FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        Nos. 06-50592
                 Plaintiff-Appellee,                   06-50593
                v.                                  D.C. Nos.
JEFFREY D. CRANDALL; MICHAEL                     CR-04-00309-
                                                     DOC-7
MCDONNELL,
            Defendants-Appellants.                CR-04-00309-
                                                     DOC-4

                                                   OPINION

         Appeal from the United States District Court
            for the Central District of California
          David O. Carter, District Judge, Presiding

                    Argued and Submitted
            January 10, 2008—Pasadena, California

                        Filed May 13, 2008

       Before: Jerome Farris and Milan D. Smith, Jr.,
   Circuit Judges, and H. Russel Holland,* District Judge.

                    Opinion by Judge Holland




   *The Honorable H. Russel Holland, Senior United States District Judge
for the District of Alaska, sitting by designation.

                                 5373
5376                 UNITED STATES v. CRANDALL


                             COUNSEL

Jerald L. Brainin Esq, Los Angeles California; H. Dean Stew-
ard Esq., for the defendants-appellants.

Andrew Stolper Esq., Assistant United States Attorney, Santa
Ana, California, for the plaintiff-appellee.


                              OPINION

HOLLAND, District Judge:

   Jeffrey Dean Crandall and Michael McDonnell (collec-
tively, “Defendants”) appeal their convictions and sentences
for mail, wire, and honest services fraud, in violation of 18
U.S.C. §§ 1341, 1343, and 1346.1 Defendants challenge their
convictions based on the district court’s refusal to give their
proposed jury instruction on “intent to defraud.” They appeal
their sentences arguing that the district court erred in relying
on Application Note 2(F)(v)(III) to U.S.S.G. § 2B1.12 to cal-
culate loss. McDonnell also argues that his sentence was
unreasonable because of the disparity between his sentence
and that of a codefendant’s. Finally, McDonnell argues that
his restitution order was illegal. We have jurisdiction to




   1
     McDonnell was also convicted of bank fraud, in violation of 18 U.S.C.
§ 1344.
   2
     The district court employed and we refer to the Sentencing Guidelines
effective November 1, 2001.
                 UNITED STATES v. CRANDALL               5377
review the convictions under 28 U.S.C. § 1291 and the sen-
tences under 18 U.S.C. § 3742(a)(2). We affirm Defendants’
convictions but vacate and remand as to their sentences and
as to McDonnell’s restitution order.

                              I

   The charges against Defendants arose out of a fraudulent
scheme to convert apartment buildings to condominiums in
Huntington Beach, California between 1998 and 2003. The
scheme was hatched by codefendant Philip Benson, a real
estate broker. Benson solicited people who owned or were
willing to purchase four-plex apartment buildings. The apart-
ment buildings were then fraudulently converted to stock
cooperatives through the creation of false back-dated docu-
ments.

   To legally convert an apartment building to individual con-
dominiums, the City of Huntington Beach required a condi-
tional use permit. Obtaining a conditional use permit was a
difficult and expensive process. There was an exception, how-
ever, for stock cooperatives. An apartment building held as a
stock cooperative could be converted to individual condomin-
iums without first obtaining a conditional use permit. The
false back-dated stock cooperative documents were employed
by Defendants to avoid having to obtain conditional use per-
mits from the City.

   Once the fraudulent stock cooperatives were created, the
buildings were then converted into individual condominiums.
This conversion process involved the creation of additional
false documents, including lease terminations and grant
deeds. After the buildings were converted into condominiums,
codefendant Harvey DuBose, who worked for Stewart Title
Company, prepared title insurance policies so the building
owners could sell the individual condominiums to unsuspect-
ing buyers. The building owners paid Benson a “conversion
fee” for each building that was converted and also paid
5378              UNITED STATES v. CRANDALL
DuBose individually for his role in providing the title insur-
ance.

   Defendants were purchasers of apartment buildings which
were fraudulently converted to individual condominiums.
Crandall bought two four-unit apartment buildings and subse-
quently sold seven of his converted “condominiums” for a
total of $1,938,400. Crandall retained the eighth “condomini-
um” as his personal residence.

   McDonnell bought a total of five four-unit apartment build-
ings. McDonnell could not obtain sufficient financing to pur-
chase all of the apartment buildings, so he recruited former
colleagues to act as his straw buyers. McDonnell sold all of
his converted “condominiums” for a total of $4,261,800.

   In addition to using straw buyers for his own properties,
McDonnell agreed to act as the straw buyer of an apartment
building for Pamela Julien Houchen, who, at the time, was the
mayor of Huntington Beach and a member of the City Coun-
cil. Houchen was prohibited from buying the apartment build-
ing in her name because it was located in a redevelopment
zone overseen by city council members. After allegations of
the fraud emerged, McDonnell retained an attorney to write
a demand letter to Houchen claiming that he was entitled to
the proceeds of the sales of the property in question, but
McDonnell failed to tell his attorney that he had agreed to be
a straw buyer for Houchen.

   At trial, the core of Defendants’ defense was the contention
that they did not know that the conversion documents were
false when they signed them, and thus they lacked the intent
to defraud. Crandall testified that he only glanced at the con-
version documents that Benson gave him before signing them,
and McDonnell testified that he signed the conversion docu-
ments where Benson told him to sign, without reading them.
Although the parties stipulated to the use of the Ninth Circuit
Model Jury Instructions for wire and mail fraud, the parties
                  UNITED STATES v. CRANDALL                5379
did not agree as to the jury instruction defining the “intent to
defraud” element. The district court gave the Ninth Circuit
Model Instruction on “intent to defraud,” rather than Defen-
dants’ proposed “intent to defraud” instruction.

   The jury ultimately convicted Crandall of 9 counts of mail,
wire, and honest services fraud; and McDonnell was con-
victed of 30 counts of mail, wire, bank, and honest services
fraud. At the sentencing hearing, Crandall argued that the
actual loss that resulted from his fraudulent scheme was
$63,000, the amount of loss incurred by Stewart Title Com-
pany in connection with the sale of his “condominiums.”
Crandall argued that there was no economic loss suffered by
the buyers of the fraudulently converted “condominiums”
because the units were worth more at the time of trial than
when they had been purchased from Crandall. McDonnell
argued that the actual loss that resulted from his fraudulent
scheme was $361,000, the amount of loss incurred by Stewart
Title Company in connection with the sale of his “condomini-
ums.” McDonnell argued that there was no other economic
loss because he incurred a loss of $149,109.89 from the sale
of his “condominiums.” The district court rejected Defen-
dants’ arguments and calculated the actual loss as the total
sales price of the “condominiums” each of them had sold.
This resulted in Crandall’s base offense level being increased
by 16 levels and McDonnell’s by 18. Based on a total offense
level of 22, the district court calculated the advisory Sentenc-
ing Guidelines range for Crandall to be 41 to 51 months.
Based on a total offense level of 28, the district court calcu-
lated the advisory Sentencing Guidelines range for McDon-
nell to be 78 to 97 months. After considering relevant 18
U.S.C. § 3553(a) sentencing factors, the district court imposed
sentences that were at the bottom of the guideline ranges, sen-
tencing Crandall to 41 months and McDonnell to 78 months.
The district court also ordered that McDonnell pay $361,000
in restitution.
5380                  UNITED STATES v. CRANDALL
                                    II

  Defendants argue that their convictions must be reversed
because the district court erred in declining to give their pro-
posed “intent to defraud”3 jury instruction. Defendants’
requested “intent to defraud” instruction was based on Arthur
Andersen LLP v. United States, 

(2005), an
obstruction of justice case, and read:

      An intent to defraud is an intent to deceive or cheat.
      You can find an intent to deceive or cheat only if,
      after reviewing all the evidence, you are convinced
      beyond a reasonable doubt that the defendant know-
      ingly and consciously engaged in criminal wrongdo-
      ing.

The district court declined to give this proposed instruction
because the mail and wire fraud statutes do not require “con-
sciousness of wrongdoing” and the Court in Arthur Andersen
did not indicate that its holding was to apply to other criminal
statutes.

   [1] “[A] defendant is entitled to have the judge instruct the
jury on his theory of defense, provided that it is supported by
law and has some foundation in the evidence.” United States
v. Fejes, 

, 702 (9th Cir. 2000) (quotation omit-
ted). We review de novo whether a proposed instruction is
supported by law. United States v. Garcia-Cruz, 

, 540 (9th Cir. 1992).

   [2] Defendants’ proposed “intent to defraud” jury instruc-
tion was not supported by law. Arthur Andersen involved an
obstruction of justice charge under 18 U.S.C.
§§ 1512(b)(2)(A) and (B) and the meaning of “knowingly . . .
  3
   To obtain a conviction on mail and wire fraud, the government must
prove that the defendant had a specific intent to defraud. See United States
v. Manion, 

, 1156 (9th Cir. 2003).
                     UNITED STATES v. CRANDALL                      5381
corruptly persuade” under that 

. Arthur
Andersen did not involve either the mail or wire fraud statute
and there is no indication that the Court intended its holding
as to the mens rea requirement for obstruction of justice to
extend to other federal statutes. See United States v. Gay, 

, 327 (9th Cir. 1992) (declining to apply a Supreme
Court tax decision to a mail and wire fraud case). Moreover,
the “intent to defraud” instruction that was given4 adequately
covered the defense theory of lack of intent. See United States
v. Mason, 

, 1438 (9th Cir. 1990) (“[I]t is not
reversible error to reject a defendant’s proposed instruction on
his theory of the case if other instructions, in their entirety,
adequately cover that defense theory.”).

                                   III

   [3] Defendants argue that their sentences must be vacated
because the district court erred in relying on Application Note
2(F)(v)(III) to U.S.S.G. § 2B1.1 to calculate the loss caused
by the fraud. “We review the district court’s interpretation of
the Sentencing Guidelines de novo.” United States v. Garcia,

, 969 (9th Cir. 2007); see also United States v.
Grissom, No. 06-10688, 

, at *4 (9th Cir.
April 15, 2008). We review the district court’s application of
the Sentencing Guidelines to the facts for abuse of discretion.
United States v. Gonzales, 

, 943 (9th Cir. 2007)
(en banc). Whether the district court’s reliance on Application
Note 2(F)(v)(iii) involves an interpretation or an application
of the guidelines is irrelevant because the result is the same
under either standard.

   Under U.S.S.G. § 2B1.1(b)(1), if a crime involving fraud
resulted in a loss of more than $5000, the base offense level
is increased depending on the amount of actual or intended
loss, whichever is greater. See U.S.S.G. § 2B1.1 cmt. n.2(A).
  4
    The Ninth Circuit Model Instruction reads: “An intent to defraud is an
intent to deceive or cheat.”
5382              UNITED STATES v. CRANDALL
“The guidelines do not present a single universal method for
loss calculation under § 2B1.1—nor could they, given the
fact-intensive and individualized nature of the inquiry.”
United States v. Zolp, 

, 718 (9th Cir. 2007). For
that reason, Ҥ 2B1.1 is not to be applied mechanically in
valuing loss” and sentencing courts are instructed to “ ‘take a
realistic, economic approach to determine what losses the
defendant truly caused or intended to cause, rather than the
use of some approach which does not reflect the monetary
loss.’ ” United States v. Stoddard, 

, 1145-46
(9th Cir. 1998) (quoting United States v. Allison, 

,
943 (9th Cir. 1996)).

   The guidelines do provide some “special rules” to assist
sentencing courts in calculating the amount of loss in particu-
lar cases. To calculate the amount of loss, the district court
relied on the “special rule” in Application Note 2(F)(v)(III),
which provides, in pertinent part:

    In a case involving a scheme in which . . . (III) goods
    for which regulatory approval by a government
    agency was required but not obtained, or was
    obtained by fraud, loss shall include the amount paid
    for the property, services or goods transferred, ren-
    dered, or misrepresented, with no credit provided for
    the value of those items or services.

The district court, based on the recommendation of the proba-
tion office, found that subpart (III) was applicable because in
order to convert an apartment building into individual condo-
miniums, an owner was required to obtain governmental
approval through the conditional use permit process, but
Defendants had failed to obtain the proper approval.

  [4] The district court erred in relying on Application Note
2(F)(v)(III) to calculate loss. This Application Note is con-
cerned with schemes involving “goods” which are subject to
regulatory approval by the government. “Goods” are com-
                     UNITED STATES v. CRANDALL                       5383
monly defined as “[t]angible or movable personal property
other than money[.]”5 The fraud in this case involved real
property, not personal property. Although there is one refer-
ence in the note to “property,” the focus of subpart (III) is on
“goods.” In short, the plain language of Application Note
2(F)(v)(III) indicates that this subpart applies to cases involv-
ing goods, not cases involving real property.6

   Moreover, the use of Application Note 2(F)(v)(III) was not
a realistic, economic approach to calculating the loss caused
by the fraud. The converted “condominiums” that were pur-
chased from Defendants were not completely worthless at the
time of purchase, even though the buyers did not get that for
which they bargained. The buyers bargained for condomini-
ums and they got apartments which had not been legally con-
verted. Nevertheless, the apartments had significant value
because the buyers could live in their units or they could rent
their units out as apartments.7 Without Sentencing Commis-
sion direction or policy, it is improbable from a realistic, eco-
nomic perspective that the “condominiums” had no value to
the victims of the fraud, even though the units may have been
difficult or impossible to resell.

   While it is clear that the district court erred in relying on
Application Note 2(F)(v)(III) to calculate loss, it is not imme-
diately apparent how the district court should have calculated
the loss suffered by the victims of the fraud. Defendants sug-
gest that Application Note 2(E)(i) or (ii) could apply here, but
  5
     Black’s Law Dictionary 714 (8th ed. 1999).
  6
     The only two published cases that make reference to Application Note
2(F)(v) both involve consumer goods, not real estate. See United States v.
Canova, 

(2d Cir. 2005) (pacemakers); United States v. Mil-
stein, 

(2d Cir. 2005) (misbranded drugs).
   7
     We are mindful that at least one of the McDonnell units was not habit-
able when purchased due to construction problems that arose during the
“conversion” process; but, from the record that is before the court, it
appears that most of the units sold by Defendants were habitable at the
time of purchase.
5384               UNITED STATES v. CRANDALL
neither of these fit this case. Application Note 2(E)(i) pro-
vides that “[l]oss shall be reduced by . . . the fair market value
of the property returned,” but Defendants did not “return” any
property to the victims. Application Note 2(E)(ii) provides
that

    [l]oss shall be reduced . . . [i]n a case involving col-
    lateral pledged or otherwise provided by the defen-
    dant, [by] the amount the victim has recovered at the
    time of sentencing from disposition of the collateral,
    or if the collateral has not been disposed of by that
    time, [by] the fair market value of the collateral at
    the time of sentencing.

But, Defendants did not pledge or otherwise provide collateral
to any of the victims.

   [5] In calculating loss for sentencing purposes, our focus is
on the loss inflicted upon the victims, who are, in this case,
the buyers of the fraudulently converted “condominiums.” See
United States v. Harper, 

, 1392 (9th Cir. 1994).
As noted above, “loss” can involve both actual and intended
loss, but here we are dealing only with actual loss. Defen-
dants’ fraudulent scheme was intended to enhance the market-
ability and value of the apartments which were sold.
Defendants did not intend that the buyers would suffer any
loss. Hence, the loss, if any, suffered by the buyers must be
measured in terms of “actual loss,” not intended loss.

   “Actual loss” is defined as “the reasonably foreseeable
pecuniary harm that resulted from the offense.” U.S.S.G.
§ 2B1.1 cmt. n.2(A)(i). “Pecuniary harm” is “harm that is
monetary or that otherwise is readily measured in money” and
“does not include emotional distress, harm to reputation, or
other non-economic harm.” 

“Reasonably
foreseeable pecuniary harm” is “pecuniary harm that the
defendant knew, or under the circumstances, reasonably
should have known, was a potential result of the offense.” 

v. CRANDALL                        5385
cmt. n.2(A)(iv). In calculating actual harm, “[t]he court need
only make a reasonable estimate of the loss.” 

The guidelines offer the following general instructions for
estimation of loss:

      The estimate of loss shall be based on available
      information, taking into account, as appropriate and
      practicable under the circumstances, factors such as
      the following:

           (i)    The fair market value of the property
                  unlawfully taken or destroyed; or, if
                  the fair market value is impracticable
                  to determine or inadequately mea-
                  sures the harm, the cost to the victim
                  of replacing that property.

           (ii)   The cost of repairs to damaged prop-
                  erty.

           (iii) The approximate number of victims
                 multiplied by the average loss to each
                 victim.

           (iv) More general factors, such as the
                scope and duration of the offense and
                revenues generated by similar opera-
                tions.

Note suggests several different methods
that the district court might employ to estimate loss from the
real estate fraud committed by Defendants.

   First, the district court could use fair market value apprais-
als of the property involved in the fraudulent sales to estimate
loss (what the victims paid less the fair market value of what
they received at the time of the sale8). However, the use of fair
  8
   Although U.S.S.G. § 2B1.1 is silent as to the appropriate valuation date
for a loss determination, in this case, the actual loss to the victims at the
5386                  UNITED STATES v. CRANDALL
market value appraisals has some drawbacks because obtain-
ing appraisals is expensive and may cause unacceptable delay
in sentencing. Moreover, on the facts of this case, the
appraisal approach may not fairly reflect economic reality—
the actual monetary loss to the victims. Whereas an illegally
converted condominium may be unmarketable and therefore
have little or no value in the market, that “condominium” may
have significant, actual economic value to the buyer, if the
buyer purchased the unit for purposes of occupancy and not
resale.

   District courts can also estimate loss by considering the
“cost of repairs to damaged property.” U.S.S.G. § 2B1.1 cmt.
n.2(C)(ii). Here, although the real property was not physically
“damaged,” the buyers faced thousands of dollars in fees in
order to bring their units into compliance. These fees would
be analogous to paying to repair damaged property. Thus, a
reasonable estimate of loss may be the cost that the victims
of the fraud would have had to pay to make their “condomini-
ums” legal, but for the fortuitous settlement between Stewart
Title Company and the City of Huntington Beach. This is a
realistic, economic estimate of loss inasmuch as it reflects
what it would have cost the victims to become whole and
reflects the value of what the victims actually lost, namely the
ability to sell the property if they chose.

   As a third alternative, the district court might be of the view
that the loss from the fraud cannot be reasonably determined,

time of the fraud, as opposed to the time of trial or sentencing, best cap-
tures Defendants’ culpability. The volatile nature of the real estate market
is wholly independent of Defendants’ actions and, for sentencing pur-
poses, they should not benefit from the ultimate conversion of the units
into condominiums. See United States v. Gordon, 

, 1052 n.6
(9th Cir. 2004) (“there is little logic in increasing or decreasing a defen-
dant’s sentence as a result of unpredictable fluctuating values for misap-
propriated items in a punitive context”); United States v. Bae, 

, 776 (D.C. Cir. 2001) (“the loss associated with their fraudulent pro-
curement is equal to the value of the goods at the time of the offense”).
                     UNITED STATES v. CRANDALL                     5387
given the nature of the property involved in the fraud. Should
that be the case, the district court could rely on Application
Note 2(B) to U.S.S.G. § 2B1.1 to calculate the loss for sen-
tencing purposes. Application Note 2(B) provides that “[t]he
court shall use the gain that resulted from the offense as an
alternative measure of loss only if there is a loss but it reason-
ably cannot be determined.” Here, Defendants purchased
four-plexes and then resold them as though the individual
units were condominiums. Defendants’ “gain” might be val-
ued by comparing Defendants’ cost of purchasing the apart-
ment buildings to the gross sale prices of the buildings to the
victims.

   [6] Depending on the nature of the fraudulent scheme
involved, there may be still other approaches a district court
could properly employ to determine loss for purposes of sen-
tencing in a fraud case involving real property. For example,
if the fraudulently sold property has been resold by the victim,
a comparison of the price on resale to the price paid to the
defendant may be a realistic measure of the economic loss to
that particular victim. It is also possible that tax assessor valu-
ations might be useful in some cases in estimating the loss
suffered by a victim of the fraud. But, whatever approach the
district court takes, it must take a realistic, economic approach
that reflects the monetary loss to the victims of the fraud.
Here, the district court, by relying on Application Note
2(F)(v)(III) to calculate loss, failed to take such an approach.
As a result, the district court erred in calculating the applica-
ble guidelines ranges for Defendants. Because this error was
not harmless, Defendants’ sentences are vacated,9 and we
remand for resentencing.
  9
    Because we vacate Defendants’ sentences on this ground, we need not
consider McDonnell’s other sentencing argument, in which Crandall
sought leave to join. McDonnell argued that his sentence was unreason-
able because it was disproportionately longer than that of codefendant
Howard Richey. Had we considered this argument, we would have
rejected it because “[d]isparity in sentences between codefendants is not
5388                  UNITED STATES v. CRANDALL
                                    IV

   McDonnell argues that his restitution order of $361,000
was illegal10 because it appears to be based on the loss to
Stewart Title Company (“Stewart Title”) rather than on the
loss to the persons who purchased the fraudulently converted
“condominiums.” At sentencing, the district court made it
clear that it did not perceive Stewart Title as a victim and that
Stewart Title was not to receive any restitution. However, the
amount of restitution that the district court ordered was calcu-
lated by the probation office, and the only “victim” identified
by the probation officer in McDonnell’s presentence report
was Stewart Title.

   [7] Loss for purposes of evaluating the seriousness of a
fraud under the Sentencing Guidelines and loss for purposes
of restitution are, on the facts of this case, potentially quite
different. The purpose of restitution “is to make the victims
whole” while “the Sentencing Guidelines serve a punitive
purpose[.]” 

n.6. “[T]he amount of
restitution . . . is limited to the victim’s actual losses.” United
States v. Bussell, 

, 964 (9th Cir. 2007) (emphasis
in the original).

  [8] As a result of Stewart Title’s settlement with the City
of Huntington Beach, the “condominium” buyers may ulti-
mately have gotten the legal condominiums for which they

sufficient ground to attack a proper guidelines sentence.” United States v.
Whitecotton, 

, 1200 (9th Cir. 1998). In addition, the differ-
ences between Defendants’ sentences and that of Richey were warranted,
given that the district court found that Crandall perjured himself during the
trial and McDonnell sold many more units than Richey for approximately
twice as much money, was convicted on charges relating to his involve-
ment in the Houchen scheme and for bank fraud, and had tried to “shake
down” Houchen when the fraudulent scheme came to light.
   10
      Crandall withdrew his argument that his restitution order of $63,000
was illegal.
                  UNITED STATES v. CRANDALL                 5389
bargained. The buyers may have suffered no loss for purposes
of restitution. McDonnell has not briefed nor argued the issue
of whether the district court erred in concluding that Stewart
Title was not a victim of the fraudulent scheme in which its
dishonest employee joined. We need not decide this issue
because the government concedes that the basis for the district
court’s restitution order was not adequately set forth. Accord-
ingly, we vacate McDonnell’s restitution order and remand to
the district court to reassess restitution as to McDonnell. We
leave it to the district court to reconsider whether Stewart
Title was a second-tier victim for purposes of restitution.

                               V

   In conclusion, Defendants’ convictions are affirmed
because their proposed “intent to defraud” jury instruction
was not supported by law and because the jury instructions
that were given adequately covered their lack of intent
defense theory. Because the district court improperly relied on
Application Note 2(F)(v)(III) to calculate the loss that resulted
from the fraud, Defendants’ sentences are vacated. McDon-
nell’s restitution order is also vacated because it is unclear
whether the restitution amount is based on what was actually
lost by the victims of the fraud. This matter is remanded for
resentencing and for reassessment of the amount of McDon-
nell’s restitution.

   Convictions AFFIRMED; sentences and McDonnell res-
titution order VACATED; REMANDED for resentencing.