United States District Court, E.D. Kentucky, Central Division
For Petrica Octavian Stoian, aka: Nazarie Bogdan, Petrut Ciobanu, Adrian-Ioan Bulza, Adrian-Ioan Bulzan, Bogdan Nazarie, Defendant: Benjamin Gerald Dusing, LEAD ATTORNEY, Zachary Kent Peterson, The Law Offices of Benjamin G. Dusing, PLLC, Covington, KY USA.
For Nicholas Corey Garner, aka: Frank Marten, Clark David Thomson, Wallace Steeves, Neal Marion, Ronald Peterson, Patrick Steele, Defendant: Andrew M. Stephens, LEAD ATTORNEY, Lexington, KY USA.
For Sabrina Carmichael, aka: Valerie Pisano, Emily Arvay, Samantha Cracknell, Paula Vymisil, Defendant: C. William Swinford, Jr., LEAD ATTORNEY, Lexington, KY USA.
For Eli Holley, aka: Anna Dvorak, Larisa Meilia Thomson, Jennifer Singh, Defendant: Elizabeth Snow Hughes, LEAD ATTORNEY, Green, Chesnut & Hughes PLLC, Lexington, KY USA.
For Brooks Sowell, aka: Leroy Beckford, Defendant: John Casey McCall, LEAD ATTORNEY, Louisville, KY USA.
For April Abrams, aka: Nancy Smith, Iris Garver, Rebecca Brown, Alexander Grey, Defendant: Adrian M. Mendiondo, LEAD ATTORNEY, Kinkead & Stilz, PLLC, Lexington, KY USA.
For Dwayne Hardy, aka: Jared Duckley, Louis Welmart, Defendant: H. Wayne Roberts, LEAD ATTORNEY, Lexington, KY USA.
For Nathaniel Garner, aka: Wallace Steeves, Defendant: Stephen D. Milner, LEAD ATTORNEY, Hughes, Lowry, Milner & Hayworth, Lexington, KY USA.
For Harold Smith, Defendant: John C. Helmuth, LEAD ATTORNEY, Lexington, KY USA.
MEMORANDUM OPINION & ORDER
Joseph M. Hood, Senior United States District Judge.
Defendants have entered guilty pleas in this matter, and the Court is tasked with imposing a sentence on them which is " sufficient, but not greater than necessary, to comply with" the purposes of sentencing set forth under 18 U.S.C. § 3553(a)(2). Setting out to accomplish this task, the Court starts with the understanding that the offense of conviction for each defendant in this matter for conspiracy to commit wire fraud carries a maximum sentence of imprisonment of not more than 20 years. See 18 U.S.C. § § 1343 and 1349. The Court is assisted in the sentencing errand by a correct determination of the advisory Guidelines, one element of which is the calculation of actual or intended loss attributable to each of the defendants for the fraud of which they stand convicted. U.S.S.G. § 2B1.1(b)(1).
Defendants dispute the amount of loss proposed in the presentence report prepared by the United States Probation Office. Thus, the matter is before the Court so that it may make a determination of the reasonably foreseeable loss which resulted from the offense conduct to which each defendant in this matter has entered a guilty plea and announce its rationale for that conclusion. This is no easy task in this case because the evidence shows that a substantial quantity of the evidence upon which the Court could ordinarily rely to make its calculation has been lost or destroyed or simply cannot be found as a result of the actions of the co-defendants. Nonetheless, the Court has made its quest for the legal Holy Grail of the loss amount attributable to each defendant and has reached a sound conclusion based on the evidence and the law, as set forth below.
In making its determination, the Court has had the benefit of the parties' briefs [DE 498, 500, 501, 503, 504, 506, 507, 508, 509, 510, 515, 520, 521, 529, 546, and 553] as well as the evidence presented at a hearing which took place before this Court on December 8, 9, and 10, 2014, including the testimony of Special Agent Lowe, Detective Gavin Patrick of the Ashland Police Department, and Defendants' opinion witness, Dr. Arnold J. Stromberg of the University of Kentucky statistics department.
U.S.S.G. § 2B1.1(b)(1) provides that the Court shall increase the offense level for offenses involving fraud and deceit where the amount of actual or intended loss, whichever is greater, exceeds $5,000. See Comment 3(A). Actual loss is the reasonably foreseeable pecuniary (" monetary . . . readily measurable in money" ) or harm that resulted from the offense. Comment 3(A)(i) and (iii). Intended loss is the pecuniary harm intended to result from the offense. Comment 3(A)(ii). To be reasonably foreseeable, a defendant must have known or, under the circumstances, reasonably should have known, that pecuniary harm was a potential result of the offense. Comment 3(A)(iv).
" The court need only make a reasonable estimate of the loss." U.S.S.G. § 2B1.1 cmt. 3(C); United States v. Agbebiyi, 575 F.App'x 624, 630-631 (6th Cir. 2014) (" Where losses are not easy to quantify, the court is only required to make a reasonable estimate of the loss, given available information, and such estimates need not be determined with precision." ); see also United States v. Gordon, 495 F.3d 427, 431 (7th Cir. 2007) (holding that a district court " need only make a reasonable estimate of the loss, not one rendered with
scientific precision" ); United States v. Triana, 468 F.3d 308, 320 (6th Cir. 2006) (explaining that this precept rings true for " situations where the losses occasioned by financial frauds are not easy to quantify" ). " The estimate of loss shall be based on available information, taking into account, as appropriate and practicable under the circumstances" a number of factors such as " [t]he approximate number of victims multiplied by the average loss to each victim" and " [m]ore general factors, such as the scope and duration of the offense and revenues generated by similar operations." U.S.S.G. § 2B1.1 cmt. 3(C)(iv) and (vi); United States v. Abdelsalam, 311 F.App'x 832, 846 (6th Cir. 2009) (quoting U.S.S.G. § 2B1.1 cmt. 3).
It is permissible, for example, " to estimate the loss . . . by extrapolating the average amount of loss from known data and applying that average to transactions where the exact amount of loss is unknown." United States v. Tipton, 269 F.App'x 551, 561 (6th Cir. 2008) (quoting United States v. Bryant, 128 F.3d 74, 76 (2d Cir. 1997)); United States v. Mei, 315 F.3d 788, 792-93 (7th Cir. 2003) (citing United States v. Scott, 250 F.3d 550, 552 (7th Cir. 2001); United States v. Jarrett, 133 F.3d 519, 530-31 (7th Cir. 1998); United States v. Wai-Keung, 115 F.3d 874, 877 (11th Cir. 1997); United States v. Egemonye, 62 F.3d 425, 428-29 (1st Cir. 1995); United States v. Koenig, 952 F.2d 267, 271 (9th Cir. 1991); U.S.S.G. § 2F1.1 cmt. 9)) (reviewing intended loss calculation in a counterfeit credit card scheme and remarking that courts and Sentencing Commission " have approved averaging as a reasonable method of calculating intended loss in fraud cases).
The factors and facts upon which estimates are based must be proven by a preponderance of the evidence. United States v. Poulsen, 655 F.3d 492, 513 (6th Cir. 2011) (holding that if the loss amount is in dispute, the government must prove loss amount by a preponderance of the evidence, or the district court may engage in judicial fact-finding to determine the loss amount); United States v. Bahhur, 200 F.3d 917, 924-25 (6th Cir. 2005). It is permissible, for example, to extrapolate information about loss for one period and apply that information to another period. In Tipton, the Sixth Circuit approved of the extrapolation method of loss calculation, explaining that " requiring precise calculations which entail the gathering of documents that are diffuse and/or difficult to obtain would reward a defendant whose tax fraud was particularly complex and/or spanned a significant period of time."  Tipton, 269 F.App'x at 561 (quoting United States v. Spencer, 178 F.3d 1365, 1368 (10th Cir. 1999)) (holding that district court's estimate of loss under U.S.S.G. § 2B1.1 was supported by the evidence where it relied upon testimony of inspector that she calculated profits generated from sale of unregistered pull-tab cards at a charity bingo location by multiplying the number of pull-tab cards played by the expected profit); see also United States v. Wooten, 39 Fed. App'x 83, 88 (6th Cir. 2002) (holding that district court properly estimated a $2.7 million loss due to fraud and money laundering by multiplying $9,000 by the number of days in the conspiracy even though there were only checks in an amount of less than $1 million mentioned during the trial where record contained testimony that defendants cashed a $9,000
check daily and purchased stolen goods with that amount until the funds were exhausted during duration of ...