United States v. Confredo, No. 06-3201-cr (2d Cir. June 10, 2008) (Newman, Winter, Parker, CJJ)
This case takes on the difficult question of fixing the loss amount under the sentencing guidelines when the case involves fraudulently obtained that loans have been partially repaid. It also addresses an interesting Apprendi claim.
1. The Loss Amount
Defendant Confredo and his associates coordinated the submission of more than 200 fraudulent loan applications to New York banks. The borrowers were small businesses, which paid Confredo a fee, and knew that the applications were false, in most instances because the businesses were not credit worthy. Most of the applications were cosigned by second parties with good credit, but none were secured by real collateral. In total, more than $24 million was sought, and more than $12 million was actually lent, mostly from Citibank.
At sentencing, the probation department recommended that the full $24 million be treated as intended loss under the guidelines, although the available evidence suggested that the banks had actually lost significantly less than that, because some of the $12 million in loans had been repaid. When Confredo was originally sentenced, in 1997, the district court used the $24 million figure, rejecting Confredo’s argument that the guidelines should be based on the actual loss, which he conceded was between $10 million and $20 million.
He won his first appeal, which included an unpreserved claim that the loss amount was incorrect. Because the government had conceded on other issues, the court directed that the district court revisit loss amount on remand.
At resentencing, the government urged the district court to stick to its original ruling. Confredo argued that the intended loss was less than $20 million because he expected that (1) the banks would reject some of the applications and (2) some of his customers would repay their loans, at least in part. The district court sided with the government, but the circuit disagreed.
The court first dealt with the “uncertainty” as to whether the district court’s loss calculation was a fact-finding, reviewed only for clear error, or an interpretation of the guidelines, which would be reviewed de novo. Here, the court treated the ruling here a legal question – as a matter of law, does the presenter of loan applications intend a loss equal to the aggregate amount of the loans when the presenter is not the borrower?
Then the court then surveyed the law on this point. Until 1991, it had held that the proper measure of intended loss was always the value of the loan obtained or sought, even if the defendant intended to repay it. A 1991 guideline amendment, however, permitted greater flexibility on this issue, giving a defendant credit for actions – such as loan repayments or assets pledged to secure the loan – that might reduce the intended loss amount.
The court viewed Confredo’s case as more difficult, however, because he was not the borrower himself, and no assets had been pledged to secure the loans. Nevertheless, the court concluded that the 1991 amendment means that a defendant “should have an opportunity to persuade the sentencing judge that the loss he intended was less than the face amount of the loans.” The court remanded the case for this purpose, directing that the district court “determine the extent, if any, to which Confredo has proven a subjective intent to cause a loss of less than the aggregate amount of the loans.”
2. The Apprendi Issue
Confredo also received to a 3-level enhancement for committing some of the offenses to which he had pled guilty while on bail for others. He argued that this enhancement violated his right to a jury trial, under Apprendi. Interestingly, the court held that Apprendi does apply in this situation because, even though Confredo did not receive a sentence above the unenhanced statutory maximum, the enhancement “expose[d him] to the risk of a sentence that exceed[ed] the statutory maximum.” But the court also held that Apprendi’s jury fact-finding requirement was not violated, because Confredo “sufficiently” admitted that he committed offenses while on release, by admitting to conduct that “the public record indisputably establishe[d]” had occurred after his release on bail.
The court also recognized that there was a second Apprendi violation here – the absence from the indictment of an allegation that Confredo committed the offenses while on release. But it held that such an omission is harmless error “where the evidence is overwhelming that the grand jury would have found the fact at issue.”