United States of America v. Iovino
Docket No. 14-270
United States Court of Appeals, Second Circuit
Decided on February 2, 2015
Blog by: Stephen N. Preziosi Esq., Criminal Appeals Lawyer
The Second Circuit finds that “victims” can be counted separately for sentencing enhancement purposes, even if they collectively belong to the same group. ?
Issue: Whether the district court erred in enhancing defendants sentence by four offense level points under 2B1.1(b)(2)(B) by counting each of the individual tenants of a condominium as a separate victim of defendants theft of funds from the condominium association?
Summary: Defendant was convicted, upon a guilty plea, in the United States District Court for the Southern District of New York of wire fraud in violation of 18 U.S.C. 1343 and bank fraud in violation of 18 U.S.C. 1344. The district court applied the four-level enhancement of United States Sentencing Guidelines 2B1.1(b)(2)(B) and sentenced defendant principally to sixty months of imprisonment because his crimes involve more than fifty victims. He appealed arguing that the district court miscalculated his Sentencing Guidelines range because there were only two victims who suffered losses: the insurance company (as subrogee for the bank) and the condominium association. The Second Circuit affirmed the judgment and sentence finding that the district court properly counted the 70 tenants of the condominium as victims who suffered actual loss calculated by the district court.
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Holding: The district court properly applied the four-level enhancement of United States Sentencing Guidelines 2B1.1(b)(2)(B) because the 70 tenants of the condominium were victims required to pay higher common charges out-of-pocket to replace the $139,292.00 taken by defendant from the Bedford Terrace Condominium Association.
Facts: In 2000, Bedford Terrace Condominium Association (Bedford Terrace) hired defendant to manage the property, which was occupied by more than 70 tenants. He was responsible for paying vendors, managing finances, and reporting monthly to Bedford Terrances Board of Managers. Although defendant had access to Bedford Terraces bank accounts, he was not authorized to withdraw funds with the signed approval of at least two Board members.
In 2011, the Board of Managers discovered that defendant had taken out an unauthorized loan in the name of Bedford Terrace and made unauthorized withdrawals from Bedford Terraces bank accounts by providing forged bank statements that hid the true balance of the accounts. He was subsequently charged with a single count of wire fraud, based upon his unauthorized withdrawals from the Bedford Terrance bank accounts, and a single count of bank fraud, based upon the unauthorized loan. On January 16, 2013, defendant pled guilty to both counts.
During the sentencing hearing, the district court quantified the loss cause by defendants withdrawals from the Bedford Terrace accounts at $139,292.00. Defendant argued that the only victims who suffered losses were the insurance company (as subrogee for the bank) and the condominium association. The government counter-argued that the 70 tenants of the condominium were victims who suffered actual losses due to defendants actions. At the Fatico hearing, the president of Bedford Terraces Board of Managers testified that the bank accounts were funded by common charges paid by tenants. Further, Bedford Terrace was forced to raise its common charges by roughly $100 per month in order to replenish the accounts depleted by defendants fraud. Based on the evidence, the district court found that each of the tenants of Bedford Terrace was a victim of defendants fraud because they were force to pay higher common charges as a result of the theft. Accordingly, the district court increased defendants offense level by four levels pursuant to United States Sentencing Guidelines 2B1.1(b)(2)(B), which applies to offenses that involve[ ] or more victims. Defendant appealed. His sole argument was that the district court erred by counting each of the individual tenants of Bedford Terrace as a separate victim of his fraud because the higher common charges paid were not included in the actual loss calculated at $139,292.00.
Legal Analysis: The Second Circuit first looked to the express terms of the Sentencing Guidelines 2B1.1(b)(2)(B), which instructs sentencing courts to increase a defendants offense level by four levels when the offense involved 50 or more victims. According to application note 1 of 2B1.1, victim is defined as, inter alia, any person who sustained any part of the actual loss determined under subsection (b)(1). As previously interpreted, victims within the meaning of subsection (b)(2) are those persons or entities who sustained actual loss determined by the court (United States v. Skys, 637 F.3d 146[2d Cir. 2011]). Further, the monetary value of the loss must be calculated and quantified as part of the actual loss (United States v. Abiodun, 536 F.3d 162[2d Cir.2008]). The Court applied these standards holding in its per curiam opinion that the 70 tenants were victims who sustained actual, out-of-pocket losses. The Court reasoned that every dollar paid by a tenant in the form of higher common charges was one dollar reimbursed to Bedford Terrace to cover the actual loss calculated at $139,292.00. Moreover, their losses were part of the actual loss determined under subsection (b)(1) because the district court found the higher common charges directly replaced the funds that defendant had stolen from the condominium associations bank accounts. Stated another way, the district court measure the loss collectively sustained by Bedford Terrace and the individual tenants. Thus, the Second Circuit affirmed the judgment and sentence of the district court.