Case o' The Week: Good Dictum on Victims, Armstead and 2B1.1 Victim Enhancements

Judge Tashima writes for a very good panel, and gives us welcome new rules on identifying "victims" for fraud and theft cases under USSG § 2B1.1. United States v. Armstead, __ F.3d __, 2008 WL 4570608 (9th Cir. Oct. 15, 2008), decision available here.

Players: Decision by Judge Tashima (left), joined by Judges Reinhardt and McKeown

Facts: Armstead lead a bank fraud conspiracy, doling out “packets” of stolen identity information to co-conspirators. Id. at *1. Using these packets, the crew would cash stolen checks, create credit accounts, and buy merchandise. Id. Armstead got 50% of the take, with the loss amount topping $400,000. Id. at *2.

After losing at trial, Armstead received a guideline sentence of 210 months. Id. That sentence included a four-level bump for over fifty victims. Id. at *6; see also USSG § 2B1.1(b)(2). Those victims included sixteen banks and victims of retail fraud, together with an unstated number of individuals and companies whose personal information was stolen by the conspirators. Id.

Issue(s): “Armstead contends that the district court erred by counting as victims those individuals and companies whose losses were not included in the loss calculation.” Id.

Held: “We agree.” Id. “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. Therefore, the district court erred by including those individuals in the number-of-victim calculations.” Id.

Of Note: As Arizona Defender Jon Sands noted in his blog post this week, in Armstead the Ninth joins the Second and Tenth Circuits with a rule on “victims” for guideline sentencing: a “victim” for Guideline § 2B1.1(b)(1) is a person or business that suffered pecuniary harm that is included in the actual loss calculations. Id. at *7.

What about individual victims who are immediately reimbursed for their losses by their banks? With another good rule, the Ninth joins the Fifth and Sixth Circuits: “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 reimbursement takes a longer period of time and requires a great deal of effort on the part of the individual, it is conceivable that the individual may suffer additional pecuniary harm that is not fully reimbursed. If that loss amount is included in the loss calculation, the victim associated with the loss should be included in the victim calculation.” Id. at *8.

How to Use: The “number of victims” bump is a big one: in this case, it added four offense levels. What’s the key to counting “victims” for this dangerous enhancement? Start with the loss calculation, explains the Court. Id. at *9. Judge Tashima goes to considerable lengths to distinguish an Eleventh Circuit case (Lee) and to emphasize that identifying victims begins with calculating loss. Id.

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 person associated with that loss should also be included in the victim calculation. If the temporary loss results in no additional pecuniary harm, then there is nothing to include in the loss calculation and thus no additional victim in the victim calculation.

Id. at *9.

For Further Reading: For the Party Line on calculating loss, the Sentencing Commission has a training manual available here. For a discussion on the developing circuit split on the meaning of “victim,” visit a Sentencing Law and Policy guest post here

For some of the – unfortunate – facts of the Armstead case itself, visit a newspaper article here.



Picture of the Honorable A. Wallace Tashima from http://www.downtown-los-angeles-jacl.org/us-supreme-court.html

Steven Kalar, Senior Litigator N.D. Cal. FPD. Website at www.ndcalfpd.org

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