Archive | loss calculation

United States v. Hsu, No. 09-4152-cr (2d Cir. February 17, 2012) (Winter, Lynch, Carney, CJJ)

Norman Hsu, a prominent, if corrupt, political fundraiser, used the connections he made in politics to run a giant Ponzi scheme. He pled guilty to mail and wire fraud, and was convicted by a jury of campaign finance fraud. In all, the district court imposed a 292-month guideline sentence.

The main, but not only, issue on his appeal concerned an interesting sentencing issue. The district court found that the Ponzi scheme caused a loss of between $50 million and $100 million, but in doing so included earnings that the victims reinvested in the scheme – even though those earnings were invented as part of the scheme – in the intended loss. The circuit agreed that this was permissible.

Normally, in fraud cases, the guidelines measure the amount of principal the victims lost, and not the …

United States v. Woolf Turk, No 09-5091-cr (2d Cir. November 30, 2010) (Katzmann, Hall CJJ, Jones, DJ)

Ivy Woolf Turk was a principal in a real estate development company. Between 2003 and 2007 she and her partner persuaded investors to lend them $27 million, primarily to renovate apartment buildings in upper Manhattan. They induced the loans by promising that the investors would hold recorded first mortgages on the buildings as collateral. This was a lie – they never recorded the mortgages, so the investors were merely unsecured creditors. At the same time, the developers obtained loans from banks, and those liens were recorded.

Eventually Woolf Turk began defaulting on the victims’ loans. The victims became suspicious and discovered that, despite Woolf Turks’ representations, their mortgages had never been recorded. In May of 2007, the investors sued; only then did they learn that, not only were their mortgages unrecorded, but that …

United States v. Uddin, No. 07-3121-cr (2d Cir. January 6, 2009) (Kearse, Sack, Katzmann, CJJ)

Mohammed Uddin owned a small grocery store in Manhattan, and used it to commit food stamp fraud between 2003 and 2006 by dispensing cash in exchange for food stamps. He pled guilty but admitted in his allocution only that the amount of fraud exceeded $5,000 – the jurisdictional amount. After a Fatico hearing, the district court concluded that the loss amount was $377,799, and sentenced Uddin accordingly. On appeal, Uddin challenged the loss calculation.

The District Court Proceedings

The government had been seeking a loss in excess of $1.2 million, arguing that all of Uddin’s food stamp redemptions exceeding $50 during the relevant time period were fraudulent. Uddin argued instead that the loss should be limited to $5,000, the amount he admitted in his plea.

The evidence at the Fatico hearing showed that his store …

United States v. Abiodun, No. 06-5335-cr (2d Cir. July 30, 2008) (Cardamone, Cabranes, Katzmann, CJJ)

Emmanuel Abiodun was one of a group of people who ran a large credit card and identity fraud scheme in which credit reports were illegally downloaded and used to obtain credit cards in the victims’ names. Abiodun himself purchased between 300 and 400 reports and, the district court found, was responsible for a loss of between $1.6 and 2.0 million.

The court also increased his offense level by six levels based on its finding that Abiodun’s conduct involved more than 250 victims. The court included in this number individuals who suffered no actual financial loss, but who spent time securing reimbursement from banks and credit card companies.

On appeal, the circuit agreed that this was appropriate. The fraud guideline defines a victim as anyone “who sustained any part of the actual loss” for which the …