have been a Guidelines sentence of 262 months--
Confredo’s sentence would be a non-Guidelines sentence and the Judge’s
calculation would be “similar to that performed in Stevens.” Judge
Sand’s methodology, detailed in the margin,8 satisfied the purpose of
8
Judge Sand determined a total punishment range at level 37 (the
enhanced level), which was 210-262 months, selected the top of the
range, 262, as an initial punishment and then subtracted the 57 months
of Judge Mishler’s sentence to reach a total punishment of 205 months.
Then he spread those 205 months among the five counts of conviction as
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Note 2 and section 3147 because the enhanced portions of the sentences
for all offense-on-release counts run consecutively to all other
sentences.
The Government contends that Judge Sand applied only section
2J1.7, and not section 3147. The Government relies on the language of
section 2J1.7, which states that the three-level enhancement is to be
applied “as if this section were a specific offense characteristic
contained in the offense guideline for the offense committed while on
release.” The District of Columbia Circuit has accepted that view, at
least as long as a defendant is not separately charged with a section
3147 offense, see
Samuel, 296 F.3d at 1172-76, and the First Circuit
has rejected an Apprendi challenge to a section 2J1.7 enhancement on
similar grounds, see
Randall, 287 F.3d at 30-31. We disagree.
Since the section 2J7.1 enhancement is the Commission’s technique
for implementing section 3147, use of that enhancement is an
follows: 100 months on Count 2, 30 months on Count 15, 30 months on
Count 16, 30 months on Count 23, and 15 months on Count 28. Then he
made an allocation within the sentence for each of the four offense-
on-release counts as follows: Count 15, 13 months for the offense and
17 months for the enhancement; Count 16, 13 months for the offense and
17 months for the enhancement; Count 23, 14 months for the offense and
16 months for the enhancement; Count 28, 7 months for the offense and
8 months for the enhancement. Finally, and most significantly, he
specified that all five sentences are to run consecutively.
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application of section 3147. Indeed, the only reason the Commission
requires apportionment is to satisfy section 3147’s requirement of
consecutiveness. The Commission cannot take a statutory requirement
of consecutive punishment and, by calling it an offense
characteristic, avoid the reality that a defendant, punished for
committing an offense while on release, is exposed to the additional
consecutive ten-year maximum provided by section 3147.
Since section 3147 applies (even though not as a separately
charged offense), Apprendi also applies because section 3147 exposes
Confredo to a higher maximum, i.e., ten more years, than the highest
maximum he could have received on the offense-on-release counts.
Under our decision in Gonzalez, it does not matter that the added
sentence in fact left the total sentence within the maximum for the
underlying offenses.
See 420 F.2d at 128-29.
Although Apprendi applies, its jury fact-finding requirement has
not been violated. Confredo sufficiently admitted the fact on which
the enhancement rested, i.e., that he committed the offenses while on
release. See United States v. Booker,
543 U.S. 220, 244 (2005)
(Apprendi not violated where fact is “admitted by the defendant).
During his plea colloquy, Confredo stated that, after he had been
arrested, he had participated in the proffer sessions at which he made
the false statements underlying Count 23, at a time when the public
record indisputably establishes that he had been released, and he
acknowledged meeting a co-conspirator in the Bronx and Manhattan on a
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number of occasions to prepare false loan applications, activity that
occurred after his release. Under these circumstances, jury fact-
finding that the offenses occurred while on release was not required
or, in any event, any error was harmless. See United States v.
Wallace,
276 F.3d 360, 369 (7th Cir. 2002) (stipulation and plea
colloquy); United States v. Champion,
234 F.3d 106, 109-10 (2d Cir.
2000) (stipulation). Moreover, the presentence report alleged that
the offenses were committed while on release, and this aspect of the
PSR was not challenged. See United States v. Fagans,
406 F.3d 138, 142
(2d Cir. 2005).
The only aspect of the Apprendi claim that might remain is the
absence from the indictment of an allegation that the offenses were
committed while on release. See
Apprendi, 530 U.S. at 476 (citing
Jones v. United States,
526 U.S. 227, 243 n.6 (1999)). The Supreme
Court has ruled that an Apprendi violation concerning an omission from
an indictment is not noticeable as plain error where the evidence is
overwhelming that the grand jury would have found the fact at issue.
See United States v. Cotton,
535 U.S. 625, 631-34 (2002). We think
the same analysis should apply to harmless error. See United States v.
Salazar-Lopez,
506 F.3d 748, 752-56 (9th Cir. 2007); United States v.
Robinson,
367 F.3d 278, 285-89 & n.7 (5th Cir. 2004). There is no
doubt that the grand jury would have found that the offenses were
committed while Confredo was on release. Moreover, as the Government
contends, Confredo had ample notice, prior to his plea, that he faced
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an enhancement under section 2J1.7. Cf. United States v. Doe,
297 F.3d
76, 87-88 (2d Cir. 2002) (on plain error review, omission from
indictment did not violate substantial rights because of prior
notice).
Confredo’s challenge to the section 2J1.7 enhancement is
rejected.9
Conclusion
The case is remanded for reconsideration of the sentence.
9
The Government contends that no Apprendi error occurred because
the fact of committing the offenses while on release is similar to the
prior conviction facts that are exempted from Apprendi. See
Almendarez-Torres v. United States,
523 U.S. 224 (1998). The First
Circuit has accepted this argument, see
Randall, 287 F.3d at 30,
although, as Justice Thomas has pointed out, a majority of the Supreme
Court now agrees that Almendarez-Torres was incorrectly decided. See
Shepard v. United States,
544 U.S. 13, 27 (2007) (Thomas, J.,
concurring). In view of our disposition of the Apprendi claim, we
need not consider this alternative argument.
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