IN THE UNITED STATES COURT OF APPEALS

                                  FOR THE FIFTH CIRCUIT

                                 _________________________

                                        No. 95-10325
                                  ________________________


UNITED STATES OF AMERICA,
                                                                       Plaintiff-Appellee,
                                              versus

J. D. TEDDER,

                                                         Defendant-Appellant.
                ____________________________________________________

                          Appeal from United States District Court
                             for the Northern District of Texas
                 __________________________________________________
                                      April 15, 1996

Before LAY*, HIGGINBOTHAM and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

       Pursuant to a plea agreement, Tedder pled guilty to one count of fraudulent use of a social

security number, 42 U.S.C. §408(a)(7)(B), and one count of aiding and abetting, 18 U.S.C. §2 for

selling fraudulent social security numbers and counseling individuals with poor credit on how to

submit fraudulent loan applications based on the phony numbers. The district court adopted the

probation department’s findings in the Presentence Report (PSR), and sentenced Tedder to a term

of thirty months, based on a potential loss of $865,643.99. Tedder appeals his sentence, contending

that the calculation should have been based on “actual” loss under U.S.S.G. §2F1.1. Finding no

error, we AFFIRM.

                                              FACTS

       Tedder was in the business of counseling people with poor credit. For a fee, Tedder provided

his clients with false social security numbers and gave them instructions on how to apply for loans



       *
        Circuit Judge of the Eighth Circuit, sitting by designation.
using those numbers. As a result, many of Tedder’s clients were able to qualify for car loans and

mortgages for which they would not otherwise have qualified. Tedder did not know whether his

clients would fulfill their contractual obligations with the lenders, though he gave them specific

instructions to pay their bills on time and not to lie to any governmental agency.

       The original PSR calculated a total offense level of 11 and noted a guideline range of 12 to

18 months of imprisonment. Based on further investigation and an updated Victim Impact Statement,

an amendment to the PSR raised that offense level to 16 and a guideline range of 27-33 months. The

recommendation, as amended, was based on a “potential loss amount” of $865,643.99 in loans

applied-for. Loans were granted in the amount of $735,878.99, and the realized loss at the time of

amending the PSR was $21,681.55. Tedder disputes the 30 month sentence, arguing that the loss

should have been based on the actual loss of $21,681.55, and t hat the amended PSR calculation

significantly overstates the seriousness of his conduct because it included loans applied-for but never

approved, loans that were current, loans secured by collateral, and loans applied-for by individuals

not named in any of the counts.

                                           DISCUSSION

       The calculation of the amount of loss is a factual finding, reviewed for clear error. United

States v. Wimbish, 

, 313 (5th Cir. 1992), cert. denied, __ U.S. __, 

, 

(1993). However, the interpretation and application of the Guidelines is reviewed de

novo. United States v. Hill, 

, 916 (5th Cir.), cert. denied __U.S. __, 

, 

(1995).

       The sum and substance of this appeal is how U.S.S.G. §2F1.1 applies to Tedder’s fraudulent

scheme. Section 2 F1.1(b)(1)(A)-(S) provides for incremental increases in the offense level

depending on the amount of loss. Comment (n.7) provides that loss is the value of the thing

unlawfully taken. 

fraudulent loan application case, “ the loss is the actual loss to the victim

or if the loss has not yet come about, the expected loss.” 

(n.7(b)). However, “where

the intended loss is greater than the actual loss, the intended loss is to be used.” 

                                                   2
paragraph of the comment delineates a ‘ballpark’ provision: “Where the loss determined above

significantly understates or overstates the seriousness of the defendant’s conduct, an upward or

downward departure may be warranted.” U.S.S.G. §2F1.1 comment (n.7(b)).

        Tedder argues that the higher calculation based on “intended” loss is inappropriate because

he lacked the intent to defraud lenders, as evidenced by his instructions to his clients “not [to] lie to

the government and to pay their bills on time.” He contends that the actual loss should have been

measured by subtracting the amounts the lending institutions can expect to recover or have recovered

from the amount of the loans not likely to be repaid at the time the offense was discovered, as

indicated in comment n.7(b)’s instructions calculating actual loss.

        The amount of loss in a fraudulent loan application case is factually dependant. Where the

defendant intends to repay the loans, then actual loss, rather than intended loss, is the appropriate

basis for calculating loss under §2F1.1. United States v. Henderson, 

(5th Cir.), cert.

denied __ U.S. __, 

, 130 L. Ed. 2d (1994). However, where the defendant does not

intend to repay, and the actual loss is less than the intended loss, only because law enforcement

official thwarted his plans, then the full intended loss is the appropriate basis for calculation. United

States v. Brown, 

, 1159 (5th Cir. 1993).

        The defendant’s conduct is similar to that of the defendant in facts in the case sub judice in

United States v. 

. Hill “rented” faked securities to individuals and companies

who wanted to dress-up their balance sheets. He received in rent a much smaller amount than the

face value of the securities. The securities pledged in Hill had no value and there was no evidence

presented to show that the defendant intended to repay the loans. This Court held that the “intended”

loss for Guidelines purposes was the face value of the securities, not the “actual” amount received

in rentals because the purpose of the scheme was to allow the victims to pledge the face value of the

securities as collateral for loans, or to allow them to increase the assets reflected on their balance

sheets by that amount. 

.

        The purpose of Tedder’s scheme was to allow his clients to fraudulently obtain loans to the


                                                   3
full extent of the amounts requested in the loan applications. Tedder’s clients were therefore at risk

to jeopardize their financial st ability to the full amount of the loan requested. Tedder’s and Hill’s

schemes put the clients, as well as the loan institutions, in precarious financial situations.

Furthermore, both schemes enabled the defendants’ clients to cheat loan institutions, and one of

Tedder’s clients also cheated an innocent victim of his good credit standing. Like Hill, Tedder sold

his expertise, his research, and his fraudulent product specifically for the purpose of enabling his

clients to obtain fraudulent loans. Although the banks had received repayment on some of the loans,

there is no evidence that the defendant had any control over any such repayment and therefore, as in

Hill “he could not have intended to replace them... if it became necessary.” Because Tedder had no

control over repayment of the loans, his argument that he intended the loan to be paid is unpersuasive.

Thus, we find that the intended, rather than the actual amount of the loss is the appropriate measure

for guidelines purposes.

        At sentencing, the lower court adopted the facts as detailed in the amended PSR, and Tedder

offered no rebuttal evidence to refute any of the Victim’s Impact Statement’s findings upon which

the calculation of the offense level was based. A court is justified in relying on information provided

in a PSR where it has an adequate evidentiary basis. United States v. Mir., 

, 943 (5th

Cir. 1990). The trial court found it a reasonable inference from the information given that a very

large percentage, if not one hundred percent, of the amount lent either had or would at some point

go into default, and that it was problematic that there would be any substantial recovery. Thus, the

trial court implicitly found that the seriousness of Tedder’s crime justified the calculation of the loss

based upon the total of the loan amounts applied for. Finding no error of fact or law, the sentence

as imposed by the lower court is AFFIRMED.




                                                   4