FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                 No. 06-30550
                Plaintiff-Appellee,          D.C. No.
               v.
                                         CR 04-0512 JLR
WARREN ERIC ARMSTEAD,                      ORDER AND
             Defendant-Appellant.           AMENDED
                                            OPINION

       Appeal from the United States District Court
          for the Western District of Washington
        James L. Robart, District Judge, Presiding

                   Argued and Submitted
            April 8, 2008—Seattle, Washington

                 Filed October 15, 2008
        Opinion Withdrawn and Amended Opinion
                Filed December 30, 2008

    Before: Stephen Reinhardt, A. Wallace Tashima, and
          M. Margaret McKeown, Circuit Judges.

                Opinion by Judge Tashima




                           16779
                  UNITED STATES v. ARMSTEAD              16783


                         COUNSEL

Tessa M. Gorman, Assistant United States Attorney, Seattle,
Washington, for the plaintiff-appellee.

Carol A. Elewski, Tumwater, Washington, for the defendant-
appellant.


                          ORDER

   The Opinion filed October 15, 2008, and reported at 

, is withdrawn and replaced by the Amended Opin-
ion filed concurrently with this order. With the filing of the
Amended Opinion, the panel has voted to deny the petition
for panel rehearing. Judges Reinhardt and McKeown vote to
deny the petition for rehearing en banc and Judge Tashima so
recommends. The full court has been advised of the petition
for rehearing en banc and no judge of the court has requested
a vote on en banc rehearing. See Fed. R. App. P. 35(f).

  The petition for panel rehearing and the petition for rehear-
ing en banc are denied. No further petitions for rehearing may
be filed.
16784               UNITED STATES v. ARMSTEAD
                             OPINION

TASHIMA, Circuit Judge:

   A jury convicted Defendant Warren Armstead of nine
counts of bank fraud in violation of 18 U.S.C. § 1344 and one
count of conspiracy to commit bank fraud in violation of 18
U.S.C. § 1349. On appeal, Armstead contends that the district
court committed numerous procedural errors during sentenc-
ing and that his 210-month sentence is substantively unreason-
able.1 Because we agree that the district court miscalculated
the number of victims under United States Sentencing Guide-
lines (“U.S.S.G.”) § 2B1.1(b)(2) and erred under U.S.S.G.
§ 5G1.3(b)(1), we vacate Armstead’s sentence and remand for
resentencing.

 I.   FACTUAL AND PROCEDURAL BACKGROUND

   From 2001 to 2004, Armstead led a conspiracy to commit
bank fraud. Armstead recruited conspirators and paid them
fifty dollars or gave them drugs in exchange for “packets” of
stolen personal information. Each packet contained an indi-
vidual’s social security number, a bank account number or
numbers, a credit card number or numbers, and blank checks.
Armstead and his co-conspirators stole these packets from
individuals, their homes, and vehicles.

   Armstead gave the personal identification information to
certain co-conspirators and directed them to create fake
Washington State Driver Licenses (“WSDLs”). Each fake
WSDL contained stolen personal information juxtaposed with
a photograph of one of the conspirators. At Armstead’s direc-
tion, his co-conspirators deposited stolen checks into bank
accounts and withdrew funds from those accounts using the
  1
    Armstead’s challenge to his conviction was addressed and his convic-
tion affirmed in a memorandum disposition, filed on October 15, 2008.
See United States v. Armstead, 

.
                  UNITED STATES v. ARMSTEAD              16785
fake WSDLs. Conspirators also used the fake WSDLs to take
out lines of credit with General Electric (“GE”), Home Depot,
and Dania Furniture and to purchase merchandise with that
credit. Armstead received fifty percent of all of the proceeds
from the fraudulent schemes.

   Armstead was charged with nine counts of bank fraud
under 18 U.S.C. § 1344 and one count of conspiracy to com-
mit bank fraud under 18 U.S.C. § 1349. Armstead’s nine co-
conspirators pled guilty and they, as well as individuals from
whom his co-conspirators stole personal information, testified
against Armstead at his trial. In submitting the case to the
jury, at Armstead’s request, the district court included on the
verdict form the following interrogatory: “Was the defendant
WARREN ERIC ARMSTEAD an organizer or leader of a
conspiracy or a bank fraud scheme that involved five or more
participants or was otherwise extensive?” The jury returned a
guilty verdict on all ten counts and answered the interrogatory
in the affirmative.

   Armstead’s presentence investigation report (“PSR”) rec-
ommended a minimum $397,000 loss amount. This amount
included $296,000 from a United States Secret Service loss
calculation (the “Secret Service calculation”); $50,000 in cash
that Armstead gave Rusty Hill, one of Armstead’s co-
conspirators; $46,000 that an individual testified was taken
from her bank account; and $5,000 in loss to Dania Furniture.
The Secret Service calculation was based on amounts conspir-
ators took from forty-two accounts at thirteen banks and
credit unions (collectively, the “banks”). These forty-two
accounts belonged to forty-six different individuals and busi-
nesses. The Secret Service calculation also included
$11,576.88 in losses to GE and Home Depot.

   At sentencing the government argued that the loss amount
should also include $107,000 based on deposits made to Arm-
stead’s bank account during the course of the conspiracy.
Armstead argued that the loss calculation should not include
16786                UNITED STATES v. ARMSTEAD
any of the $107,000 or the $50,000 Armstead gave to Hill.
Armstead further contended that the number of victims should
be limited to the number of banks — thirteen2 — and that the
district court should not apply the enhancement for role in the
offense. With regard to the 18 U.S.C. § 3553(a) factors, Arm-
stead argued that his sentence should be comparable to that of
his co-conspirators.3

   The district court agreed with the loss calculation in the PSR,4
but also added enough from the $107,000 in deposits to Arm-
stead’s bank account to bring the total loss amount over
$400,000. The court stated that it was “extremely skeptical of
counting 100 percent of the funds,” but concluded that enough
of the funds came from criminal conduct to cross the
$400,000 threshold. The district court also found that there
were more than fifty victims and, having submitted the ques-
tion of Armstead’s role in the offense to the jury, adopted its
finding that Armstead was a leader or organizer in the con-
spiracy. The district court calculated the Guidelines range for
Armstead’s sentence as follows:




  2
     In his sentencing memorandum, Armstead argued that the number of
victims should be limited to seven, the number of banks in the indictment.
On the day of sentencing and before this court, however, Armstead argued
that the victims should be limited to the number of banks, but did not dis-
pute the government’s list of thirteen bank victims in the Secret Service
calculation.
   3
     The co-conspirator with the longest sentence received a 60-month term
of imprisonment.
   4
     On the day of sentencing, the government presented a slightly revised
Secret Service calculation and a slightly revised amount of loss attribut-
able to Dania Furniture. The district court, however, adopted the Secret
Service calculation and loss attributed to Dania Furniture as listed in the
PSR: $296,000 and $5,000, respectively. Because the parties do not argue
that the district court erred in doing so, we use the amounts listed in the
PSR throughout.
                  UNITED STATES v. ARMSTEAD               16787
     Base offense level (U.S.S.G. § 2B1.1(a)(1)):         7

     Loss    amount     over       $400,000      (U.S.S.G.
     § 2B1.1(b)(1)(H)):                               +14

     Fifty or more victims (U.S.S.G. § 2B1.1(b)(2)(B)):
                                                     +4

     Possession of five or more false identifications
     (U.S.S.G. § 2B1.1(b)(10)):                    +2

     Adjustment for role in the offense (U.S.S.G.
     § 3B1.1(a)):                              +4

     Total offense level:                               31

     Criminal history category:                          V

     Guidelines range:                    168-210 months

   After calculating the Guidelines range, the district court
considered the 18 U.S.C. § 3553(a) factors and sentenced
Armstead to a 210-month term of imprisonment, the top of
the Guidelines range. The district court did not credit Arms-
tead for the five months he had already served on an undis-
charged state sentence. Armstead timely appeals.

                      II.   ANALYSIS

A.   Standards of Review

   When reviewing a sentence, “we first consider whether the
district court committed significant procedural error.” United
States v. Carty, 

, 993 (9th Cir. 2008) (en banc)
(citing Gall v. United States, 

, 597 (2007)). Pro-
cedural errors include, but are not limited to, incorrectly cal-
culating the Guidelines range, treating the Guidelines as
mandatory, failing properly to consider the § 3553(a) factors,
16788             UNITED STATES v. ARMSTEAD
using clearly erroneous facts when calculating the Guidelines
range or determining the sentence, and failing to provide an
adequate explanation for the sentence imposed. Id. “We
review the district court’s interpretation of the Sentencing
Guidelines de novo, the district court’s application of the
Guidelines to the facts for abuse of discretion, and the district
court’s factual findings for clear error.” United States v.
Garro, 

, 1167 (9th Cir. 2008) (citing United
States v. Cantrell, 

, 1279 (9th Cir. 2006)).

   If we discern no significant procedural error, we proceed to
the second step and “consider the substantive reasonableness
of the sentence.” Carty, 520 F.3d at 993 (citing Gall, 128
S. Ct. at 597). We review the substantive reasonableness of a
sentence for abuse of discretion. Gall, 128 S. Ct. at 597;
Carty, 520 F.3d at 993.

B.   Standard of Proof

   A district court generally uses a preponderance of the evi-
dence standard of proof when finding facts at sentencing.
United States v. Moreland, 

, 1220 (9th Cir.
2007) (citing United States v. Kilby, 

, 1140 (9th
Cir. 2006)). Only “ ‘when a sentencing factor has an
extremely disproportionate effect on the sentence relative to
the offense of conviction’ ” must a district court find the facts
by a clear and convincing standard of proof. Id. (quoting
United States v. Dare, 

, 642 (9th Cir. 2005)).

   Because Armstead did not object to the standard of proof
below, we review for plain error. Fed. R. Crim. P. 52(b); see
also United States v. Rendon-Duarte, 

, 1146
(9th Cir. 2007). For an error to be plain, it must be (1) an
“error,” (2) that is “plain,” and (3) that “affects substantial
rights.” Id. (citing United States v. Olano, 

, 732
(1993)). Moreover, we will not exercise our discretion to cor-
rect the error “ ‘unless the error seriously affect[s] the fair-
                     UNITED STATES v. ARMSTEAD                      16789
ness, integrity or public reputation of judicial proceedings.’ ”
Id. (alteration in original) (quoting Olano, 507 U.S. at 732).

   Armstead contends that the district court should have
employed the clear and convincing standard of proof because
enhancements5 for the amount of loss under § 2B1.1(b)(1)
(two levels),6 number of victims under § 2B1.1(b)(2) (two
levels),7 and role in the offense under § 3B1.1 (four levels)
had a disproportionate effect on his sentence. Without the dis-
puted enhancements, Armstead’s total offense level would
have been twenty-three instead of thirty-one, and his Guide-
lines range (using Criminal History Category V) would have
been 84-105 months, instead of 168-210 months.

   [1] Armstead’s argument fails for three reasons. First, the
district court did not err by finding the number of victims by
a preponderance of the evidence because sentencing enhance-
ments based entirely on the extent of the conspiracy do not
require the heightened standard of proof. See Riley, 335 F.3d
at 926-27 (holding that enhancements for loss amount and
possession of five or more means of false identification were
   5
     In United States v. Harrison-Philpot, we used the term “enhancement”
to describe an increase in offense level based on uncharged or acquitted
conduct. 

, 1524 (9th Cir. 1992) (contrasting “sentencing
enhancement” with “straight sentencing for convicted conduct”). Here, we
use the term “enhancement” to describe any addition to the base offense
level. See United States v. Riley, 

, 926 (9th Cir. 2003) (using
“enhancements” to describe increases to the base offense level based on
the extent of a conspiracy).
   6
     In his sentencing memorandum, Armstead argued that the amount of
loss should be limited to the amount in the indictment: $13,000. At the
sentencing hearing and before this court, however, Armstead disputed
only $173,576.88 of the total loss. Without the disputed amount, the loss
calculation would be over $200,000 instead of over $400,000, resulting in
a 12-level rather than a 14-level increase. See U.S.S.G.
§ 2B1.1(b)(1)(G),(H).
   7
     The Guidelines direct a two-level increase for over ten victims and a
four-level increase for fifty or more victims. U.S.S.G.
§ 2B1.1(b)(2)(A),(B).
16790                 UNITED STATES v. ARMSTEAD
based on the extent of the conspiracy to produce fictitious
obligations and thus did not have a “disproportionate effect on
the sentence relative to the offense of conviction”); Harrison-
Philpot, 978 F.2d at 1524 (holding that the quantity of drugs
in a conspiracy need only be established by a preponderance
of the evidence). Enhancements based on the extent of a con-
spiracy are “ ‘on a fundamentally different plane than’ ”
enhancements based on uncharged or acquitted conduct.
Riley, 335 F.3d at 926 (quoting Harrison-Philpot, 978 F.2d at
1523). Due process concerns with regard to the former are
satisfied by a preponderance of the evidence standard because
the enhancements are based on criminal activity for which the
defendant has already been convicted. Harrison-Philpot, 978
F.2d at 1523.

   [2] Second, the jury found that Armstead was a leader or
organizer of the conspiracy beyond a reasonable doubt, a
higher standard of proof than the clear and convincing evi-
dence standard. By adopting the jury’s finding, the district
court agreed that the government proved beyond a reasonable
doubt that Armstead was a leader or organizer of the conspiracy.8
We thus conclude that the standard of proof argument is inap-
plicable to the four-level enhancement for role in the offense.

   [3] Finally, the remaining two-level enhancement due to
the disputed amount of loss did not have an “ ‘extremely dis-
proportionate effect’ ” on the sentence.9 Moreland, 

     Armstead further contends that the district court should not have
adopted the jury’s finding that Armstead was a leader or organizer in the
conspiracy because the jury was not instructed on how the Guidelines
define those terms. It is the district court’s decision to apply the enhance-
ment, however, that we review on appeal. Given the prodigious evidence
presented at trial detailing Armstead’s role in the conspiracy, and particu-
larly the testimony from co-conspirators that Armstead recruited them,
directed their actions, and collected fifty percent of their proceeds, we can-
not say that the district court abused its discretion when applying the four-
level enhancement for Armstead’s role in the conspiracy.
   9
     While the vast majority of the loss amount is attributable to the extent
of the conspiracy, a fraction of the loss amount — $16,576.88 — relates
                    UNITED STATES v. ARMSTEAD                    16791
at 1220 (quoting Dare, 425 F.3d at 642); see also United
States v. Watts, 

, 150, 156-57 (1997) (noting that
a two-level enhancement is not an “exceptional circum-
stance[ ]” that could warrant a higher standard of proof).
Accordingly, we hold that the district court did not err by
applying a preponderance of the evidence standard to its
enhancement findings.10

C.   Loss Calculation Pursuant to U.S.S.G. § 2B1.1(b)(1)

   When calculating the Guidelines range for bank fraud, a
district court must determine the amount of loss caused by the
fraud. U.S.S.G. § 2B1.1(b)(1). The Guidelines further direct
that “[t]he court need only make a reasonable estimate of the
loss.” U.S.S.G. § 2B1.1, cmt. n.3(C). We defer to the district
court’s calculation because “[t]he sentencing judge is in a
unique position to assess the evidence and estimate the loss
based upon that evidence.” Id.

   Armstead contends that the district court erred by including
the following in its loss calculation: $107,000 in deposits to
his bank account; $50,000 that Hill testified Armstead gave to
him; and $16,576.88 in loss attributable to retail fraud.

   [4] Armstead first argues that gain cannot be used as a mea-
sure of loss when a court also uses actual loss in its calcula-
tions. The $107,000 in deposits to Armstead’s bank account
and the $50,000 that Armstead gave to Hill are better charac-
terized as gain. The Guidelines direct the court to “use the
gain that resulted from the offense as an alternative measure
of loss only if there is a loss but it reasonably cannot be deter-

to retail fraud, which was uncharged conduct. Assuming that the district
court only found the minimum amount of loss necessary to cross the
$400,000 threshold, a two-level enhancement may be attributed to the
retail fraud loss amount.
   10
      Finding no error, we need not address the remaining factors in the
plain error analysis.
16792             UNITED STATES v. ARMSTEAD
mined.” U.S.S.G. § 2B1.1, cmt. n.3(B). This note provides
that it is only appropriate to use gain as an exclusive measure
of loss when actual loss cannot be determined. We do not read
the note, however, to prohibit the use of gain as a proxy for
a portion of the total loss where some, but not all, of the loss
can be determined.

   [5] Here, the district court used actual loss to estimate the
vast majority of the total: approximately $347,000. The dis-
trict court found, however, that this loss calculation did not
properly account for all of the loss caused by the conspiracy
and used a small portion of Armstead’s gain to account for a
small portion of the loss. The nature of Armstead’s crime,
where money was fraudulently withdrawn from bank
accounts, lends itself to this type of approximation because,
as the district court reasonably determined, some of the
money going into Armstead’s account and the money Arms-
tead gave to Hill corresponded dollar-for-dollar with money
lost by the banks. Given that a court need only make a “rea-
sonable estimate of the loss,” the district court’s method of
calculation is not foreclosed by the Guidelines.

   Armstead next argues that the district court erred by includ-
ing $16,576.88 in loss attributable to retail fraud. Armstead
concedes that this amount can be included if the retail fraud
is relevant conduct under U.S.S.G. § 1B1.3(a)(1)-(2), but he
maintains that it is not. Because Armstead did not object to
the loss calculation on this basis at sentencing, we review for
plain error. See Rendon-Duarte, 490 F.3d at 1146.

  [6] Specific offense characteristics, such as loss, are deter-
mined by taking into account:

    (1)   (A) all acts and omissions committed, aided,
          abetted, counseled, commanded, induced, pro-
          cured, or willfully caused by the defendant; and
          (B) in the case of a jointly undertaken criminal
          activity . . . all reasonably foreseeable acts and
                 UNITED STATES v. ARMSTEAD              16793
         omissions of others in furtherance of the jointly
         undertaken criminal activity,
         that occurred during the commission of the
         offense of conviction . . . ;

    (2) . . . all acts and omissions described in subdivi-
    sions (1)(A) and (1)(B) above that were part of the
    same course of conduct or common scheme or plan
    as the offense of conviction.

U.S.S.G. § 1B1.3(a)(1)-(2). Acts are part of the same course
of conduct “if they are sufficiently connected or related to
each other as to warrant the conclusion that they are part of
a single episode, spree, or ongoing series of offenses.”
U.S.S.G. § 1B1.3, cmt. n.9(B). Acts are part of the common
scheme or plan if they are “substantially connected to [the
offense] by at least one common factor, such as common vic-
tims, common accomplices, common purpose, or similar
modus operandi.” U.S.S.G. § 1B1.3, cmt. n.9(A).

   [7] The fraud perpetrated against GE, Home Depot, and
Dania Furniture involved the same co-conspirators using the
same personal identification information that was used to per-
petrate the bank fraud. At sentencing, the government prof-
fered that the Secret Service calculation, which included
losses to GE and Home Depot, accounted for losses associ-
ated with the personal identification information recovered
from Armstead’s house, car, and hotel room and identifica-
tions used when conspirators deposited or withdrew money
from the banks. Additionally, Armstead orchestrated the
fraudulent purchase at Dania Furniture in the same manner as
he directed the bank fraud: he told co-conspirators to obtain
credit at Dania Furniture using a fake WSDL and purchase
items with that credit. Because the retail fraud involved the
same participants as the bank fraud, the same modus ope-
randi, and was part of ongoing fraudulent transactions related
to the stolen personal identification information and fake
16794                UNITED STATES v. ARMSTEAD
WSDLs, the district court did not err by including the retail
fraud loss in its calculations.11

   Finally, Armstead contends that there was an insufficient
factual basis for including the $107,000 and $50,000 in the
loss amount. Armstead argues that the $107,000 is suspect
because it includes deposits from a family member and
because of possible overlap between the $107,000 and the
Secret Service calculation. He seeks to exclude the $50,000
from Hill because the latter’s testimony was uncorroborated
and not credible. The district court was “extremely skeptical”
of counting all of the $107,000 in the loss amount. Nonethe-
less, the court determined that it was reasonable to include at
least $3,001 from Armstead’s account (the amount needed to
push the loss total from the $397,000 in the PSR calculation
to over $400,000) because the evidence showed that at least
some of the deposits were the fruit of criminal conduct. The
district court did not separately comment on the $50,000.

   [8] The bank fraud conspiracy ran from 2001 through 2004.
The Secret Service calculation covers a period from Septem-
ber 2003 to September 2004. From February 2003 to August
2003, a period not covered by the Secret Service calculation,
$44,150.94 was deposited into Armstead’s account, not
including deposits from Armstead’s relative. State employ-
ment records show that Armstead only earned $3,000 in
wages from 1998 to 2004. Thus, the district court did not
clearly err by including $3,001 from the $107,000 in deposits
in the loss calculation.

   [9] With regard to the $50,000, we note that the sentencing
judge also presided over Armstead’s trial and thus observed
the witness and heard Hill’s testimony. Hill testified that
Armstead gave him $50,000 in 2000 or 2001 for safekeeping
and that he “knew” that the proceeds came from the conspir-
  11
    Because the district court did not err, we do not proceed to the addi-
tional factors in the plain error analysis.
                   UNITED STATES v. ARMSTEAD               16795
acy. We reiterate that deference to a district court’s loss calcu-
lation is warranted because the district court “is in a unique
position to assess the evidence.” U.S.S.G. § 2B1.1, cmt.
n.3(C). The district court did not clearly err by giving cre-
dence to Hill’s testimony and determining by a preponderance
of the evidence that the $50,000 corresponded dollar-for-
dollar to loss from the bank fraud.

   [10] In sum, the district court did not err by adding fourteen
levels to Armstead’s base offense level pursuant to U.S.S.G.
§ 2B1.1(b)(1)(H) for a loss amount of more than $400,000.

D.   Victim Calculation Pursuant to U.S.S.G. § 2B1.1(b)(2)

   When calculating the Guidelines range for bank fraud, a
district court must also determine the number of victims.
U.S.S.G. § 2B1.1(b)(2). The district court found that the bank
fraud conspiracy involved over fifty victims and added four
levels to Armstead’s base offense level pursuant to U.S.S.G.
§ 2B1.1(b)(2)(B). The district court arrived at this number by
adding the number of banks and victims of retail fraud (six-
teen) together with an unstated number of individuals and
companies whose personal information was stolen by the con-
spirators. The Government proffered at sentencing that the
individuals and companies suffered pecuniary losses in the
form of “getting a new driver’s license, or having to figure out
how to put a fraud alert on your account and spending money
to correct credit.” The district court offered little in the way
of an explanation for its finding that there were more than
fifty victims, but concluded “that there were a substantial
number of people involved.”

   Armstead contends that the district court erred by counting
as victims those individuals and companies whose losses were
not included in the loss calculation. We agree.

   [11] The Guidelines define victim as “any person who sus-
tained any part of the actual loss determined under subsection
16796                UNITED STATES v. ARMSTEAD
(b)(1).” U.S.S.G. § 2B1.1, cmt. n.1. “ ‘Actual loss’ means the
reasonably foreseeable pecuniary harm that resulted from the
offense.” U.S.S.G. § 2B1.1, cmt. n.3(A)(i). “ ‘Pecuniary
harm’ means harm that is monetary or that otherwise is read-
ily measurable in money.” U.S.S.G. § 2B1.1, cmt. n.3(A)(iii).
Thus, in order to be counted as a victim, a person12 must have
sustained a loss that is “monetary or that otherwise is readily
measurable in money” and that loss must be included in the
loss calculation. Here, the loss calculated pursuant to U.S.S.G.
§ 2B1.1(b)(1) included only losses to the thirteen banks and
three victims of retail fraud. While other persons conceivably
may have sustained pecuniary harm in the form of time and
money spent procuring new identification and credit cards,
opening new bank accounts, and mending their credit, those
losses were not included in the calculated loss amount. There-
fore, the district court erred by including those individuals in
the number-of-victims calculation.

   Our conclusion is in accord with the other circuits that have
considered the issue. The defendants in United States v. Abi-
odun were convicted of, inter alia, conspiracy to commit
fraud and wire fraud. 

, 163 (2d Cir. 2008). Their
fraudulent scheme involved stealing credit reports, obtaining
credit cards with the information procured, and purchasing
merchandise with the ill-gotten credit. Id. at 164-65. The dis-
trict court included in its victim calculation persons “who had
spent an appreciable amount of time securing reimbursement
for their financial losses.” Id. at 166. The Second Circuit held
that this was error “because the losses attributable to these
victims were not included in the loss calculation.” Id. at 168.
The court noted that loss of time is a pecuniary harm because
it can be measured in monetary terms, but that losses due to
lost time were not included in the loss calculation. Id. at 169.
  12
    “ ‘Person’ includes individuals, corporations, companies, associations,
firms, partnerships, societies, and joint stock companies.” U.S.S.G.
§ 2B1.1, cmt. n.1.
                  UNITED STATES v. ARMSTEAD              16797
   The Tenth Circuit addressed the victim calculation in the
context of a fraudulent scheme in which the defendant, a
postal employee, stole mail addressed to a non-profit organi-
zation. United States v. Leach, 

, 1101 (10th Cir.
2005). The district court calculated the loss amount by taking
the total donations the non-profit organization reported miss-
ing and subtracting “replacement donations” sent to the non-
profit by the donors. Id. at 1105-06. The district court based
its victim calculation on the over 200 persons who reported
that their donations had not been delivered. Id. at 1106. The
district court found that those persons suffered losses because
they had to write and mail replacement checks. Id. The Tenth
Circuit held that the 200 donors were not victims under
U.S.S.G. § 2B1.1(b)(2). Id. at 1107. While the donors suf-
fered pecuniary harm, their loss “was not included as part of
the actual loss ‘determined under subsection (b)(1).’ ” Id. at
1106 (quoting U.S.S.G. § 2B1.1, cmt. n.1). Cf. United States
v. Icaza, 

, 969-70 (8th Cir. 2007) (holding that
each individual store was not a separate victim of shoplifting
where all stores were owned by the same corporation).

   Over fifty persons in the present case conceivably may
have suffered pecuniary harm. The loss calculation, however,
only included losses to the thirteen banks and three victims of
retail fraud. As a result, the district court erred in finding
more than sixteen victims. See United States v. Pham, 

, 719 (9th Cir. 2008) (holding that individual account
holders can be counted as victims “only if they ‘sustained any
part of the actual loss determined under’ § 2B1.1(b)(1)”) (cit-
ing U.S.S.G. § 2B1.1 cmt. n.1).

   The government counters that the loss calculation reflects
more than fifty victims because the losses attributed to the
banks were first held by the account holders prior to the reim-
bursement of funds. We have not fully addressed when per-
sons whose losses are so reimbursed may be included in the
victim calculation.
16798             UNITED STATES v. ARMSTEAD
   The Sixth Circuit addressed this issue in United States v.
Yagar, 

 (6th Cir. 2005). Like Armstead, the
defendant in Yagar stole checks, deposited them into more
than fifty accounts using stolen personal information and then
withdrew the deposited funds from forty-seven accounts. Id.
at 968. The district court counted eleven victims: five banks
and six account holders who had to purchase new checks. Id.
at 969. On appeal, the government argued that the district
court should have found over fifty victims by including all
account holders who temporarily lost funds. Id.

   The Sixth Circuit held that the account holders who did not
purchase replacement checks were not victims because the
temporary loss of funds did not amount to a pecuniary harm.
Id. at 971. The court reasoned that such a “short-lived” loss,
which was “immediately covered by a third-party,” had “no
adverse effect as a practical matter.” Id. The court declined to
hold that a fully reimbursed loss is always a bar to including
a person in the victim calculation, noting that there “may be
situations in which a person could be considered a ‘victim’
under the Guidelines even though he or she is ultimately reim-
bursed.” Id.

  Recently, the Fifth Circuit followed Yagar in evaluating the
number of victims in a credit card fraud scheme. United
States v. Conner, 

, 489-90 (5th Cir. 2008). The
court concluded that credit card account holders could not be
counted as victims because they were “quickly reimbursed”
and there was no evidence “that any account holder had to
spend money or an extended length of time seeking reim-
bursement.” Id. at 491. The only victims were the five credit
card companies that reimbursed the account holders. Id. at
492.

   More recently, we held in Pham that an individual may be
considered a victim even if the individual’s losses are fully
reimbursed, provided the reimbursement was not immediate.
545 F.3d at 716-20. We stated that a court can count both
                  UNITED STATES v. ARMSTEAD                16799
account holders and reimbursing banks as victims, even if the
“losses are ultimately traceable to the same fraudulently
obtained funds,” because “both the account holders and the
banks have suffered harms that are ‘pecuniary’ and ‘reason-
ably foreseeable’ . . . and that are sufficiently distinct from
one another to avoid a double counting problem.” Id at 717-
18. We rejected the argument that a victim must suffer addi-
tional pecuniary harm other than the reimbursed loss. See id.
at 718.

   The Guidelines direct the court to calculate victims by
determining the number of persons who have suffered pecuni-
ary harm. A loss that is reimbursed immediately does not
amount to a pecuniary harm because the ultimate loss cannot
be measured in monetary terms. If, however, the reimburse-
ment takes a longer period of time, it is conceivable that the
individual may “have suffered or ‘sustained’ ” part of the loss.
Id. at 719. If that loss is included in the loss calculation, the
victim associated with the loss should be included in the vic-
tim calculation. See id.

   We thus decline to follow the approach taken by the Elev-
enth Circuit in United States v. Lee, 

 (11th Cir.
2005), and hinted at in Yagar and Conner, which would allow
the district court to include as victims persons who were fully
reimbursed if their losses “were neither short-lived nor imme-
diately covered by third parties” without regard to whether
their losses were included in the loss calculation. Lee, 427
F.3d at 895. The defendants in Lee cancelled their checking
accounts but continued to write personal checks, and, in that
manner, purchased miscellaneous goods, cars, motorcycles,
property, and paid off mortgages. Id. at 884-85. When the
checks were not honored, some entities wrote off losses, oth-
ers received payment from defendants, some repossessed the
merchandise, and a mortgage company foreclosed on one of
the defendant’s homes. Id. at 885-86. The district court calcu-
lated the loss at over $400,000 and determined that the num-
ber of victims was between ten and fifty. Id. at 893-94.
16800                 UNITED STATES v. ARMSTEAD
   The defendants argued that the persons who “offset” their
losses by repossession or other forms of reimbursement could
not be included in the victim calculation. Id. at 894. The Elev-
enth Circuit disagreed, and held that the district court did not
err by including all of the individuals who received bad
checks in the victim calculation. Id. at 895. The court first rea-
soned that the credit against loss provision in the Guidelines,
U.S.S.G. § 2B1.1, cmt. n. 3(E), envisions a situation in which
a victim is reimbursed for losses but remains a victim. Lee,
427 F.3d at 895. Second, the court distinguished its case from
Yagar, noting that the losses borne by the victims “were nei-
ther short-lived nor immediately covered by third parties.” Id.

   [12] While we agree that persons who are reimbursed may
suffer pecuniary harm, we disagree with the approach taken
in Lee. A court should analyze and quantify pecuniary harm
when making the loss calculation, not when determining the
number of victims. If a person suffered pecuniary harm
beyond the amount by which the person was reimbursed, then
that amount should be included in the loss calculation. Once
a loss amount is included in the loss calculation, then the per-
son associated with that loss should also be included in the
victim calculation.13
   13
      We agree with the Eleventh Circuit that the credit against loss provi-
sion may result in a situation in which a victim’s loss amount is included
in the loss calculation but the loss is subsequently reduced by the amount
the defendant returned to the victim. See U.S.S.G. § 2B1.1, cmt. n.3(E).
In such a case, we see no bar to including that victim in the victim calcula-
tion because that person’s loss was included in the loss calculation prior
to the credit. We so conclude because the Guidelines draw a distinction
between “Exclusions from Loss,” U.S.S.G. § 2B1.1, cmt. n.3(D), and
“Credits Against Loss,” U.S.S.G. § 2B1.1, cmt. n.3(E). The former are not
included in the loss calculation whereas the latter simply reduces the
amount of loss. Losses that are subsequently credited are still part of the
initial loss calculation, and thus persons who suffered those losses are vic-
tims because they “sustained a[ ] part of the actual loss determined under
subsection (b)(1).” U.S.S.G. § 2B1.1, cmt. n.1. The credit against loss pro-
vision is inapposite to Armstead’s case, however, because the individuals
from whose bank accounts conspirators withdrew money were reimbursed
by the banks, not by Armstead.
                     UNITED STATES v. ARMSTEAD                       16801
   [13] Here, the district court erred by applying a four-level
enhancement for fifty or more victims when the loss calcula-
tion only included losses incurred by sixteen victims. Because
an error in the Guidelines calculation is a significant proce-
dural error, Carty, 520 F.3d at 993, we vacate Armstead’s
sentence and remand for resentencing.14

E. Credit for Time Served Pursuant to U.S.S.G.
§ 5G1.3(b)(1)

   Armstead contends that the district court erred by failing to
apply U.S.S.G. § 5G1.3(b)(1), which would have given him
five months’ credit for time served on an undischarged state
sentence. That Guideline provides that if:

       a term of imprisonment resulted from another
       offense that is relevant conduct to the instant offense
       of conviction under the provisions of subsections
       (a)(1), (a)(2), or (a)(3) of § 1B1.3 (Relevant Con-
       duct) and that was the basis for an increase in the
       offense level for the instant offense under Chapter
       Two (Offense Conduct) or Chapter Three (Adjust-
       ments), the sentence for the instant offense shall be
       imposed as follows:

           (1)   the court shall adjust the sentence for
                 any period of imprisonment already
                 served on the undischarged term of
                 imprisonment . . . .

U.S.S.G. § 5G1.3(b). The PSR recommended, and the govern-
  14
    Because we conclude that the district court erred by including individ-
uals other than the banks and victims of retail fraud in the victim calcula-
tion, we do not reach Armstead’s argument that the alleged pecuniary
harms were not supported by the record and had to be excluded from any
loss calculation as losses “similar” to “finance charges, late fees, [and]
penalties.” See U.S.S.G. § 2B1.1, cmt. n.3(D)(i).
16802             UNITED STATES v. ARMSTEAD
ment does not dispute, that Armstead was eligible for five
months’ credit for time served on a state conviction because
the conduct that resulted in the state conviction was used to
calculte the Guidelines range for his federal sentence. At the
sentencing hearing, however, the district court did not men-
tion § 5G1.3(b)(1) or adjust Armstead’s sentence for the time
served. Because Armstead did not object at sentencing, we
review for plain error. Rendon-Duarte, 490 F.3d at 1146.

   The Guidelines are now advisory. United States v. Booker,

, 245 (2005). Even so, the Guidelines remain
central to the sentencing regime. “As a matter of administra-
tion and to secure nationwide consistency, the Guidelines
should be the starting point and the initial benchmark.” Gall,
128 S. Ct. at 596. The district court must begin the sentencing
process by acccurately calculating the Guidelines range.
Carty, 520 F.3d at 991 (“All sentencing proceedings are to
begin by determining the applicable Guidelines range.”). The
court’s consideration of the Guidelines does not, however,
end there. After the Guidelines range is calculated, the court
must “determine from Parts B through G of Chapter Five the
sentencing requirements and options related to probation,
imprisonment, supervision conditions, fines, and restitution.”
U.S.S.G. § 1B1.1(h).

   [14] Here, after calculating the Guidelines range, the dis-
trict court did not consider § 5G1.3(b)(1), contrary to the
express direction in § 1B1.1(h). Section 5G1.3(b)(1)’s lan-
guage is mandatory: “the court shall adjust the sentence for
any period of imprisonment already served on the undis-
charged term of imprisonment.” (Emphasis added.) The dis-
trict court erred in not including this adjustment in its
Guidelines calculation as “the starting point” of the sentenc-
ing proceeding. Gall, 128 S. Ct. at 596.

  [15] This error was compounded by the court’s failure to
give any reason for its decision — if it, indeed, made such a
decision — not to apply the adjustment. Because the provi-
                   UNITED STATES v. ARMSTEAD               16803
sion is mandatory, a court’s declining to make the adjustment
results in a sentence that departs from the Guidelines. See
United States v. Fifield, 

, 1061 (9th Cir. 2005)
(explaining that the imposition of consecutive sentences con-
trary to § 5G1.3(b)(2), when applicable, is a deviation from
the Guidelines). Because the Guidelines are now advisory, a
sentencing court is free to impose a sentence outside of the
Guidelines. If it does so, however, the court must adequately
explain the reason(s) for the deviation. Carty, 520 F.3d at 992
(“[T]he judge must explain why he imposes a sentence out-
side the Guidelines.”) (citing Rita, 127 S. Ct. at 2468; Gall,
128 S.Ct. at 594). Thus, the court’s failure to provide a justifi-
cation for its decision not to apply the § 5G1.3(b)(1) credit for
time served was error. See United States v. Lane, 

, 775-76 (6th Cir. 2007) (finding no error where the dis-
trict court explained that applying the § 5G1.3(b)(1) credit
would not properly reflect the § 3553(a) factors).

   It remains to determine whether the district court’s error in
failing to give the § 5G1.3(b)(1) credit and in also failing to
explain or justify its action is plain error. “An error is plain
if it is ‘contrary to the law at the time of appeal.’ ” United
States v. Ameline, 

, 1078 (9th Cir. 2005) (en
banc) (quoting Johnson v. United States, 

, 468
(1997)). Because, as explained above, both the Supreme
Court and this court have repeatedly emphasized the centrality
of the Guidelines and the need for the sentencing court to
explain any deviation from the Guidelines, we conclude that
the error is plain. We further conclude that the error affected
Armstead’s substantial rights, given that the starting point for
consideration of the § 3553(a) factors was five months higher
than it should have been. See United States v. Rodriguez-
Lara, 

, 949 (9th Cir. 2005) (holding that the
defendant’s substantial rights were affected where the defen-
dant “was entitled to a lower Guideline range than that under
which he was actually sentenced”). Moreover, it appears from
the sentencing record that the sentence was based on the erro-
neous belief that it was the highest within-Guidelines sen-
16804             UNITED STATES v. ARMSTEAD
tence. If the Guidelines sentence had been adjusted for the
time-served credit, the highest within-Guidelines sentence
would have been five months shorter.

   [16] Finally, we hold that the error “seriously affect[ed] the
fairness, integrity or public reputation of judicial proceed-
ings.” Rendon-Duarte, 490 F.3d at 1146 (quoting Olano, 507
U.S. at 732). As the Supreme Court has explained, § 5G1.3(b)
protects a defendant “against having the length of his sentence
multiplied by duplicative consideration of the same criminal
conduct.” Witte v. United States, 

, 405 (1995).
For reasons unexplained on the record, most likely an over-
sight, Armstead was denied this protection. This error seri-
ously affects the integrity of judicial proceedings because it
may well be that, had the district court considered the credit
under § 5G1.3(b)(1), it still would have sentenced him to the
top of the Guidelines sentence, which would have been five
months less.

   [17] We conclude that the district court clearly erred in not
considering the effect of § 5G1.3(b)(1) on its sentence. At
resentencing, the court should either give Armstead five
months’ credit for time served under § 5G1.3(b)(1) or explain
why it declines to apply that sentencing adjustment.

F.   Procedural Challenges Under § 3553(a)

   Armstead further contends that the district court erred by
misstating the parsimony provision in 18 U.S.C. § 3553(a)
and failing to address his parity argument when discussing the
§ 3553(a) factors. Because any imposition of a sentence must
start with a correct Guidelines calculation, Carty, 520 F.3d at
991, on remand, the district court will have to reconsider the
§ 3553(a) factors with the correct Guidelines range in mind.
Thus, we decline to reach Armstead’s procedural arguments
with regard to the application of the § 3553(a) factors.
                 UNITED STATES v. ARMSTEAD             16805
                   III.   CONCLUSION

  Having concluded that the district court committed signifi-
cant procedural error, we do not address the substantive rea-
sonableness of Armstead’s sentence. We vacate Armstead’s
sentence and remand for resentencing in accordance with this
opinion.

  VACATED and REMANDED.