Order on Denial of Rehearing and Rehearing En Banc February 18, 1992.
OPINION OF THE COURT
BECKER, Circuit Judge.
Defendant Larry Kopp pled guilty to procuring a $13.75 million bank loan by fraudulent misrepresentations, in violation of 18 U.S.C. § 1344 (1988) (subsequently amended). The district court for the District of New Jersey sentenced him to a term of 33 months in prison. In calculating the sentence under United States Sentencing Guideline ("USSG") § 2F1.1, the district court had to determine, as a specific offense characteristic, the amount of the "loss." The defendant argued that the "loss" was zero (and therefore that no offense level increase was necessary) on the following grounds: (1) the bank's actual loss was nil because the bank later sold the security for the loan for more than the loan balance; (2) even if the bank did incur an out-of-pocket loss, such loss resulted from misconduct by the bank and the defendant's nephew David Kopp, thus the defendant was not responsible for any actual loss; and (3) the defendant did not intend to inflict any loss on the bank. The court rejected the defendant's position and also declined to accept the probation officer's calculation that the bank's actual loss was only $3.4 million (an estimate which also took into account operating expenses, lost interest, and the cost of a low-interest loan to the new purchaser). Instead, the court agreed with the government that the "loss" was the amount that the defendant fraudulently obtained (the full $13.75 million face value of the loan), thereby increasing the offense level by eleven levels and the applicable sentence range to 30-37 months.
The defendant also raises several other issues. He objects to added offense levels for more than minimal planning and for a supervisory role, and he complains that the district court should have granted him an offense level reduction for minor participation. We find these arguments without merit. He also alleges that the district court improperly refused to depart downward from the guideline range based on a misconception of its legal ability to do so. Because the district court is free to revisit the departure issues on remand, we need not reach that issue.
I. FACTS AND PROCEDURAL HISTORY
A. The Offense
In the early 1980s, the defendant and his brother, Marvin Kopp, began a real estate development business, which they operated through various corporations and partnerships. The seed capital came largely from the family of Barbara Kopp, the defendant's wife. In November 1984, Marvin Kopp died, and, as the business faced ever more severe financial problems, disputes arose between the defendant on one side and Marvin Kopp's widow Judith Kopp and her son David Kopp on the other.
In August 1987, the Kopp partnership began to negotiate with Ensign Bank, FSB ("the bank") for a $14 million loan, $12.3 million of which was necessary to refinance a shopping mall owned by one of the real estate partnerships. The refinancing was apparently required because an earlier
Relying on the misrepresentations, the bank loaned the Kopp partnership $13 million in December 1987 and $750,000 more in January 1988. Apparently the debt-service ratio was insufficient to collect the remaining $250,000 of the $14 million loan commitment. To obtain the first installment, Sherer, with the defendant's knowledge, submitted five forged leases and twentyone forged estoppel letters, along with three more leases that the partners knew would be broken by tenants. To obtain the second installment, Sherer further submitted a lease that overstated the rent due, as well as a new forged estoppel letter and an updated fraudulent rent roll.
B. The Default and the Bank's Actual Loss
The loan went into default in February 1988: no payments were made after the second loan installment was received. The defendant blames the failure to repay in part on David Kopp's diversion of partnership money and his failure to collect all amounts receivable. The government doubts that the defendant ever intended that the loan be repaid. In any event, the bank demanded and received a deed in lieu of foreclosure and eventually sold the property for $14.5 million, $750,000 more than the face value of the loan. The bank nonetheless calculated that it actually lost approximately $3.4 million overall, due to lost interest ($1.5 million), the bank's operating expenses when taking over the property ($0.4 million), and the cost of a low-interest loan to the new purchaser ($2.3 million).
The defendant, however, contends that the $3.4 million actual loss estimate was overstated and that any actual loss was a result of misconduct by David Kopp and bank officer Brian Maloney. He called a real estate appraiser, who testified that the value of the foreclosed property was at least $17.5 million, $3 million more than the sale price. He also introduced evidence that the lower sale price and a linked low-interest loan were due to an unethical "sweetheart" deal between the bank (in the person of Maloney) and David Kopp. The bank wanted control over the shopping center more quickly, so sought a deed from both Kopps in lieu of foreclosure. The defendant alleges that to obtain rapid title, Maloney secretly agreed to steer the resale to David Kopp's friend Clifford Streit, who in turn would give David Kopp back a 25% interest in the property.
The defendant also claims that the actual loss figure of $3.4 million was improperly calculated, even given the way the resale took place. He argues that Maloney, who made that calculation, had an incentive to distort it because of Maloney's own misconduct.
C. The Criminal Proceedings
The federal authorities discovered the fraud in May 1988, when David Kopp reported the offense, admitted his complicity, and agreed to cooperate in prosecuting Stuart Sherer and his uncle, the defendant. David Kopp began secretly to record his conversations with the other conspirators. Confronted with the recordings, Sherer later agreed to cooperate and record additional conversations with the defendant. On August 8, 1989, the defendant was indicted for, among other things, one count of bank fraud under 18 U.S.C. § 1344 and one count of conspiracy to commit bank fraud. On June 11, 1990, under a plea bargain, the defendant pled guilty to those counts; the remaining ten counts, five of which related to other alleged crimes, were dropped.
The U.S. Probation Office submitted a Presentence Investigation Report on September 10, 1990, which adopted the bank's estimate of $3.4 million in out-of-pocket loss as the "loss" for purposes of U.S.S.G. § 2F1.1, the applicable sentencing guideline. Both parties objected. The government claimed that because the bank would not have made the loan at all had it known the truth, the defendant fraudulently obtained $13.75 million, which was therefore the proper measure of the "loss."
The impact of the challenged ruling is significant. Because the defendant had no prior criminal record, if the "loss" was zero (as he claims), the sentencing range would drop from the 30-37 months that the district court considered to a range of 2-8 months. If the district court also found that no upward departure was warranted, it might have elected to impose probation conditioned on a combination of community confinement, home detention, or intermittent
The defendant then sought bail pending appeal from this court. A motions panel denied that request without prejudice to reconsideration after hearing the merits. After hearing oral argument and anticipating the probable outcome on the merits, we issued an order granting the defendant bail pending our final decision and eventual resentencing.
II. DEFINITION OF "LOSS" IN THE FRAUD GUIDELINE
A. Analysis of U.S.S.G. § 2F1.1 as It Was in Effect at Sentencing
The guideline in effect here is a combination of the fraud guideline in effect at the time of sentencing and the original fraud guideline in effect at the time of the crime. As a general rule, sentencing courts must apply the guidelines in effect at the time of sentencing, not the time of the crime. See 18 U.S.C.A. § 3553(a)(4), (5) (West 1985 & Supp 1991); United States v. Cianscewski, 894 F.2d 74, 77 n. 6 (3d Cir. 1990). But where such retroactivity results in harsher penalties, Ex Post Facto Clause problems arise, and courts must apply the earlier version. See Miller v. Florida, 482 U.S. 423, 107 S.Ct. 2446, 96 L.Ed.2d 351 (1987); see also United States v. Underwood, 938 F.2d 1086, 1090 (10th Cir.1991); United States v. Morrow, 925 F.2d 779, 782 (4th Cir.1991). We consequently review the district court's decision for consistency with the guidelines in effect on May 17, 1991, the date of sentencing, except where amendments since the time of the crime would yield a harsher result.
The version of the fraud guideline, U.S.S.G. § 2F1.1(b)(1), that is in effect here reads:
Loss Increase in Level (A) $2,000 or less no increase . . . (K) $2,000,001 — $5,000,000 add 10 (L) over $5,000,000 add 11
The official Commentary provides some further guidance as to the calculation
Application Note 8 explained the process of estimating a "loss":
The Commentary also discussed possible upward or downward departures. Application Note 9 provided that where "[d]ollar loss . . . does not fully capture the harmfulness and seriousness of the conduct . . . an upward departure may be warranted." In contrast, Application Note 10
As have most courts, we begin our interpretation of "loss" under the fraud guideline with Application Note 7's cross-reference
The Background to U.S.S.G. § 2B1.1 continued: "The value of the property taken plays an important role in determining sentences for theft offenses, because it is an indicator of both the harm to the victim and the gain to the defendant."
The government seizes upon the first sentence of Application Note 2 to the theft guideline, which equates the "loss" with the value "taken." The government claims that the defendant "took" $13.75 million that was not rightfully his, because, as proved at the hearing, the bank would have lent him nothing if it had known the true monetary condition of the shopping center.
But the analysis is not so simple. Even the theft guideline is not entirely perpetrator-oriented. The Commentary to U.S.S.G. § 2B1.1 focuses significantly on the victim's loss, as well as the perpetrator's gain. Replacement cost to the victim may be used to measure theft "loss" where the market value of the stolen property is difficult to ascertain or inadequate to measure harm to the victim. And the Background to U.S.S.G. § 2B1.1 emphasizes that "loss" measures both harm to the victim and gain to the defendant.
More basically, however, U.S.S.G. § 2B1.1 is, by definition, a theft guideline, and fraud differs from theft. In this case,
Mechanical application of the theft guideline in fraud cases would frustrate the legislative purpose of the guidelines and contravene the specific language of the Commission. The sentencing guideline system was designed to sentence similarly situated defendants similarly; basing all fraud sentences on a simple "amount taken" rule without regard to actual or intended harm would contravene that purpose. We think it plain that actual harm is generally relevant to the proper sentence. More importantly, Congress has explicitly said so in 28 U.S.C.A. § 994(c)(3) (West Supp.1991), which directs the Commission to take "the nature and degree of the harm caused by the offense" into account in its guidelines. See also U.S.S.G. § 1B1.3(a)(3) (factors that determine guideline ranges include actual and intended harm).
Indeed, the fraud guideline does reflect the differences between theft and fraud and between the types of fraud. Even after the June 15, 1988 amendment, fraud guideline analysis only begins and does not end with the discussion of "loss" in the theft guideline. The revised Application Note 7 to U.S.S.G. § 2F1.1 does not say that the definitions of "loss" for theft and fraud crimes are identical, just that "[v]aluation of loss is discussed in the Commentary to § 2B1.1 . . ." (emphasis added). While the calculations under the two guidelines are essentially consistent, the fraud analysis is slightly (and crucially, here) more complicated, as a detailed analysis of the entire fraud guideline Commentary reveals. We part company with several other circuits and join ranks with the Seventh Circuit largely because we decline to impose an identical analysis for theft and fraud crimes in all cases. Compare United States v. Brach, 942 F.2d 141, 143 (2d Cir.1991) (applying theft analysis to fraud crime with no qualification), and United States v. Johnson 941 F.2d 1102, 1113-15 (10th Cir.1991) (same), with United States v. Schneider, 930 F.2d 555, 558-59 (7th Cir.1991) ("simple" but "irrational" to treat all frauds the same, whether or not the defendant intended to walk away with the face value). See generally Part II.B at 532-534.
The remainder of Application Note 7 to U.S.S.G. § 2F1.1 (which was part of the original Commentary) made a critical distinction between actual, probable, and intended loss. Under Application Note 7 as in effect here, "if a probable loss or intended loss . . . can be determined, that figure would be used if it was larger than the actual loss." Consistent with the ordinary meaning of "loss," sentencing courts were to use the victim's actual loss as the basic "loss" under the fraud guideline. But, consistent with the guidelines' overall theory of culpability for attempts, see U.S.S.G. § 2X1.1, courts were to switch to either "probable" or "intended" loss if either was both reasonably calculable (as discussed in Application Note 8) and higher. The fraud guideline thus has never endorsed sentencing based on the worst-case scenario potential loss (here, the face value of the loan). See also U.S.S.G. § 1B1.3 appl. note 4 (fraud guideline only refers to actual, attempted, or intended harm, hence risk of harm enters only into the base offense level and the possibility of an upward departure).
This plain reading of Application Note 7 is in fact consistent with the cross-reference to the theft guideline. In both theft and fraud cases, the guideline "loss" turns out to be the higher of the actual loss and the intended loss. Admittedly, the theft guideline does not state this approach in terms. But in a theft case, the
Aside from the cross-reference to the theft guideline, the only support in the fraud guideline for the government's position comes from Application Note 8. That Note primarily emphasizes that the "loss" need not be estimated with precision, but the version in effect at the time of sentencing did end with the statement that "[t]he offender's gross gain from committing the fraud is an alternative estimate that ordinarily will understate the loss" (emphasis added).
The government also relies on original Application Note 11, which noted that "a downward departure may be warranted"
The government is correct on one point, however: Application Note 11 definitively rejected adjusting the "loss" itself downward to reflect other causes beyond the defendant's control. As an example of when the dollar loss may overstate the seriousness of the offense and hence a downward departure may be appropriate, Application Note 11 included situations where the "misrepresentation . . . is not the sole cause of the loss." Application Note 11 made it clear that actual loss was how much better off the victim would be but for the defendant's fraud. To the extent actual loss had other, more proximate causes, a discretionary downward departure — but not a mandatory "loss" adjustment — might be appropriate. Here, then, the district court might conclude that the defendant deserves a downward departure due to misconduct by David Kopp and Brian Maloney, but the level of the "loss" itself would remain unaffected.
The foregoing analysis leads to the conclusion that the fraud guideline defines "loss" primarily as the amount of money the victim has actually ended up losing at the time of sentencing, not what it could have lost. Under the guideline in effect at sentencing, the "loss" should have been revised upward to the amount of loss that the defendant intended to inflict on the victim, or to the amount of probable loss,
B. The Case Law
One other circuit, the Seventh, is on record with a similar interpretation of
To support its conclusion, the Schneider court cited United States v. Whitehead, 912 F.2d 448 (10th Cir.1990), a case that also supports our earlier reasoning. There the defendant presented fraudulent documents when renting a home and obtaining an option to purchase. The home was worth $168,000, and the government claimed that the whole amount was the "loss." The court disagreed, reasoning that Whitehead had not yet attempted to purchase the house itself, and it was uncertain that he would ever succeed in doing so, or that the full value of the home would be lost if he did. Therefore only the value of the option ($2,000) counted as the "loss." Id. at 451-52. We certainly agree that the "loss" was not the $168,000, although we are not certain that even the entire $2,000 option value was properly considered as "loss."
We also find persuasive United States v. Hughes, 775 F.Supp. 348 (E.D.Cal.1991). There the defendant conspired to present false loan applications to buy three homes. Hughes, however, clearly had no intention of defaulting on the loans. Indeed, Hughes, a male friend, and their female companions lived in the homes; the payments on two loans were in good standing, and although the third house was sold in bankruptcy, it was sold at a profit. The court also found that no actual economic loss had been realized, and the government could not prove that default was probable or that any future loss was expected. Discussing U.S.S.G. § 2F1.1 and its Commentary in detail, and rejecting blind application of the theft guideline, the court found that the "loss" was zero and that no sentence enhancement was required.
The government cites a number of fraud guideline cases that appear to support its view because they upheld "loss" calculations of the full amount fraudulently obtained. On closer analysis, however, these cases do not conflict with our reasoning. For example, in United States v. Wills, 881 F.2d 823 (9th Cir.1989), the defendant was guilty of credit card fraud. He masterminded a scheme to take $52,000, but $25,000 from one of the transactions was recovered. The court summarily (and properly) upheld the "loss" calculation of $52,000, specifically because the defendant intended to cause a $52,000 loss. Id at 827. Similarly, in United States v. Davis, 922 F.2d 1385 (9th Cir.1991), Davis would call a business with an order and promise to pay by wire transfer. He would then have someone call the business and pose as a bank officer, saying that the wire transfer had arrived. He would then receive the goods. In the particular instance in the case, the actual loss was zero because jewels were never shipped. The court, however, properly held that the loss was the market value of the jewels — again specifically because the probable and intended losses were higher than actual loss. Id. at 1391-92.
The government relies most heavily on United States v. Johnson, 908 F.2d 396
The Eighth Circuit's opinion is ambiguous, but it may in fact be consistent with our approach. Although the court did mention "possible loss," it did so only in referring to the loss that Johnson attempted (and therefore intended) to inflict. And in the next sentence, the court referred to Application Note 7's discussion of "probable or intended loss" as an alternative measure to actual loss. Id. On a reasonable reading of the case, therefore, the court held that Johnson intended to commit actions she knew would inflict the full $22,000 loss. See Schneider, 930 F.2d at 559 (reading Johnson as a case where the defendant had no intention to repay). If so, we agree with the holding, but if Johnson did legally equate "possible loss" with "probable or intended" loss, we must reject that linguistic stretch.
In another case also styled United States v. Johnson, 941 F.2d 1102 (10th Cir.1991), the Tenth Circuit unhesitatingly applied the "value of the property taken" language from U.S.S.G. § 2B1.1 Application Note 2 in remanding a sentence for mail fraud under U.S.S.G. § 2F1.1. Johnson somehow bought eighteen homes worth over $400,000 from a realty company with no money down, even though he was only making $1200 each month in salary. He never made a payment even though he collected $16,000 in rent. The lender foreclosed, and Johnson was convicted of mail fraud and equity skimming. The court of appeals agreed with the district court that the "loss" covered both the value of the real estate and the cash rents, but its entire discussion of "loss" centered on the Commentary to U.S.S.G. § 2B1.1: the real estate was "taken" and the reacquisition by foreclosure was irrelevant. Id. at 1113-14. The court remanded only because it was unsure of the fair market value of the real estate under USSG § 2B1.1. Id. at 1114-15. The same result could easily (and more properly) have been reached under the fraud guideline by determining that Johnson intended to cause such a loss. To the extent the Tenth Circuit believes that fraud "loss" must be calculated under the theft guideline, we disagree for the reasons outlined above.
The Second Circuit has also rejected the holding advanced by the defendant here. In United States v. Brach, 942 F.2d 141 (2d Cir.1991), Brach fraudulently procured a loan of $250,000 from a town. Upon discovering the fraud, the town demanded the money back. Brach refused, but after the FBI came, he returned the money. The Second Circuit upheld the use of the $250,000 face value of the loan as the "loss," rather than the few days' interest the victim actually lost. The court relied on the cross-reference to U.S.S.G. § 2B1.1 and specifically declined to treat fraud cases any differently from theft cases. Id. at 143. According to the court, the "loss" was therefore the amount taken and put at risk, and Brach's claimed intent to repay the loan and the trivial ultimate harm to the victim were irrelevant. Id. (also equating "probable" loss with the amount put at risk). Although the result in Brach may have been correct, we respectfully decline to follow its reasoning. If the court believed that Brach intended to steal the whole $250,000 (not simply to borrow it), then the intended loss was $250,000 and the result was proper. But if Brach intended to repay the borrowed money — something the opinion declined to address — the case is more like the present one, and we disagree with the Second Circuit. In our view, Application Note 7 to U.S.S.G. § 2F1.1 straightforwardly requires the sentencing court to use actual loss in the first instance. Indeed, actual and intended loss, the two factors that the Second Circuit insisted were irrelevant, 942 F.2d at 143, are the primary proper factors in determining a "loss" under the fraud guideline.
C. The Post-Sentencing Amendments to U.S.S.G. § 2F1.1
The Sentencing Commission's recent (postsentencing) elucidation of proper "loss" calculation in the fraudulent loan procurement context buttresses our interpretation and that of the case law on which we rely, although we emphasize that we need not and do not rely upon the postsentencing amendments as "clarifications" of the fraud guideline in holding as we do. See also United States v. Ofchinick, 877 F.2d 251, 257 n. 9 (3d Cir.1989) (proposed amendment purporting to clarify sentencing guideline noted for its support, but discussion explicitly labeled as not necessary to the result). Technically, the postsentencing amendments are subsequent legislative history, always a controversial interpretative tool. See note 9. As subsequent legislative history, the amendments do not directly apply retrospectively to earlier sentencings, but they may still have limited relevance as indications of what the guidelines in effect here meant. We also feel it necessary to discuss the amendments in light of our ultimate decision to remand: those amendments not posing ex post facto problems will be in effect at resentencing.
The most recent round of guideline amendments went into effect on November 1, 1991. Of the recent amendments, two address "loss" calculation. The first responded to section 2507 of the Crime Control Act of 1990, Pub.L. 101-647, 104 Stat. 4789, 4862, reprinted in note following 28 U.S.C.A. § 994 (West Supp.1991), which instructed the Commission to promulgate or amend guidelines to require an offense level of at least 24 for defendants deriving over $1 million in "gross receipts" from crimes affecting financial institutions.
Even better evidence that the current Commission does not define "loss" as the amount fraudulently obtained comes from the other recent amendment to U.S.S.G. § 2F1.1 See 1991 Guidelines Manual Appendix C at 221-24 (amendment 393). After the changes, the relevant portions of Application Note 7 to U.S.S.G. § 2F1.1 now read:
Application Note 7 still cross-references the theft guideline Commentary, but notes that "[f]requently, loss in a fraud case will be the same as in a theft case" (emphasis added). Thus the Commission implicitly recognized that occasionally the definitions will differ. Moreover, although Application Note 7 no longer discusses actual, probable, and intended loss in precisely the same way, a "loss" is generally still to be calculated as we concluded above: actual loss incurred at the time of sentencing remains the basic "loss," and intended (attempted) loss is substituted if greater.
We accordingly find nothing in the subsequent legislative history that causes us to doubt our analysis under the original guidelines themselves. Indeed, to the limited extent we consider the subsequent amendments to U.S.S.G. § 2F1.1 at all, our earlier conclusions are only confirmed.
In sum, a close examination of the fraud guideline and its entire official Commentary requires the conclusion that the district court erred here by equating the "loss" with the full amount of the loan. Although the courts have split on how to define fraud "loss," we find the logic in Schneider and Hughes compelling, and we believe that the contrary case law relies on a flawed equation of fraud and theft crimes. From the recent amendments to U.S.S.G. § 2F1.1, it appears that the Sentencing
The record in this case requires vacatur of the judgment of sentence and remand to the district court for resentencing. The district court made no findings on actual or intended loss, and the parties contest both amounts. As discussed above, the government claims that actual loss was at least $3.4 million, while the defendant claims that the bank's records cannot support an actual loss of anywhere near that amount. Also, the defendant claims he intended to repay the loan and so intended no loss, while the government (somewhat belatedly) contends that the defendant's failure to make any payments after receiving the second loan installment belies his claim. It is the district court's province to resolve these questions, and we leave it to that court on remand to decide whether further hearings on these issues are necessary.
The district court erred in concluding that a "loss" under the fraud sentencing guideline, U.S.S.G. § 2F1.1, is always the amount fraudulently obtained, regardless of intended or actual loss. We will therefore vacate the judgment of sentence and remand for resentencing consistent with this opinion.
SUR PETITION FOR PANEL REHEARING WITH SUGGESTION FOR REHEARING IN BANC
Feb. 18, 1992.
PRESENT: SLOVITER, Chief Judge, BECKER, STAPLETON, MANSMANN, GREENBERG, HUTCHINSON, SCIRICA, COWEN, NYGAARD, ALITO, ROTH, Circuit Judges and FULLAM, District Judge
The petition for rehearing filed by Appellant, having been submitted to the judges who participated in the decision of this Court and to all the other available circuit judges in active service, and no judge who concurred in the decision having asked for rehearing, and a majority of the circuit judges of the circuit in regular active service not having voted for rehearing by the court in banc, the petition for rehearing is DENIED.
On the other hand, effective November 1, 1989, the Commission revised the "loss" table for "losses" over $40,000, such that for the same "loss" amount the offense level is greater. See 1991 Guidelines Manual Appendix C at 70-71 (amendment 154). This change was clearly substantive, and applying the stricter punishments retroactively would violate the Ex Post Facto Clause. Therefore, as both parties agree, the original, unamended table applies.
One other presentencing change to the guideline is also inapplicable here because of ex post facto problems. Effective November 1, 1990, as a result of a statutory directive, fraud "substantially jeopardiz[ing] the safety and soundness of a financial institution" yields an additional four-level increase, at minimum to level 24. See U.S.S.G. § 2F1.1(b)(6); 1991 Guidelines Manual Appendix C at 146-47 (amendment 317). This amendment too was obviously not a clarification of ambiguous earlier language, and applying its stricter punishment retroactively would violate the Ex Post Facto Clause. Neither party suggests that it applies here.
Finally, the Commission also amended U.S.S.G. § 2F1.1(b)(2)-(5) effective November 1, 1989, but those changes are irrelevant to this appeal. See 1991 Guidelines Manual Appendix C at 71-72 (amendment 156). We will discuss relevant amendments to the official Commentary as we discuss each application note.
It is also worth noting that the Commission has recently revised Application Note 2 to U.S.S.G. § 2B1.1 effective November 1, 1991. See 1991 Guidelines Manual Appendix C at 221 (amendment 393). Those changes appear to be editorial only.
In this case, the government argues that had the bank known the true income from the property it would only have lent at most $10.2 million, based solely on standard debt service ratios. In actuality, however, the bank would have refused to lend at all, says the government, because of pre-existing liens far greater than $10.2 million and because of insufficient estoppel letters and other problems with vacancies, maintenance, etc. The district court found that the evidence supported these conclusions.
We think that the amendment did not change fraud "loss" calculation, and hence the ex post facto concern disappears. The Commission's stated purpose in amending the fraud guideline was to "clarify the guideline in respect to the determination of loss." Id at 10 (amendment 30). We find no reason to doubt that explanation, although we fear that the Commission only succeeded in confusing courts further. See Part II.B at 532-534 (discussing the case law interpreting the revised guideline). In our view, both before and after the amendment, courts imposing sentences for fraud were supposed to use actual loss, substituting "probable or intended loss" where higher and measurable.
Separately, but related to the "gross gain" issue, the Commission has followed Congress's statutory instruction to raise the penalties for major bank fraud, specifically including cases where the defendant reaped more than $1,000,000 in "gross receipts" from the offense. See id at 184-85 (amendment 364). That amendment is subsequent legislative history because it took effect after the sentencing here. We discuss its implications below. See Part II.C at 534-536.
"Probable loss" could also mean the amount the victim is eventually likely to lose, viewed from the time of sentencing. This measure would make sense where at the time of sentencing the victim has only incurred a fraction of its ultimate actual loss, and therefore actual loss thus far is an understatement of the true harm to the victim. On the other hand, under Application Note 8, "actual loss" need only be reasonably estimated, and it would certainly be reasonable to include probable but as yet unrealized losses as actual losses.
There is little case law on the subject. Compare United States v. Davis, 922 F.2d 1385, 1392 (9th Cir.1991) (adopting first interpretation), with United States v. Hughes, 775 F.Supp. 348, 351 (E.D.Cal.1991) (adopting the second). Fortunately, we need not decide the issue here. Because we eventually conclude that resentencing is required here, the definition of "probable loss" becomes moot. As discussed above, when resentencing, the district court must apply the guidelines in effect at that time, unless Ex Post Facto Clause problems arise. Since the defendant's original sentencing, the Commission has revised Application Note 7 to eliminate the "probable loss" terminology in favor of "expected loss," a measure applicable only when actual loss is not fully realized. See 1991 Guideline Manual Appendix C at 222 (amendment 393). The revised guideline will not result in a stiffer sentence for the defendant here: the "probable loss" measure could only have increased the "loss," and because the bank's net actual loss (if any) has been fully realized, the "expected loss" measure will drop out of the case. We are therefore relieved of deciding how to define "probable loss."
Second, the defendant challenges the two offense levels added for "more than minimal planning." He claims he was convicted of a single fraud that involved minimal planning on his part (as opposed to Sherer's). The government correctly counters that more than minimal planning is present whenever there were repeated acts over time, unless each act was opportune. U.S.S.G. § 1B1.1 appl. note 1(f). Here twenty-eight documents were delivered on three occasions, demonstrating repeated fraud and not mere taking advantage of a sudden opportunity. Again, the district court's ruling was not clearly erroneous.
Finally, the defendant contends that the district court improperly refused to consider as valid grounds for departure: (1) his own economic suffering (including bankruptcy); (2) David Kopp's alleged fraud while acting as a government agent; and (3) the guideline range's overstating the seriousness of his offense (an issue that is bound up with the earlier discussion of "loss" calculation). Because we have ruled that the guideline range used was improper, and because on remand the district court is free to revisit the issues relevant to deciding whether to depart (upward or downward) from the properly calculated sentencing range, we need not consider these claims.