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March 5, 2021

Did a Sixth Circuit panel largely decimate the federal sentencing fraud guidelines (and perhaps many others)?

A helpful colleague made sure I found some time in a busy week to think about the Sixth Circuit's panel decision on Wednesday in US v. Riccardi, No. 19-4232 (6th Cir. Mar. 3, 2021) (available here). The Riccardi decision is the latest in a series of relatively new circuit rulings in which courts are declaring it improper and impermissible for the commentary to the federal sentencing guidelines to be applied in ways that expand the meaning of the actual guidelines (prior Sixth Circuit en banc example flagged here).

Riccardi seems like an especially big deal because it is focused on the commentary to the fraud guidelines, USSG § 2B1.1, which has an extensive accounting of how courts should account for the key factor of "loss" in the main guideline.  Here is how panel's majority opinion gets started: 

Jennifer Riccardi, a postal employee, pleaded guilty to stealing 1,505 gift cards from the mail. Most of these gift cards had an average value of about $35 for a total value of about $47,000.  The Sentencing Guidelines directed the district court to increase Riccardi’s guidelines range based on the amount of the “loss.” U.S.S.G. § 2B1.1(b)(1).  Yet § 2B1.1 does not define the word “loss.”  A search for its ordinary meaning might produce definitions such as “[t]he amount of something lost” or “[t]he harm or suffering caused by losing or being lost.”  American Heritage Dictionary of the English Language 1063 (3d ed. 1992).  Perhaps, then, the word is ambiguous on the margins.  Does it, for example, cover only financial harms or emotional ones too?  But one definition of “loss” that you will not find in any dictionary is the rule that the district court used for Riccardi’s stolen gift cards: a $500 minimum loss amount for each gift card no matter its actual value or the victim’s actual harm (which, for Riccardi, amounted to a total loss amount of $752,500).

Riccardi challenges the use of this $500 minimum loss amount, which comes from the Sentencing Commission’s commentary to § 2B1.1.  The commentary instructs that the loss “shall be not less than $500” for each “unauthorized access device,” a phrase that Riccardi concedes covers stolen gift cards. U.S.S.G. § 2B1.1 cmt. n.3(F)(i).  But guidelines commentary may only interpret, not add to, the guidelines themselves.  United States v. Havis, 927 F.3d 382, 386 (6th Cir. 2019) (en banc) (per curiam).  And even if there is some ambiguity in § 2B1.1’s use of the word “loss,” the commentary’s bright-line rule requiring a $500 loss amount for every gift card does not fall “within the zone of ambiguity” that exists. Kisor v. Wilkie, 139 S. Ct. 2400, 2416 (2019).  So this bright-line rule cannot be considered a reasonable interpretation of — as opposed to an improper expansion beyond — § 2B1.1’s text.  We thus reverse Riccardi’s sentence and remand for resentencing without the use of the commentary’s automatic $500 minimum loss amount for every gift card.

Though the part of the loss commentary found to be an "improper expansion" of the 2B1.1 guideline in Riccardi might seem like a quirky example, I suspect a good many fraud cases involve commentary that could be considered an "improper expansion" of the guideline term "loss."  For example, the commentary states that "loss is the greater of actual loss or intended loss," but can see a good argument that "intended loss" — which is loss that did not actually happen, but was part of the design of an offense — is not a reasonable interpretation of "loss."  Similarly, the commentary states sentencing judges "shall use the gain that resulted from the offense as an alternative measure of loss only if there is a loss but it reasonably cannot be determined." I feel pretty confident that "gain" is not really an interpretation of "loss."

Critically, the fraud guideline is not the only one important part of the federal sentencing guideline with an intricate set of commentary instructions that might be challenged as full of "improper expansions."  I sense a growing number of litigants and courts are starting to hone on potentially problematical guideline commentary and that some variation of this issue with be getting to the US Supreme Court before too long.  In the meantime, defense attorneys would be wise to challenge (and preserve arguments around) any application of guideline commentary that even might be viewed as "expansionary."

March 5, 2021 at 09:58 AM | Permalink


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