Notice of Proposed Amendments 1/6/98

BAC2210-40

UNITED STATES SENTENCING COMMISSION

Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission

ACTION: Notice of proposed amendments to sentencing guidelines, policy statements, and commentary. Request for public comment. Notice of public hearing. _________________________________________________________________

SUMMARY: Pursuant to section 994(a), (o), and (p) of title 28, United States Code, and other provisions of law, the Commission is considering promulgating certain amendments to the sentencing guidelines, policy statements, and commentary. This notice sets forth the proposed amendments and, for each proposed amendment, a synopsis of the issues addressed by that amendment. The Commission seeks comment on the proposed amendments, alternative proposed amendments, and any other aspect of the sentencing guidelines, policy statements, and commentary. The Commission may submit amendments to the Congress not later than May 1, 1998.

The proposed amendments are presented in this notice in one of two formats. First, some of the amendments are proposed as specific revisions to a guideline or commentary. Bracketed text within a proposed amendment indicates alternative proposals and that the Commission invites comment and suggestions for appropriate policy choices; for example, a proposed enhancement of [3-5] levels means a proposed enhancement of either three, four, or five levels. Similarly, a proposed enhancement of [4] levels indicates that the Commission is considering, and invites comment on, alternative policy choices. Second, the Commission has highlighted certain issues for comment and invites suggestions for specific guideline language.

DATES: Written public comment should be received by the Commission not later than March 12, 1998, in order to be considered by the Commission in the promulgation of amendments and in the possible submission of those amendments to the Congress by May 1, 1998.

The Commission has scheduled a public hearing on the proposed amendments for March 12, 1998, at the Thurgood Marshall Federal Judiciary Building, One Columbus Circle, N.E., Washington, D.C. 20002-8002. An additional public hearing focusing primarily on proposed amendments to the theft, fraud, and tax guidelines is scheduled for March 5, 1998, at the Parc Fifty-Five Hotel in San Francisco, CA, in conjunction with the American Bar Association’s 1998 National Institute on White Collar Crime.

A person who desires to testify at the public hearing in Washington, D.C., should notify Michael Courlander, Public Information Specialist, at (202) 273-4590, not later than February 26, 1998. Written testimony for that hearing must be received by the Commission not later than March 5, 1998. Timely submission of written testimony is a requirement for testifying at the public hearing.

A person who desires to testify at the public hearing in San Francisco, CA, should notify Michael Courlander, Public Information Specialist, at (202) 273-4590, not later than February 19, 1998. Written testimony for that hearing must be received by the Commission not later than February 26, 1998. Timely submission of written testimony is a requirement for testifying at the public hearing.

ADDRESS: Public comment should be sent to: United States Sentencing Commission, One Columbus Circle, N.E., Suite 2-500, Washington, D.C. 20002-8002, Attention: Public Information.

FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Information Specialist, Telephone: (202) 273-4590.

SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is an independent agency in the judicial branch of the United States Government. The Commission promulgates sentencing guidelines and policy statements for federal sentencing courts pursuant to 28 U.S.C. § 994(a). The Commission also periodically reviews and revises previously promulgated guidelines pursuant to 28 U.S.C. § 994(o) and submits guideline amendments to the Congress not later than the first day of May each year pursuant to 28 U.S.C. § 994(p).

AUTHORITY: 28 U.S.C. § 994(a), (o), (p), (x); Pub. L. 105–101, § 2, Nov. 19, 1997, 111 Stat. 2202; Pub. L. 105–147, § 2(g), 111 Stat 2678, Dec. 16, 1997.

Richard P. Conaboy,
Chairman

Fraud, Theft, Tax, and Related Offenses

Chapter Two

1. Synopsis of Proposed Amendment: During the 1997-98 amendment cycle, the Sentencing Commission has identified as a priority issue for consideration the definition of "loss" and the weight it is given in the theft, fraud, and tax guidelines. The following are two proposed options for revising the loss tables for the theft, fraud, and tax guidelines. The purpose of both options is to raise penalties for economic offenses that have medium to high dollar losses in order to achieve better proportionality with the guideline penalties for other offenses of comparable seriousness. With the exception of the proposed tax tables at low dollar losses, each of the proposed tables uses two-level incremental increases in offense levels.

Option 1:

(A) §2B1.1 (Theft): The proposed loss table incorporates the two-level “more than minimal planning” (MMP) enhancement currently treated as a separate specific offense characteristic in the theft guideline. The first level from that enhancement is built in at amounts exceeding $10,000; the second level from that enhancement is built in at amounts exceeding $20,000. In addition, beginning at amounts exceeding $40,000, the severity of the offense levels in the proposed theft loss table is greater than the severity of the offense levels in the current theft loss table, plus an enhancement for MMP.

(B) §2F1.1 (Fraud): The proposed change provides for an initial increase in the loss table from a base offense level of 6 to an offense level of 8 at more than $5,000, whereas the initial increase in the current fraud loss table is an increase from a base offense level of 6 to an offense level of 7 at more than $2,000. The proposed loss table incorporates the MMP enhancement currently treated as a separate specific offense characteristic in the fraud guideline. The first level of that enhancement is built in at amounts exceeding $10,000; the second level from that enhancement is built in at amounts exceeding $20,000. In addition, beginning at $40,000, the severity of the offense levels in the proposed fraud loss table is greater than the severity of the offense levels in the current fraud loss table, plus an enhancement for MMP.

(C) §2T4.1 (Tax): For tax losses of $40,000 or less, the offense levels of the proposed tax loss table are the same as the current tax loss table. For losses of more than $40,000, the proposed increases in offense levels are the same as the increases in offense levels in the proposed theft and fraud loss tables for like monetary amounts.

Option 2:

(A) §2B1.1 (Theft): The proposed loss table incorporates the two-level MMP enhancement currently treated as a separate specific offense characteristic in the theft guideline. The first level from that enhancement is built in at amounts exceeding $2,000; the second level from that enhancement is built in at amounts exceeding $5,000. (Because the proposed table also changes a “cutting point” from $10,000 to $12,500, only one level for more than MMP is built in for amounts between $10,000 and $12,500.) In addition, beginning at amounts exceeding $12,500, the severity of the offense levels in the proposed theft loss table is greater than the severity of the offense levels in the current theft loss table, plus an enhancement for MMP.

(B) §2F1.1 (Fraud): The proposed loss table provides for an initial increase from a base offense level of 6 to an offense level of 8 at more than $2,000, whereas the initial increase under the current fraud loss table increases the base offense level of 6 to an offense level of 7 at more than $2,000. The proposed loss table incorporates the MMP enhancement currently treated as a separate specific offense characteristic in the fraud guideline. The first level of that enhancement is built in at amounts exceeding $2,000; the second level from that enhancement is built in at amounts exceeding $5,000. (Because the proposed table also changes a “cutting point” from $10,000 to $12,500, only one level for MMP is built in for amounts between $10,000 and $12,500.) In addition, beginning at $12,500, the severity of the offense levels in the proposed fraud loss table is greater than the severity of the offense levels in the current fraud loss table, plus an enhancement for MMP.

(C) §2T4.1 (Tax): The proposed increases in offense levels are the same as the increases in offense levels in the proposed fraud loss tables for like monetary amounts.

Proposed Amendment:

[Option 1:

[Section 2B1.1(b)(1) is amended by striking:

"Loss (Apply the Greatest) Increase in Level

(A) $100 or less no increase

(B) More than $100 add 1

(D) More than $2,000 add 3

(E) More than $5,000 add 4

(F) More than $10,000 add 5

(G) More than $20,000 add 6

(H) More than $40,000 add 7

(I) More than $70,000 add 8

(J) More than $120,000 add 9

(K) More than $200,000 add 10

(L) More than $350,000 add 11

(M) More than $500,000 add 12

(N) More than $800,000 add 13

(O) More than $1,500,000 add 14

(P) More than $2,500,000 add 15

(Q) More than $5,000,000 add 16

(R) More than $10,000,000 add 17

(S) More than $20,000,000 add 18

(T) More than $40,000,000 add 19

(U) More than $80,000,000 add 20.",

and inserting:

"Loss Amount (Apply the Greatest)Offense Level

Increase

(A) $2,000 or less no increase

(B) More than $2,000 add 2

(D) More than $10,000 add 6

(E) More than $20,000 add 8

(F) More than $40,000 add 10

(G) More than $80,000 add 12

(H) More than $200,000 add 14

(I) More than $500,000 add 16

(J) More than $1,200,000 add 18

(K) More than $2,000,000 add 20

(L) More than $7,500,000 add 22

(M) More than $20,000,000 add 24

(N) More than $50,000,000 add 26

(O) More than $100,000,000add 28.".

Section 2F1.1(b)(1) is amended by striking:

"Loss (Apply the Greatest) Increase in Level

(A) $2,000 or less no increase

(B) More than $2,000 add 1

(D) More than $10,000 add 3

(E) More than $20,000 add 4

(F) More than $40,000 add 5

(G) More than $70,000 add 6

(H) More than $120,000 add 7

(I) More than $200,000 add 8

(J) More than $350,000 add 9

(K) More than $500,000 add 10

(L) More than $800,000 add 11

(M) More than $1,500,000add 12

(N) More than $2,500,000add 13

(O) More than $5,000,000add 14

(P) More than $10,000,000add 15

(Q) More than $20,000,000add 16

(R) More than $40,000,000add 17

(S) More than $80,000,000add 18.",

and inserting:

"Loss Amount (Apply the Greatest)Offense Level

Increase

(A) $5,000 or less no increase

(B) More than $5,000 add 2

(D) More than $20,000 add 6

(E) More than $40,000 add 8

(F) More than $80,000 add 10

(G) More than $200,000 add 12

(H) More than $500,000 add 14

(I) More than $1,200,000 add 16

(J) More than $2,500,000 add 18

(K) More than $7,500,000 add 20

(L) More than $20,000,000 add 22

(M) More than $50,000,000 add 24

(N) More than $100,000,000add 26.".

Section 2T4.1 is amended by striking:

"Tax Loss (Apply the Greatest) Offense Level

(A) $1,700 or less 6

(B) More than $1,700 7

(D) More than $5,000 9

(E) More than $8,000 10

(F) More than $13,500 11

(G) More than $23,500 12

(H) More than $40,000 13

(I) More than $70,000 14

(J) More than $120,000 15

(K) More than $200,000 16

(L) More than $325,000 17

(M) More than $550,000 18

(N) More than $950,000 19

(O) More than $1,500,000 20

(P) More than $2,500,000 21

(Q) More than $5,000,000 22

(R) More than $10,000,000 23

(S) More than $20,000,000 24

(T) More than $40,000,000 25

(U) More than $80,000,000 26.",

and inserting:

"Loss Amount (Apply the Greatest)Offense Level

Increase

(A) $1,700 or less no increase

(B) More than $1,700 add 1

(D) More than $5,000 add 3

(E) More than $8,000 add 4

(F) More than $13,500 add 5

(G) More than $23,500 add 6

(H) More than $40,000 add 8

(I) More than $80,000 add 10

(J) More than $200,000 add 12

(K) More than $500,000 add 14

(L) More than $1,200,000 add 16

(M) More than $2,500,000 add 18

(N) More than$7,500,000 add 20

(O) More than $20,000,000add 22

(P) More than $50,000,000 add 24

(Q) More than $100,000,000 add 26.".]

[Option 2:

[Section 2B1.1(b)(1) is amended by striking:

"Loss (Apply the Greatest) Increase in Level

(A) $100 or less no increase

(B) More than $100 add 1

(D) More than $2,000 add 3

(E) More than $5,000 add 4

(F) More than $10,000 add 5

(G) More than $20,000 add 6

(H) More than $40,000 add 7

(I) More than $70,000 add 8

(J) More than $120,000 add 9

(K) More than $200,000 add 10

(L) More than $350,000 add 11

(M) More than $500,000 add 12

(N) More than $800,000 add 13

(O) More than $1,500,000 add 14

(P) More than $2,500,000 add 15

(Q) More than $5,000,000 add 16

(R) More than $10,000,000 add 17

(S) More than $20,000,000 add 18

(T) More than $40,000,000 add 19

(U) More than $80,000,000 add 20.",

and inserting:

"Loss Amount (Apply the Greatest)Offense Level

Increase

(A) $100 or less no increase

(B) More than $100 add 1

(D) More than $2,000 add 4

(E) More than $5,000 add 6

(F) More than $12,500 add 8

(G) More than $30,000 add 10

(H) More than $70,000 add 12

(I) More than $150,000 add 14

(J) More than $350,000 add 16

(K) More than $800,000 add 18

(L) More than $2,500,000 add 20

(M) More than $7,500,000 add 22

(N) More than $20,000,000 add 24

(O) More than $50,000,000add 26

(P) More than $100,000,000add 28.".

Section 2F1.1(b)(1) is amended by striking:

"Loss (Apply the Greatest) Increase in Level

(A) $2,000 or less no increase

(B) More than $2,000 add 1

(D) More than $10,000 add 3

(E) More than $20,000 add 4

(F) More than $40,000 add 5

(G) More than $70,000 add 6

(H) More than $120,000 add 7

(I) More than $200,000 add 8

(J) More than $350,000 add 9

(K) More than $500,000 add 10

(L) More than $800,000 add 11

(M) More than $1,500,000add 12

(N) More than $2,500,000add 13

(O) More than $5,000,000add 14

(P) More than $10,000,000add 15

(Q) More than $20,000,000add 16

(R) More than $40,000,000add 17

(S) More than $80,000,000add 18.",

and inserting:

"Loss Amount (Apply the Greatest)Offense Level

Increase

(A) $2,000 or less no increase

(B) More than $2,000 add 2

(D) More than $12,500 add 6

(E) More than $30,000 add 8

(F) More than $70,000 add 10

(G) More than $150,000 add 12

(H) More than $350,000 add 14

(I) More than $800,000 add 16

(J) More than $2,500,000 add 18

(K) More than $7,500,000 add 20

(L) More than $20,000,000 add 22

(M) More than $50,000,000 add 24

(N) More than $100,000,000add 26.".

Section 2T4.1 is amended by striking:

"Tax Loss (Apply the Greatest) Offense Level

(A) $1,700 or less 6

(B) More than $1,700 7

(D) More than $5,000 9

(E) More than $8,000 10

(F) More than $13,500 11

(G) More than $23,500 12

(H) More than $40,000 13

(I) More than $70,000 14

(J) More than $120,000 15

(K) More than $200,000 16

(L) More than $325,000 17

(M) More than $550,000 18

(N) More than $950,000 19

(O) More than $1,500,000 20

(P) More than $2,500,000 21

(Q) More than $5,000,000 22

(R) More than $10,000,000 23

(S) More than $20,000,000 24

(T) More than $40,000,000 25

(U) More than $80,000,000 26.",

and inserting:

"Loss Amount (Apply the Greatest)Offense Level

Increase

(A) $2,000 or less no increase

(B) More than $2,000 add 2

(D) More than $12,500 add 6

(E) More than $30,000 add 8

(F) More than $70,000 add 10

(G) More than $150,000 add 12

(H) More than $350,000 add 14

(I) More than $800,000 add 16

(J) More than $2,500,000 add 18

(K) More than $7,500,000 add 20

(L) More than $20,000,000 add 22

(M) More than $50,000,000 add 24

(N) More than $100,000,000add 26.".]

Issues for Comment: (A) The Commission invites comment on suggested constructions of the loss tables for the theft, property damage and destruction, and fraud guidelines other than the options proposed by this amendment. Specifically, the Commission invites commentators to suggest alternative loss tables that contain different rates of increases and different increments from those set forth in the options proposed by this amendment.

(B) The Commission invites comment on whether, in conjunction with the above proposed amendments to build into the loss tables “more than minimal planning,” it should add an application note in §§2B1.1 (Theft), 2B1.3 (Property Damage and Destruction), and 2F1.1 (Fraud) that would prohibit a downward departure if the offense involved only minimal planning and prohibit an upward departure if the offense involved “more than minimal planning.” For a related proposal to address cases in which there is limited or insignificant planning, see Amendment 5(B), infra.

Guidelines that Refer to Theft/Fraud Loss Tables

Chapter Two

2. Synopsis of Proposed Amendment: The following proposed amendments indicate the changes that might be called for in several guidelines that refer to the loss tables in either §2B1.1 (Larceny, Embezzlement, and Other Forms of Theft) or §2F1.1 (Fraud and Deceit) if the Commission were to adopt one of the proposed new loss tables (set forth in proposed Amendment 1, supra.) as well as an alternative monetary table that does not incorporate “more than minimal planning” (MMP).

The amendments are divided into Parts (A) through (G). Part (A) proposes an alternative monetary table that does not incorporate MMP. The amendments to the referring guidelines are presented in Parts (B) through (G) as follows:

(B) Those guidelines that arguably incorporate the concept of MMP into the base offense level or a specific offense characteristic.

(D) Certain copyright infringement and structuring guidelines, for which use of the proposed loss tables for fraud is also presented as an option.

(E) Trespass, for which use of the proposed theft and fraud loss tables starting at $2,000 is also presented as an option, as well as an issue for comment.

(F) Property destruction, which is proposed to be consolidated with the theft guideline (thereby mitigating the necessity for reference to the alternative monetary table).

(G) Bank gratuity, which is proposed to be consolidated with the principal gratuity guideline.

(A) The Reference Monetary Table

Synopsis of Proposed Amendment: This amendment proposes to add to the guidelines an alternative monetary table for guidelines, other than those for theft and fraud, that currently refer to either the theft or fraud loss table and arguably incorporate a MMP type feature in either the base offense level or a specific offense characteristic. The proposed alternative monetary table does not build in MMP, but does incorporate the enhanced severity increases of the proposed fraud/theft tables (see Amendment 1, supra.) for amounts exceeding $40,000.

The use of the proposed monetary table for these guidelines in lieu of the proposed theft/fraud tables generally would (1) maintain proportionality with the proposed fraud/theft loss tables, across the range of monetary values, (2) achieve increases in severity for larger-scale referring guideline offenses, and (3) eliminate the need for a 2- level reduction in these referring guidelines to account for the fact that MMP has been incorporated into the proposed theft/fraud tables. The two options are presented to coordinate with the two loss table options in proposed Amendment 1, supra. (i.e., Option 1 presented below coordinates with Option 1 in Amendment 1, and Option 2 presented below coordinates with Option 2 in Amendment 1).

Proposed Amendment:

[Option 1: Chapter Two, Part X is amended by adding at the end the following new subpart:

"6. REFERENCE MONETARY TABLE

§2X6.1.Reference Monetary Table

Amount (Apply the Greatest) Increase in Level

[(A) $2, 000 or less] or [no increase]

[(A) More than $2,000]or [add 1]

[(A) $5,000 or less] [no increase]

(B) More than $5,000 add 2

(D) More than $20,000 add 4

(E) More than $40,000 add 6

(F) More than $80,000 add 8

(G) More than $200,000 add 10

(H) More than $500,000 add 12

(I) More than $1,200,000 add 14

(J) More than $2,500,000 add 16

(K) More than $7,500,000 add 18

(L) More than $20,000,000 add 20

(M) More than $50,000,000 add 22

(N) More than $100,000,000 add 24.".]

[Option 2: Chapter Two, Part X is amended by adding at the end the following new subpart:

"6. REFERENCE MONETARY TABLE

§2X6.1.Reference Monetary Table

Amount (Apply the Greatest) Increase in Level

(A) $2, 000 or less no increase

(B) More than $2,000 add 1

(D) More than $12,500 add 4

(E) More than $30,000 add 6

(F) More than $70,000 add 8

(G) More than $150,000 add 10

(H) More than $350,000 add 12

(I) More than $800,000 add 14

(J) More than $2,500,000 add 16

(K) More than $7,500,000 add 18

(L) More than $20,000,000 add 20

(M) More than $50,000,000 add 22

(N) More than $100,000,000 add 24.".]

(B) Guidelines with MMP Built into the Base Offense Level or a Specific Offense Characteristic

Synopsis of Proposed Amendment: With respect to these guidelines, there are two issues: (1) the loss table to be referenced, and (2) whether the initial offense level increase from the referenced table should occur at $2,000 (the current status) or at $5,000. To be precise, the “cutting points” in the monetary tables occur when the monetary amount is “more than $2,000” or “more than $5,000”, etc. For simplicity, this discussion generally will omit the “more than” modifier.

To avoid concerns about a MMP overlap, the Reference Monetary Table is used for all of these guidelines. Option 1 shows how the guideline might be amended if the Commission were to reference a monetary table for which the starting point is $5,000. Alternatively, Option 1A shows how, even with a reference table starting at $5,000, the individual guideline might be amended to provide a 1-level increase for cases in which the loss is more than $2,000 but not more than $5,000.

Option 2 shows how the guideline might be amended if the Commission were to adopt a reference monetary table for which the starting point is $2,000. To cover the possibility that the Commission might elect, for one or more of these guidelines, to reference the new fraud loss table in spite of an arguable MMP overlap, an issue for comment is added at the end of the amendments.

Proposed Amendment: Section 2B5.1(b) is amended by striking:

"(1) If the face value of the counterfeit items exceeded $2,000, increase by the corresponding number of levels from the table at §2F1.1 (Fraud and Deceit).",

and inserting:

"(1) If the face value of the counterfeit items exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2B5.1(b) is amended by striking:

"(1) If the face value of the counterfeit items exceeded $2,000, increase by the corresponding number of levels from the table at §2F1.1 (Fraud and Deceit).",

and inserting:

"(1) If the face value of the counterfeit items (A) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2B6.1(b) is amended by striking:

"(1) If the retail value of the motor vehicles or parts involved exceeded $2,000, increase the offense level by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(1) If the retail value of the motor vehicles or parts involved exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2B6.1(b) is amended by striking:

"(1) If the retail value of the motor vehicles or parts involved exceeded $2,000, increase the offense level by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(1) If the retail value of the motor vehicles or parts (A) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2F1.2(b) is amended by striking:

"(1) Increase by the number of levels from the table in §2F1.1 corresponding to the gain resulting from the offense.",

and inserting:

"(1) If the gain resulting from the offense exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2F1.2(b) is amended by striking:

"(1) Increase by the number of levels from the table in §2F1.1 corresponding to the gain resulting from the offense.",

and inserting:

"(1) If the gain resulting from the offense (A) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2B4.1(b) is amended by striking:

"(1) If the greater of the value of the bribe or the improper benefit to be conferred exceeded $2,000, increase the offense level by the corresponding number of levels from the table in §2F1.1.",

and inserting:

"(1) If the greater of the value of the bribe or the improper benefit to be conferred exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2B4.1(b) is amended by striking:

"(1) If the greater of the value of the bribe or the improper benefit to be conferred exceeded $2,000, increase the offense level by the corresponding number of levels from the table in §2F1.1.",

and inserting:

"(1) If the greater of the value of the bribe or the improper benefit to be conferred (A) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2B3.3(b) is amended by striking:

"(1) If the greater of the amount obtained or demanded exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1.",

and inserting:

"(1) If the greater of the amount obtained or demanded exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2B3.3(b) is amended by striking:

"(1) If the greater of the amount obtained or demanded exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1.",

and inserting:

"(1) If the greater of the amount obtained or demanded (A) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2Q2.1(b)(3) is amended by striking:

"(A) If the market value of the fish, wildlife, or plants exceeded $2,000, increase the offense level by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit); or",

and inserting:

"(A) If the market value of the fish, wildlife, or plants exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table), [but in no event more than [18] levels]; or ".

[Option 1A:

Section 2Q2.1(b)(3) is amended by striking:

"(A) If the market value of the fish, wildlife, or plants exceeded $2,000, increase the offense level by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit); or",

and inserting:

"(A) If the market value of the fish, wildlife, or plants (i) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table), [but in no event more than [18] levels]; or".]

Section 2C1.1(b)(2) is amended by striking:

"(A) If the value of the payment, the benefit received or to be received in return for the payment, or the loss to the government from the offense, whichever is greatest, exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(A) If the value of the payment, the benefit received or to be received in return for the payment, or the loss to the government from the offense, whichever is greatest, exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2C1.1(b)(2) is amended by striking:

and inserting:

"(A) If the value of the payment, the benefit received or to be received in return for the payment, or the loss to the government from the offense, whichever is greatest, (i) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2C1.2(b)(2) is amended by striking:

"(A) If the value of the gratuity exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(A) If the value of the gratuity exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2C1.2(b)(2) is amended by striking:

"(A) If the value of the gratuity exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(A) If the value of the gratuity (i) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2C1.7(b)(1) is amended by striking:

"(A) If the loss to the government, or the value of anything obtained or to be obtained by a public official or others acting with a public official, whichever is greater, exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit); or",

and inserting:

"(A) If the loss to the government, or the value of anything obtained or to be obtained by a public official or others acting with a public official, whichever is greater, exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2C1.7(b)(1) is amended by striking:

and inserting:

"(A) If the loss to the government, or the value of anything obtained or to be obtained by a public official or others acting with a public official, whichever is greater, (i) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2E5.1(b) is amended by striking:

"(2) Increase by the number of levels from the table in §2F1.1 (Fraud and Deceit) corresponding to the value of the prohibited payment or the value of the improper benefit to the payer, whichever is greater.",

and inserting:

"(2) If the value of the prohibited payment or the value of the improper benefit to the payer, whichever is greater, exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2E5.1(b) is amended by striking:

and inserting:

"(2) If the value of the prohibited payment or the value of the improper benefit to the payer, whichever is greater (A) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Synopsis of Proposed Amendment: Option 1 for the following pornography and obscenity guidelines references the guidelines to the alternative monetary reference table. Option 2 references the new fraud loss table. Option 3 deletes the reference to a monetary table altogether and adds invited upward departure language for large-scale commercial endeavors.

Note that, with respect to §§2G2.2 and 2G3.1, the floor (i.e., an increase of not less than [5] levels) for the amount of the material has been maintained. However, two effects of maintaining the floor should be mentioned: (1) The issue of the starting point for any of the proposed tables is no longer relevant (because the starting point simply does not come into play at such levels). (2) Under the current fraud loss table, the 5-level floor presupposes a retail value of at least $40,000; however, those values change depending on the particular table proposed to be used. For that reason, the 5-level enhancement is bracketed in the following options.

Proposed Amendment:

[Option1:

Section 2G2.2(b) is amended by striking:

"(2) If the offense involved distribution, increase by the number of levels from the table in §2F1.1 corresponding to the retail value of the material, but in no event by less than 5 levels.",

and inserting:

"(2) If the offense involved distribution, increase by the number of levels from the table in §2X6.1 (Reference Monetary Table) corresponding to the retail value of the material, but in no event by less than [5] levels.".]

[Option 2:

Section 2G2.2 (b)(2) is amended by striking "corresponding to the retail value of the material, but in no event less than 5 levels" and inserting "(Fraud and Deceit) corresponding to the retail value of the material, but in no event less than [5] levels".]

[Option 3:

Section 2G2.2 (b)(2) is amended by striking "the number of levels from the table in §2F1.1 corresponding to the retail value of the material, but in no event by less than 5 levels" and inserting "[5] levels".

The Commentary to §2G2.2 captioned "Application Notes" is amended by adding at the end the following new note:

"4. Subsection (b)(2) provides a five-level enhancement if the offense involved distribution. If the offense involved distribution by a large-scale commercial enterprise [(i.e., a commercial enterprise distributing material having a retail value that is more than [$40,000])], an upward departure may be warranted.".]

[Option 1:

Section 2G3.1(b) is amended by striking:

"(1) If the offense involved an act related to distribution for pecuniary gain, increase by the number of levels from the table in §2F1.1 corresponding to the retail value of the material, but in no event by less than 5 levels.",

and inserting:

"(1) If the offense involved an act related to distribution for pecuniary gain, increase by the number of levels from the table in §2X6.1 (Reference Monetary Table) corresponding to the retail value of the material, but in no event by less than [5] levels.".]

[Option 2:

Section 2G3.1(b)(1) is amended by striking "corresponding to the retail value of the material, but in no event less than 5 levels", and inserting "(Fraud and Deceit) corresponding to the retail value of the material, but in no event less than [5] levels".]

[Option 3:

Section 2G3.1(b)(1) is amended by striking "the number of levels from the table in §2F1.1 corresponding to the retail value of the material, but in no event by less than 5 levels" following "increase by", and inserting "[5] levels".

The Commentary to §2G3.1 captioned "Application Note" is amended by adding at the end the following new note:

"2. Subsection (b)(1) provides a five-level enhancement if the offense involved an act related to distribution for pecuniary gain. If the offense involved distribution by a large-scale commercial enterprise [(i.e., a commercial enterprise distributing material having a retail value that is more than [$40,000])], an upward departure may be warranted.";

and in the caption by striking "Note" and inserting "Notes".]

[Option 1:

Section 2G3.2(b) is amended by striking:

"(2) If 6 plus the offense level from the table at 2F1.1(b)(1) corresponding to the volume of commerce attributable to the defendant is greater than the offense level determined above, increase to that offense level.",

and inserting:

"(2) If 6 plus the number of levels from the table in §2X6.1 (Reference Monetary Table) corresponding to the volume of commerce attributable to the defendant results in a greater offense level than the offense level determined above, increase to the greater offense level.".]

[Option 2:

Section 2G3.2(b) is amended by striking:

and inserting:

"(2) If 6 plus the number of levels from the table in §2F1.1 (Fraud and Deceit) corresponding to the volume of commerce attributable to the defendant results in a greater offense level than the offense level determined above, increase to the greater offense level.".]

[Option 3:

The Commentary to §2G3.2 is amended by striking subsection (b)(2); and by strking:

"Background: Subsection (b)(1) provides an enhancement where an obscene telephonic communication was received by a minor less than 18 years of age or where a broadcast was made during a time when such minors were likely to receive it. Subsection (b)(2) provides an enhancement for large-scale ?dial-a-porn’ or obscene broadcasting operations that results in an offense level comparable to the offense level for such operations under §2G3.1 (Importing, Mailing, or Transporting Obscene Matter). The extent to which the obscene material was distributed is approximated by the volume of commerce attributable to the defendant.";

and by inserting:

"Application Notes:

Subsection (b)(1) provides an enhancement where an obscene telephonic communication was received by a minor less than 18 years of age or where a broadcast was made during a time when such minors were likely to receive it.
If the offense involved communications or broadcasting operations by a large-scale commercial enterprise [(i.e., a commercial enterprise engaging in a volume of commerce having a value that is more than [$40,000])], an upward departure may be warranted.".]

(D) Copyright Infringement and Structuring Transactions

Synopsis of Proposed Amendment: With respect to these guidelines, four options are presented. Option 1 shows how the guideline might be amended if the Commission were to reference an alternative monetary table for which the starting point is $5,000. Alternatively, Option 1A shows how, even with a reference table starting at $5,000, the individual guideline might be amended to provide a 1-level increase for cases in which the monetary amount is more than $2,000 but not more than $5,000. Option 2 shows how the guideline might be amended if the Commission were to adopt an alternative reference monetary table for which the starting point is $2,000.

Option 3 shows how the guideline might be amended if the Commission were to reference a fraud loss table for which the starting point is $5,000. Alternatively, Option 3A shows how, even with a reference table starting at $5,000, the individual guideline might be amended to provide a 1-level increase for cases in which the monetary amount is more than $2,000 but not more than $5,000. Option 4 shows how the guideline might be amended if the Commission were to adopt a fraud loss table for which the starting point is $2,000.

Proposed Amendment: Section 2B5.3(b) is amended by striking:

"(1) If the retail value of the infringing items exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(1) If the retail value of the infringing items exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2B5.3(b) is amended by striking:

"(1) If the retail value of the infringing items exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(1) If the retail value of the infringing items (A) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2B5.3(b) is amended by striking:

"(1) If the retail value of the infringing items exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(1) If the retail value of the infringing items exceeded [Option 3: $5,000][Option 4: $2,000], increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).".]

[Option 3A:

Section 2B5.3(b) is amended by striking:

"(1) If the retail value of the infringing items exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

Section §2S1.3 is amended by striking:

"(a) Base Offense Level: 6 plus the number of offense levels from the table in §2F1.1 (Fraud and Deceit) corresponding to the value of the funds.",

and inserting:

"(a) Base Offense Level: 6 plus the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table), if the value of the funds exceeded [Option 1: $5,000][Option 2: $2,000].".

[Option 1A:

Section §2S1.3 is amended by striking:

"(a) Base Offense Level: 6 plus the number of offense levels from the table in §2F1.1 (Fraud and Deceit) corresponding to the value of the funds.",

and inserting:

"(a) Base Offense Level: 6 plus (1) 1 level, if the value of the funds exceeded $2,000 but did not exceed $5,000; or (2) the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table), if the value of the funds exceeded $5,000.".]

Section §2S1.3 is amended by striking:

"(a) Base Offense Level: 6 plus the number of offense levels from the table in §2F1.1 (Fraud and Deceit) corresponding to the value of the funds.",

and inserting:

"(a) Base Offense Level: 6 plus the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit), if the value of the funds exceeded [Option 3: $5,000][Option 4: $2,000].".]

[Option 3A:

Section §2S1.3 is amended by striking:

"(a) Base Offense Level: 6 plus the number of offense levels from the table in §2F1.1 (Fraud and Deceit) corresponding to the value of the funds.",

and inserting:

"(a) Base Offense Level: 6 plus (1) 1 level, if the value of the funds exceeded $2,000 but did not exceed $5,000; or (2) the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit), if the value of the funds exceeded $5,000.".]

(E) Trespass

Synopsis of Proposed Amendment: By virtue of an amendment effective November 1, 1997, the trespass guideline contains a reference to the fraud loss table to cover losses resulting from the invasion of a protected government computer. The fraud table, rather than the theft table, was chosen because it better fits with a guideline structure that provides an initial increase in offense level at $2,000. Under the proposed loss tables and accompanying reference monetary tables, a range of as many as six options are potentially viable. Those considered more likely are set forth below.

Among the issues specific to this guideline to be decided are: (1) Should the Commission maintain the $2,000 threshold for an initial increase in offense level?

(2) Should the Commission treat these offenses comparably to computer offenses sentenced under the theft or fraud guidelines (which, under the proposed amendments, will be subject to a phased-in MMP enhancement)?

Options 1 and 1A assume that the Commission may elect to use the Reference Monetary Table because these computer trespass offenses may be simpler in nature than computer offenses referenced to the theft and fraud guidelines (and, thus, the additional MMP enhancement built into the theft and fraud loss tables would not be warranted). Option 1 shows how the guideline might be amended if the Commission were to refer to a Reference Monetary Table that provides an initial increase in offense level at $2,000. Alternatively, Option 1A shows how, even with a reference table starting at $5,000, the trespass guideline might be amended to provide a 1-level increase for cases in which the loss is more than $2,000 but not more than $5,000.

Options 2 and 3 assume that the Commission will (1) maintain the current $2,000 starting point for the referenced loss table, and (2) elect to use a loss table that incorporates the phased-in MMP enhancement. Option 2 references the proposed fraud loss table and assumes a Commission decision to use a loss table structure illustrated by the Option 2 loss tables. (Under this assumed choice, the fraud loss table, rather than theft, is referenced because the former starts at $2,000.) Option 3 references the proposed theft loss table and assumes a Commission decision to use a theft table that provides an initial increase at $2,000, as in the Option 1 theft loss table.

Proposed Amendment:

[Option 1:

Section 2B2.3(b) is amended by striking:

"(3) If the offense involved invasion of a protected computer resulting in a loss exceeding $2000, increase the offense level by the number of levels from the table in §2F1.1 corresponding to the loss.",

and inserting:

"(3) If (A) the offense involved invasion of a protected computer, and (B) the loss resulting from the invasion exceeded $2,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

[Option 1A:

Section 2B2.3(b) is amended by striking:

and inserting:

"(3) If (A) the offense involved invasion of a protected computer, and (B) the loss resulting from the invasion (i) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

[Option 2:

Section 2B2.3(b) is amended by striking:

and inserting:

[Option 3:

Section 2B2.3(b) is amended by striking:

and inserting:

Issue for Comment: The Commission invites comment on the appropriate starting point for a loss table applicable to offenses sentenced under §2B2.3 (Trespass) that involve the invasion of a protected computer described in 18 U.S.C. § 1030(e)(2)(A) or (B). Specifically, should the Commission adopt a table for these offenses that starts at an amount that is lower or higher than $2,000? Since the current fraud loss table at §2F1.1 (Fraud and Deceit) applicable to these offenses starts at $2,000, should the Commission account for any difference in offense levels that might occur between a lower or higher starting amount under a new loss table and the $2,000 starting amount under the current fraud loss table?

(F) Consolidation of Property Destruction and Theft Guidelines

Synopsis of Proposed Amendment: This amendment proposes to consolidate the property destruction guideline §2B1.3 with the theft guideline, thereby mitigating the necessity for reference to the proposed alternative monetary table. (For a proposed amendment that consolidates the property destruction, theft, and fraud guidelines, see Amendment 3, infra.)

Proposed Amendment: Section 2B1.1 is amended in the title by adding at the end

"; Property Damage or Destruction".

Section 2B1.1(b)(3) is amended by striking "taken, or" and inserting "taken or destroyed, (B)"; by striking "of such item" and inserting "or destruction of undelivered United States mail"; and by striking "(B)" and inserting "(C)".

Section 2B1.1(c) is amended by adding at the end the following new subdivision:

"(2) If the offense involved arson or property destruction by use of explosives, apply §2K1.4 (Arson; Property Destruction by Use of Explosives) if the resulting offense level is greater than that determined above.".

Section 2B1.1(c) is amended by striking "Reference" and inserting "References".

The Commentary to §2B1.1 captioned "Statutory Provisions" is amended by inserting "1361, 1363," following "664,"; by inserting "1703," following "1702,"; and by inserting ", 2321" following "2317".

The Commentary to §2B1.1 captioned "Application Notes" is amended by adding at the end the following new note:

"17. In some cases, the monetary value of the property damaged or destroyed may not adequately reflect the extent of the harm caused. For example, the destruction of a $500 telephone line may cause an interruption in service to thousands of people for several hours. In such instances, an upward departure may be warranted.".

The Commentary to §2B1.1 captioned "Background" is amended in the first paragraph by inserting before the first sentence the following:

"This guideline covers offenses involving theft, stolen property, and property damage or destruction.".

The Commentary to §2B1.1 captioned "Background" is amended in the third paragraph by striking "Consistent with statutory distinctions, an" and inserting "An"; by inserting "or destruction" following "for the theft"; and by inserting "or destruction" following "Theft".

Strike §2B1.3 in its entirety.

(G) Consolidation of Bank Gratuity and Principal Gratuity Guidelines

Synopsis of Proposed Amendment: This amendment proposes to consolidate the bank gratuity guideline, §2C1.6 with the principal gratuity guideline §2C1.2, thereby mitigating the necessity for reference to the proposed alternative monetary table.

Proposed Amendment: Section 2C1.2(b)(2) is amended by striking:

"(A) If the value of the gratuity exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(A) If the value of the unlawful payment exceeded [Option 1: $5,000][Option 2: $2,000], increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".

[Option 1A:

Section 2C1.2(b)(2) is amended by striking:

"(A) If the value of the gratuity exceeded $2,000, increase by the corresponding number of levels from the table in §2F1.1 (Fraud and Deceit).",

and inserting:

"(A) If the value of the unlawful payment (i) exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase by the corresponding number of levels from the table in §2X6.1 (Reference Monetary Table).".]

Section 2C1.2(b)(2)(B) is amended by striking "gratuity" and inserting "unlawful payment".

The Commentary to §2C1.2 captioned "Statutory Provision" is amended by striking "Provision" and inserting "Provisions"; by inserting "§" following "U.S.C. §"; and by inserting ", 212-214, 217" following "(1)".

The Commentary to §2C1.2 captioned "Application Notes" is amended by adding at the end the following new note:

"5. An unlawful payment may be anything of value; it need not be a monetary payment.".

The Commentary to §2C1.2 captioned "Background" is amended by striking the second and third sentences as follows:

"A corrupt purpose is not an element of this offense. An adjustment is provided where the value of the gratuity exceeded $2,000, or where the public official was an elected official or held a high-level decision-making or sensitive position.",

and inserting:

"It also applies to the offer to, or acceptance by, a bank examiner of any unlawful payment; the offer or receipt of anything of value for procuring a loan or discount of commercial paper from a Federal Reserve Bank; and the acceptance of a fee or other consideration by a federal employee for adjusting or cancelling a farm debt.".

Strike §2C1.6 in its entirety.

Issues for Comment: (A) The Commission invites comment on whether any of the above guidelines proposed to be referenced to the Reference Monetary Table (§2X6.1) instead should be referenced to the loss table in §2F1.1, as such table is proposed to be amended under Option 1 or Option 2 (see Amendment 1, supra.). Such an approach might be justified by an assessment that the higher penalties of this approach are warranted for a particular guideline/type of offense and/or by a determination that there is no substantial overlap in the incorporation of more-than-minimal planning into the structure of the guideline and the revised loss table.

(B) The Commission invites comment on whether, for any of the above guidelines, the increase in offense level resulting from reference to a particular monetary table should be capped at a certain number of levels. For example, in §2Q2.1 (Offenses Involving Fish, Wildlife, and Plants), should the maximum increase in offense level resulting from use of the table in §2X6.1 (Reference Monetary Table) to measure the market value of the fish, wildlife, or plants be limited to [18] levels? Capping the increase in offense level for any particular guideline might be justified in order to maintain proportionality in sentencing among various offenses and/or be required in order to maintain consistency with prevailing statutory maximum sentences for offenses covered by the guideline.

(C) The Commission invites comment on whether, for any of the above guidelines that are currently referenced to the fraud loss table in §2F1.1, the Commission should continue to refer the guideline to the current fraud table if the Commission adopts one of the proposed loss tables for fraud offenses under §2F1.1. Similar to the issue of capping increases in offense levels for certain guidelines (see issue for comment (B), supra.), such an approach might be justified in order to maintain proportionality in sentencing among various offenses and/or be required in order to maintain consistency with prevailing statutory maximum sentences for offenses covered by the guideline.

§§2B1.1 (Theft), 2B1.3 (Property Destruction), and 2F1.1 (Fraud)

3. Synopsis of Proposed Amendment: This amendment consolidates the three guidelines covering theft (§2B1.1), property destruction (§2B1.3), and fraud (§2F1.1). Consolidation of these guidelines is proposed in response to concerns raised at an October 15, 1997 Commission hearing on difficulties posed by having different commentary in the theft and fraud guidelines applicable to the calculation and definition of loss and related issues. Commentators have also noted that theft and fraud offenses are conceptually similar and that prosecutors’ charging selection, rather than offense conduct, may determine which of the theft or fraud guideline will apply in any given case. For these and other reasons the Commission is considering and invites comment on the consolidation proposal set forth below. There are several important points to note with respect to the proposal:

(A) A base offense level of level 6 has been bracketed to indicate that the Commission invites comment on alternative proposals. The current base offense level for theft and property destruction offenses is level 4, while for fraud it is level 6. The proposal provides, in subsection (b)(2), for a two-level decrease for theft and property destruction offenses in which the loss is less than $2,000.

(B) The floor of level 6 for the theft of undelivered United States mail in subsection (b)(6) will need to be deleted if the Commission decides on a base offense level of level 6 but does not include a decrease for small-scale theft and property destruction offenses.

(C) The document presents two options for the current enhancement on the violation of a judicial order, a factor that relates to a circuit conflict under consideration by the Commission. Option 1 retains the enhancement in subsection (b)(7)(B). Option 2 deletes the enhancement and substitutes an encouraged upward departure provision in Application Note 11 (in lieu of an enhancement). The encouraged upward departure is provided as an option because of the infrequency with which the current enhancement applies. In fiscal year 1996, the charitable organization enhancement and the violation of a judicial order enhancement, combined, applied in only 153 cases (3% of all fraud cases in that fiscal year).

(D) Place holders have been noted for the loss table, the loss definition, and a sophisticated concealment enhancement, all of which are dependent on other policy choices.

(E) The current application note in §2B1.1 dealing with theft and embezzlement from unions and employee benefit or pension plans has been moved to §3B1.3 (Abuse of Position of Trust or Use of Special Skill) where it appears to more appropriately fit.

(F) An additional cross reference to the bribery and gratuity guidelines has been added to address situations in which a fraud statute may be used (perhaps for jurisdictional reasons) to prosecute conduct the essence of which involves bribery. An issue for comment also has been included to serve as a placeholder, and invite comment on, the concept of a more generally applicable cross reference that would apply whenever a broadly applicable fraud statute (e.g., 18 U.S.C. § 1001) is used to reach conduct that is more specifically addressed in another Chapter Two guideline.

(G) The enhancement in subsection (b)(9) involving conscious or reckless risk of serious bodily injury contains two proposed substantive changes. First, it proposes to insert the bracketed language "of death" prior to the term "serious bodily injury" because, as a practical matter, a risk of serious bodily injury is likely to also entail a risk of death. Second, an increase in the "floor" offense level is proposed.

(H) The enhancement in subsection (b)(10), relating to "chop shops," contains two options. Option 1 would add a two-level enhancement for this conduct, in addition to the existing "floor" offense level of level 14. Option 2 would retain the current policy (i.e., minimum offense level of 14).

It should also be noted that the order in which the enhancements under the consolidation are placed may affect the ultimate offense level in any given case, because of the multiple offense level "floors" that are involved (e.g., the enhancements in subsections (b)(3) through (5) may not have an additive effect in cases affected by one of the enhancements in (b)(7) through (12), that imposes a minimum or "floor" offense level).

In addition to combining the theft and fraud guidelines and the above-mentioned substantive changes, this amendment also reorganizes and updates the applicable commentary. Definitions of terms, other than the definition of loss, are collected under application note 1 and are presented in alphabetical order. Otherwise, application notes generally appear in the same sequential order as the relevant enhancements appear in the guideline.

Finally, this amendment makes a number of stylistic and grammatical changes in the language of the current affected guidelines to enhance clarity and consistency (e.g., in subsection (b)(3), the language is changed from "if the theft was from the person of another" to "if the offense involved theft from the person of another". These changes are intended to be non-substantive, but it is always possible that the change will produce an unintended substantive effect.

Proposed Amendment: Chapter Two, Part B is amended in the title by inserting "Economic" before "Offenses"; and by striking "Property" and inserting "Theft, Property Destruction, or Fraud".

Chapter Two, Part B, Subpart 1 is amended in the title by striking "AND"; and by inserting at the end ", AND FRAUD".

The Commentary to Chapter Two, Part B captioned "Introductory Commentary" is amended by striking "the most"; and by inserting "fraud, forgery, counterfeiting (other than offenses involving altered or counterfeit bearer obligations of the United States)," following "embezzlement,".

Chapter Two is amended by striking sections 2B1.1, 2B1.3 and 2F1.1 and inserting:

"§2B1.1. Larceny, Embezzlement, and Other Forms of Theft; Receiving, Transporting, Transferring, Transmitting, or Possessing Stolen Property; Property Damage or Destruction; Fraud and Deceit; Offenses Involving Altered or Counterfeit Instruments Other than Counterfeit Bearer Obligations of the United States

(a) Base Offense Level: [6]

(b) Specific Offense Characteristics

[1) LOSS TABLE - TO BE INSERTED]

[(2) If (A) the offense involved theft, embezzlement, transactions in stolen property, or property damage or destruction; and (B) the total amount of the [loss] involved in the offense was less than [$2,000], decrease by 2 levels.]

(3) If the offense involved theft from the person of another, increase by 2 levels.

(4) If the offense involved receiving stolen property, and the defendant was a person in the business of receiving and selling stolen property, increase by 2 levels.

(5) If the offense involved misappropriation of a trade secret and the defendant knew or intended that the offense would benefit a foreign government, foreign instrumentality, or foreign agent, increase by 2 levels.

[(6) If (A)(i) undelivered United States mail was taken or destroyed, or the taking or destruction of such item was an object of the offense; or (ii) the property stolen, destroyed, received, transported, transferred, transmitted, or possessed was undelivered United States mail; and (B) the offense level as determined above is less than level 6, increase to level 6.]

[Option 1 for judicial process:

(7) If the offense involved (A) a misrepresentation that the defendant was acting on behalf of a charitable, educational, religious, or political organization, or a government agency; or (B) a violation of any judicial or administrative order, injunction, decree, or process not addressed elsewhere in the guidelines, increase by 2 levels. If the resulting offense level is less than 10, increase to level 10.]

[Option 2 for judicial process:

(7) If the offense involved a misrepresentation that the defendant was acting on behalf of a charitable, educational, religious, or political organization, or a government agency, increase by 2 levels. If the resulting offense level is less than 10, increase to level 10.]

[(8) PLACE HOLDER FOR SOPHISTICATED CONCEALMENT ENHANCEMENT TO REPLACE FRAUD SOC ON USE OF FOREIGN BANK ACCOUNTS OR TRANSACTIONS]

(9) If the offense involved (A) the conscious or reckless risk [of death] or serious bodily injury; or (B) possession of a dangerous weapon (including a firearm), increase by 2 levels. If the resulting offense level is less than level [13][14], increase to level [13][14].

(10) If (A) the offense involved an organized scheme to steal vehicles or vehicle parts, or to receive stolen vehicles or vehicle parts,[Option 1: increase by 2 levels. If the resulting offense level as determined above is less than level 14, increase to level 14.][Option 2: and (B) the offense level as determined above is less than level 14, increase to level 14.]

(11) If the offense substantially jeopardized the safety and soundness of a financial institution, increase by 4 levels. If the resulting offense level is less than level 24, increase to level 24.

(12) If (A) the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense; and (B) the offense level as determined above is less than level 24, increase to level 24.

(1) If (A) a firearm, destructive device, explosive material, or controlled substance was taken, or the taking of such item was an object of the offense; or (B) the stolen property received, transported, transferred, transmitted, or possessed was a firearm, destructive device, explosive material, or controlled substance, apply §2D1.1 (Unlawful Manufacturing, Importing, Exporting, or Trafficking; Attempt or Conspiracy), §2D2.1 (Unlawful Possession; Attempt or Conspiracy), §2K1.3 (Unlawful Receipt, Possession, or Transportation of Explosive Materials; Prohibited Transactions Involving Explosive Materials), or §2K2.1 (Unlawful Receipt, Possession, or Transportation of Firearms or Ammunition; Prohibited Transactions Involving Firearms or Ammunition), as appropriate, if the resulting offense level is greater than that determined above.

(2) If the offense involved arson or property destruction by use of explosives, apply §2K1.4 (Arson: Property Destruction by Use of Explosives), if the resulting offense level is greater than that determined above.

[(3) If the offense involved (A) commercial bribery, or (B) bribery, gratuity, or a related offense involving a public official, apply §2B4.1 (Bribery in Procurement of Bank Loan and Other Commercial Bribery) or a guideline from Chapter Two, part C (Offenses Involving Public Officials), as appropriate, if the resulting offense level is greater than that determined above.]

(d) Special Instruction

(1) If the defendant is convicted under 18 U.S.C. § 1030(a)(4) or (5), the minimum guideline sentence, notwithstanding any other adjustment, shall be six months’ imprisonment.

Commentary

Statutory Provisions: 7 U.S.C. §§ 6, 6b, 6c, 6h, 6o, 13, 23; 15 U.S.C. §§ 50, 77e, 77q, 77x, 78j, 78ff, 80b-6, 1644, 1983-1988, 1990c; 18 U.S.C. §§ 225, 285-289, 471-473, 500, 510, 511, 553(a)(1), (2), 641, 656, 657, 659, 662, 664, 1001-1008, 1010-1014, 1016-1022, 1025-1028, 1029, 1030(a)(5), 1031, 1341-1344, 1361, 1363, 1702, 1703, 1708, 1831, 1832, 2113(b), 2312-2317, 2321; 29 U.S.C. §§ 439, 461, 501(c), 1131. For additional statutory provision(s), see Appendix A (Statutory Index).

Application Notes:

1. For purposes of this guideline—

?Financial institution’ means (A) any institution described in 18 U.S.C. §§ 20, 656, 657, 1005-1007, and 1014; (B) any state or foreign bank, trust company, credit union, insurance company, investment company, mutual fund, savings (building and loan) association, union or employee pension fund; (C) any health, medical or hospital insurance association; (D) brokers and dealers registered, or required to be registered, with the Securities and Exchange Commission; (E) futures commodity merchants and commodity pool operators registered, or required to be registered, with the Commodity Futures Trading Commission; and (F) any similar entity, whether or not insured by the federal government. ?Union or employee pension fund’ and ?health, medical, or hospital insurance association,’ primarily include large pension funds that serve many individuals (e.g., pension funds of large national and international organizations, unions, and corporations doing substantial interstate business), and associations that undertake to provide pension, disability, or other benefits (e.g., medical or hospitalization insurance) to large numbers of persons.

?Firearm,’ and ?destructive device’ are defined in the Commentary to §1B1.1 (Application Instructions).

?Foreign instrumentality,’ ?foreign agent,’ and ?trade secret’ have the meaning given those terms in 18 U.S.C. § 1839(1), (2), and (3), respectively.

?Gross receipts’ means any moneys, funds, credits, assets, securities, or other real or personal property, whether tangible or intangible, owned by, or under the custody or control of, a financial institution, that are obtained directly or indirectly as a result of the offense. See 18 U.S.C. §§ 982(a)(4), 1344.

?Theft from the person of another’ means the taking, without the use of force, of property that was being held by another person or was within arms’ reach. Examples include pick-pocketing or non-forcible purse-snatching, such as the theft of a purse from a shopping cart.

[?Undelivered United States mail’ means mail, including mail that is in the addressee’s mailbox, that has not been received by the addressee or the addressee’s agent.]

[2. DISCUSSION OF LOSS [including downstream damages discussion from property destruction guideline]- TO BE INSERTED]

3. Subsection (b)(7)(A) applies in the case of a misrepresentation that the defendant was an employee or authorized agents of a charitable, educational, religious or political organization, or a government agency. Examples of conduct to which this factor applies include (A) the mail solicitation by a group of defendants of contributions to a non-existent famine relief organization; (B) the diversion by a defendant of donations given for a religiously affiliated school as a result of telephone solicitations to church members in which the defendant falsely claims to be a fund-raiser for the school; and (C) the posing by a defendant as a federal collection agent in order to collect a delinquent student loan.

4. For purposes of subsection (b)(10), a [Option 1: two-level enhancement and a] minimum measure of loss [are/is] provided in the case of an ongoing, sophisticated operation (such as an auto theft ring or ?chop shop’) to steal vehicles or vehicle parts or to receive stolen vehicles or vehicle parts. ?Vehicles’ refers to all forms of vehicles, including aircraft and watercraft.

5. For purposes of subsection (b)(11), an offense shall be considered to have substantially jeopardized the safety and soundness of a financial institution if, as a consequence of the offense, the institution (A) became insolvent; (B) substantially reduced benefits to pensioners or insureds; (C) was unable on demand to refund fully any deposit, payment, or investment; (D) was so depleted of its assets as to be forced to merge with another institution in order to continue active operations; or (E) was placed in substantial jeopardy of experiencing any of the conditions described in subdivisions (A) through (D) of this note.

6. For purposes of subsection (b)(12), the defendant shall be considered to have derived more than $1,000,000 in gross receipts if the gross receipts to the defendant individually, rather than to all participants, exceeded $1,000,000.

7. Subsection (b)(7)(A) applies in the case of a misrepresentation that the defendant was an employee or authorized agents of a charitable, educational, religious or political organization, or a government agency. Examples of conduct to which this factor applies include (A) the mail solicitation by a group of defendants of contributions to a non-existent famine relief organization; (B) the diversion by a defendant of donations given for a religiously affiliated school as a result of telephone solicitations to church members in which the defendant falsely claims to be a fund-raiser for the school; and (C) the posing by a defendant as a federal collection agent in order to collect a delinquent student loan.

8. [Option 1 for judicial process: The enhancements in subsection (b)(7) are alternative rather than cumulative; however, if both of the enumerated factors apply in a particular case, an upward departure may be warranted.]

9. In the case of a partially completed offense (e.g., an offense involving a completed fraud that is part of a larger, attempted fraud), the offense level is to be determined in accordance with the provisions of §2X1.1 (Attempt, Solicitation, or Conspiracy), whether the conviction is for the substantive offense, the inchoate offense (attempt, solicitation, or conspiracy), or both. See Application Note 4 in the Commentary to §2X1.1.

10. Sometimes offenses involving fraudulent statements are prosecuted under 18 U.S.C. § 1001, or a similarly general statute, although the offense is also covered by a more specific statute. Examples include false entries regarding currency transactions, for which §2S1.3 would be more apt, and false statements to a customs officer, for which §2T3.1 likely would be more apt. In certain other cases, the mail or wire fraud statutes, or other relatively broad statutes, are used primarily as jurisdictional bases for the prosecution of other offenses. For example, a state arson offense in which a fraudulent insurance claim was mailed might be prosecuted as mail fraud. [In certain other cases, an offense involving fraudulent statements or documents, or failure to maintain required records, may be committed in furtherance of the commission or concealment of another offense, such as embezzlement or bribery.]

Offenses involving fraudulent identification documents and access devices, in violation of 18 U.S.C. §§ 1028 and 1029, are also covered by this guideline. If the primary purpose of the offense involved the unlawful production, transfer, possession, or use of identification documents for the purpose of violating, or assisting another to violate, the laws relating to naturalization, citizenship, or legal resident status, apply §2L2.1 or §2L2.2, as appropriate, rather than this guideline. [In the case of an offense involving false identification documents or access devices, an upward departure may be warranted if the actual loss does not adequately reflect the seriousness of the conduct.]

If the indictment or information setting forth the count of conviction (or a stipulation as described in §1B1.2(a)) establishes an offense more aptly covered by another guideline, apply that guideline rather than this guideline. Otherwise, in such cases, this guideline is to be applied, but a departure may be warranted.

11. If the defendant is convicted under 18 U.S.C. § 225 (relating to a continuing financial crimes enterprise), the offense level is that applicable to the underlying series of offenses comprising the continuing financial crimes enterprise.

[Option 2 for judicial process:

12. If the offense involved a violation of any judicial or administrative order, injunction, decree, or process not addressed elsewhere in the guidelines, an upward departure may be warranted. If it is established that an entity the defendant controlled was a party to the prior proceeding, and the defendant had knowledge of the prior decree or order, an upward departure pursuant to this note may be warranted, even if the defendant was not a specifically named party in that prior case. For example, an upward departure may be warranted in the case of a defendant whose business was previously enjoined from selling a dangerous product, but who nonetheless engaged in fraudulent conduct to sell the product. However, an upward departure based on conduct addressed elsewhere in the guidelines (e.g., a violation of a condition of release, addressed in §2J1.7 (Offense Committed While on Release), or a violation of probation, addressed in §4A1.1 (Criminal History Category)) is not authorized under this note.]

13. In cases involving theft of information from a ?protected computer’, as defined in 18 U.S.C. § 1030(e)(2)(A) or (B), an upward departure may be warranted if the defendant sought the stolen property to further a broader criminal purpose.

Background: This guideline covers offenses involving theft, stolen property, property damage or destruction, fraud, forgery, and counterfeiting (other than offenses involving altered or counterfeit bearer obligations of the United States). It also covers offenses involving altering or removing motor vehicle identification numbers, trafficking in automobiles or automobile parts with altered or obliterated identification numbers, odometer laws and regulations, obstructing correspondence, the falsification of documents or records relating to a benefit plan covered by the Employment Retirement Income Security Act, and the failure to maintain, or falsification of, documents required by the Labor Management Reporting and Disclosure Act.

Because federal fraud statutes often are broadly written, a single pattern of offense conduct usually can be prosecuted under several code sections, as a result of which the offense of conviction may be somewhat arbitrary. Furthermore, most fraud statutes cover a broad range of conduct with extreme variation in severity. The specific offense characteristics [and cross references] contained in this guideline are designed with these considerations in mind.

[Note: Depending on decisions made with respect to ?loss’, background commentary on loss can be added.]

Consistent with statutory distinctions, an increased minimum offense level is provided for the theft of undelivered mail. Theft of undelivered mail interferes with a governmental function, and the scope of the theft may be difficult to ascertain.

Theft from the person of another, such as pickpocketing or non-forcible purse- snatching, receives an enhanced sentence because of the increased risk of physical injury. This guideline does not include an enhancement for thefts from the person by means of force or fear; such crimes are robberies and are covered under §2B3.1 (Robbery).

A minimum offense level of 14 is provided for offenses involving an organized scheme to steal vehicles or vehicle parts. Typically, the scope of such activity is substantial, but the value of the property may be particularly difficult to ascertain in individual cases because the stolen property is rapidly resold or otherwise disposed of in the course of the offense. Therefore, the specific offense characteristic of "organized scheme" is used as an alternative to ?loss’ in setting a minimum offense level.

Use of false pretenses involving charitable causes and government agencies enhances the sentences of defendants who take advantage of victims’ trust in government or law enforcement agencies or the generosity and charitable motives of victims. Taking advantage of a victim’s self-interest does not mitigate the seriousness of fraudulent conduct; rather, defendants who exploit victims’ charitable impulses or trust in government create particular social harm. In a similar vein, a defendant who has been subject to civil or administrative proceedings for the same or similar fraudulent conduct demonstrates aggravated criminal intent and is deserving of additional punishment for not conforming with the requirements of judicial process or orders issued by federal, state, or local administrative agencies.

Subsection (b)(9)(B) implements, in a broader form, the instruction to the Commission in section 110512 of Public Law 103–322. Subsection (b)(11) implements, in a broader form, the instruction to the Commission in section 961(m) of Public Law 101–73. Subsection (b)(12) implements the instruction to the Commission in section 2507 of Public Law 101–647. Subsection (d)(2) implements the instruction to the Commission in section 805(c) of Public Law 104–132.".

The Commentary to §1B1.1 captioned "Application Notes" is amended in Note 1(f) by striking the second paragraph as follows:

"?More than minimal planning’ is deemed present in any case involving repeated acts over a period of time, unless it is clear that each instance was purely opportune. Consequently, this adjustment will apply especially frequently in property offenses.";

by striking the fifth and sixth paragraphs as follows:

"In a theft, going to a secluded area of a store to conceal the stolen item in one's pocket would not alone constitute more than minimal planning. However, repeated instances of such thefts on several occasions would constitute more than minimal planning. Similarly, fashioning a special device to conceal the property, or obtaining information on delivery dates so that an especially valuable item could be obtained, would constitute more than minimal planning.

In an embezzlement, a single taking accomplished by a false book entry would constitute only minimal planning. On the other hand, creating purchase orders to, and invoices from, a dummy corporation for merchandise that was never delivered would constitute more than minimal planning, as would several instances of taking money, each accompanied by false entries.".

Section 2K1.4(a)(4) is amended by striking "§2B1.3 (Property Damage or Destruction)" and inserting:

"§2B1.1 (Larceny, Embezzlement, and Other Forms of Theft; Receiving, Transporting, Transferring, Transmitting, or Possessing Stolen Property; Property Damage or Destruction; Fraud and Deceit; Offenses Involving Altered or Counterfeit Instruments Other than Counterfeit Bearer Obligations of the United States)".

The Commentary to §3B1.3 captioned "Application Notes" is amended by adding at the end the following new note:

"3. The following additional illustrations of an abuse of a position of trust pertain to theft or embezzlement from employee pension or welfare benefit plans or labor unions:

(A) If the offense involved theft or embezzlement from an employee pension or welfare benefit plan and the defendant was a fiduciary of the benefit plan, an adjustment under this section for abuse of a position of trust will apply. ?Fiduciary of the benefit plan’ is defined in 29 U.S.C. § 1002(21)(A) to mean a person who exercises any discretionary authority or control in respect to the management of such plan or exercises authority or control in respect to management or disposition of its assets, or who renders investment advice for a fee or other direct or indirect compensation with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or who has any discretionary authority or responsibility in the administration of such plan.

(B) If the offense involved theft or embezzlement from a labor union and the defendant was a union officer or occupied a position of trust in the union (as set forth in 29 U.S.C. § 501(a)), an adjustment under this section for an abuse of a position of trust will apply.".

Issues for Comment: (A) The Commission invites comment on whether Application Note 10 in the proposed amendment should be alternatively stated in the guideline as an explicit cross reference to apply the most applicable guideline, if the resulting offense level is greater than the offense level obtained under the proposed guideline.

(B) The Commission invites comment on whether any of the specific offense characteristics in this proposed consolidated guideline should be eliminated because of infrequency of use or other good reason. If any such factor should be eliminated, should it be replaced with commentary encouraging departure?

§§2B1.1 (Theft) and 2F1.1 (Fraud)

4. Synopsis of Proposed Amendment: The Sentencing Commission has identified the definition of loss in fraud and theft offenses as an issue for consideration during the 1997- 98 amendment cycle. The genesis of Commission interest in many of the issues raised about the definition of loss is summarized in the Loss Issues Working Paper (10-14-97) that is part of the Commission meeting materials generated in connection with the October 15, 1997 public hearing on clarifying the definition of loss. This paper and the transcript of the public hearing on the definition of loss are available on the Commission’s website (http://www.ussc.gov/) or from the Commission. Following are two proposed options for revising the definition of loss for fraud and theft offenses. Both options envision one definition of loss for both fraud and theft offenses.

Option 1 provides a dramatically simplified and shortened definition of loss that has the same core principles as those found in Option 2, but without the additional rules and guidance found in Option 2. The formulation in Option 1 arguably provides maximum discretion to sentencing judges and minimal guidance as to what should be included in, or excluded from, actual loss. Option 2 attempts to provide more guidance to courts on how to resolve issues that have arisen in the case law and elsewhere about the current definition of loss.

Both options propose adoption of a general definition that loss is the greater of the actual or intended loss, and that actual loss is defined to include “reasonably foreseeable harm resulting from the conduct for which the defendant is accountable under §1B1.3 (Relevant Conduct).” Adoption of this provision would provide an explicit causation standard for the determination of actual loss. Option 2 raises the possibility of limiting the relevant harm (both actual and intended) to “economic” harm.

Both options provide that intended loss is the “harm intended to be caused by the defendant and other persons for whose conduct the defendant is accountable under §1B1.3 (Relevant Conduct)”, with Option 2 raising the issue as to whether intended loss should be limited to those consequences “that realistically could have occurred.”

The balance of the language proposed in Option 1 also appears in Option 2 but, again, without additional rules or guidance. Language is proposed to be added to the background commentary that provides an operating principle for the use of the amount of loss, namely, that it “serves as a measure of the seriousness of the offense and the defendant’s relative culpability.” Additional language is proposed for the commentary in both options that emphasizes the fact-based nature of the determination of loss and the importance of giving appropriate deference to the sentencing court’s determinations, and that invites departure where loss “substantially understates or overstates the seriousness of the offense or the culpability of the defendant.”

In addition to the provisions summarized above, Option 2 provides added specificity in a number of areas: (A) departures; (B) estimation of loss; (C) time of measuring loss and credits against loss; (D) interest; (E) special rules.

(A) Departures: In addition to the general language inviting departure where loss “substantially understates or overstates the seriousness of the offense or the culpability of the defendant”, Option 2 lists a number of grounds for invited departures, most of which can be found in the current commentary. Option 2 also provides an option for including selected non-economic factors as specific offense characteristics instead of only as possible departure grounds.

(B) Estimation of loss: Option 2 provides a nonexclusive listing of factors (most of which are in the current commentary) that a court may use in estimating loss. Two options are provided for how gain might be fashioned as such a factor: either provide for the use of gain as any other factor, or provide that it may be used if gain exceeds loss or the loss is difficult or impossible to calculate.

(C) Time of measuring loss and credits against loss: This provision raises the issue of whether there needs to be an applicable or limiting time frame on what is to be included in loss (such as, “at the time the offense is detected”). This provision provides, in effect, that loss is a “net” concept, for both fraud and theft offenses, in contrast to the current rule that expressly uses such a concept only for certain fraud-type offenses. The determination of loss is a “net” concept under this proposed rule in the sense that the loss amount shall be reduced by the value of certain items, including money, property, or other economic benefit pledged, returned, or otherwise transferred to the victim before detection of the offense, valued as of the time of pledging or transfer (unless the defendant causes the reduction in the value of the collateral after pledging or the increase in the loss, after detection). Valuation as of the time of detection would eliminate the effect of most fluctuations in value of collateral from affecting the offense level.

(D) Interest: Option 2 provides two options for dealing with interest. One would respond to the circuit court decisions that allow use of, for example, bargained-for interest, and explicitly exclude interest from the determination of loss, except as a possible departure ground. The other would continue the exclusion of opportunity-cost interest but provide for inclusion of interest if it “was bargained for by a victim as part of a transaction which is the subject of the criminal case” or if the victim “transferred the funds lost as a result of the offense from an investment account on which interest or dividends were regularly earned.”

(E) Special rules: This provision provides rules for special cases, including retaining the current rules for stolen credit cards, diversion of government program benefits (proposed for modification or elimination), and Davis-Bacon Act cases. This provision proposes adding rules on sting operations (to respond to case law that excludes from intended loss amounts that were unlikely or impossible because informants or government agents were the only “victims”) and Ponzi schemes (to choose from divergent precedent a rule that provides that loss in such cases shall be based on “the net loss to losing victims, i.e., the sum of the net losses to each victim who lost all or part of this principal investment as a result of the fraudulent scheme”).

Proposed Amendment:

[Option One:

The Commentary to §2B1.1 captioned "Application Notes" is amended by striking the first through fourth paragraphs of Note 2 and inserting the following:

"2. ?Loss’ is the greater of the actual loss or the intended loss. ?Actual loss’ means the reasonably foreseeable harm resulting from the conduct for which the defendant is accountable under §1B1.3 (Relevant Conduct). ?Intended loss’ means the harm intended to be caused by the defendant and other persons for whose conduct the defendant is accountable under §1B1.3. Loss need not be determined precisely but may be based on a reasonable estimate.

Because of the fact-based nature of the determinations, the sentencing judge is in a unique position to assess the evidence and estimate the loss based upon that evidence. Accordingly, the district court’s determinations in this regard are entitled to appropriate deference. See 18 U.S.C. § 3742(e) and (f).

There may be cases in which the loss substantially understates or overstates the seriousness of the offense or the culpability of the defendant. In such cases, a departure may be warranted.".

The Commentary to §2B1.1 captioned "Application Notes" is amended by striking Notes 3, 4, 5, and 15; and by redesignating Notes 6, 7, 8, 9, 10, 11, 12, 13, 14, and 16 as Notes 3, 4, 5, 6, 7, 8, 9, 10, 11, and 12, respectively.

The Commentary to §2B1.1 captioned "Background" is amended by inserting after the first paragraph the following additional paragraph:

"Along with other relevant factors under the guidelines, loss serves as a measure of the seriousness of the offense and the defendant’s relative culpability.".

The Commentary to §2F1.1 captioned "Application Notes" is amended by striking Note 7 and inserting the following:

"7. ?Loss’ is the greater of the actual loss or the intended loss. ?Actual loss’ means the reasonably foreseeable harm resulting from the conduct for which the defendant is accountable under §1B1.3 (Relevant Conduct). ?Intended loss’ means the harm intended to be caused by the defendant and other persons for whose conduct the defendant is accountable under §1B1.3. Loss need not be determined precisely but may be based on a reasonable estimate.

There may be cases in which the loss substantially understates or overstates the seriousness of the offense or the culpability of the defendant. In such cases, a departure may be warranted.".

The Commentary to §2F1.1 captioned "Application Notes" is amended by striking Notes 8 and 10; and by redesignating Notes 9, 11, 12, 13, 14, 15, 16, 17, and 18 as Notes 8, 9, 10, 11, 12, 13, 14, 15, and 16, respectively.

The Commentary to §2F1.1 captioned "Background" is amended by inserting after the first paragraph the following additional paragraph:

"Along with other relevant factors under the guidelines, loss serves as a measure of the seriousness of the offense and the defendant’s relative culpability.".]

[Option Two:

[Non-economic Factors, Option A:

Section 2B1.1(b) is amended by adding at the end the following new subdivision:

["(8)If the offense involved one of the following aggravating factors: (A) the primary objective of the offense was non-monetary; (B) the offense caused or risked substantial non-monetary harm; (C) the offense was committed for the purpose of facilitating another felony offense, other than an offense covered by this guideline; (D) reasonably foreseeable (i) bodily injury, or (ii) psychological harm or emotional trauma that is substantial and severe; or (E) a reasonably foreseeable risk of substantial loss in addition to the loss that actually occurred, increase by [2] levels. If the offense involved more than one of these aggravating factors, increase by [4] levels.".]

The Commentary to §2B1.1 captioned "Application Notes" is amended by striking the first through the fourth paragraphs of Note 2 and inserting the following:

"2. ?Loss’ is the greater of the actual loss or the intended loss. ?Actual loss’ means the reasonably foreseeable [economic] harm resulting from the conduct for which the defendant is accountable under §1B1.3 (Relevant Conduct). ?Intended loss’ means the [economic] harm intended to be caused by the defendant and other persons for whose conduct the defendant is accountable under §1B1.3 [and that realistically could have occurred].

(A) Estimation of Loss. For the purposes of subsection (b)(1), the loss need not be determined precisely. The court need only make a reasonable estimate of the loss, given the available information and considering, as appropriate under the circumstances, measuring factors such as the following:

(1) the fair market value of the property, or other thing of value, taken or otherwise unlawfully acquired, misapplied, misappropriated, damaged, or destroyed;

(2) the cost to the victim of replacing property taken, damaged, or destroyed;

(3) the cost of repairs, not to exceed the replacement cost had the property been destroyed;

(4) the approximate number of victims and an estimate of the average loss to each victim;

(5) the scope and duration of the offense, or revenues generated by similar operations;

[Gain, Option A:

[(6) the gain to criminally responsible participants from committing the offense.]

[Gain, Option B:

[(6) if the gain exceeds the loss or if the loss is difficult or impossible to calculate, the gain to criminally responsible participants from committing the offense.]

(B) [Time of Measuring Loss,] Credits Against Loss. [In general, loss is to be measured at the time the offense is detected (i.e., when either a victim or law enforcement first develops a reasonable suspicion that an offense has occurred, or is occurring).]

Money, property, or other economic benefit pledged, returned, or otherwise transferred to the victim(s) (including services performed) before detection of the offense shall be valued at the time of pledging, return, transfer, or performance, as the case may be, and shall be credited in determining the amount of loss.

Payments, property transfers, pledges of collateral, or services performed after detection of the offense shall not be credited. Amounts recovered, or readily recoverable, through civil processes after detection of the offense also shall not be credited.

However, if acts or omissions for which the defendant is accountable diminish the value of pledged assets after pledging, or otherwise increase the economic harm after detection of the offense, the loss shall reflect that increased net harm.

[Interest, Option A:

[(C) Interest Not Included. For the purposes of subsection (b)(1), loss does not include interest of any kind; however, in an appropriate case (e.g., if interest was bargained for as part of a transaction that is the subject of the criminal case), an upward departure may be warranted based upon the loss of interest.]

[Interest, Option B:

[(C) Interest. Loss shall not include interest the victim could have earned had the offense not occurred (i.e., ?opportunity-cost interest’). Interest shall be included if: [(i)] interest was bargained for by a victim as part of a transaction which is the subject of the criminal case[, or (ii) the victim transferred the funds lost as a result of the offense from an investment account on which interest or dividends were regularly earned.]

(D) Special Rules. The following special rules are to be used in determining loss in the situations indicated:

(1) Sting Operations

In cases involving the participation of an informant or undercover government agent, intended loss includes economic harms the defendant intended, even if accomplishment of the defendant’s goals would have been unlikely or impossible because of the participation of an informant or undercover government agent.

(2) Ponzi Schemes

In a Ponzi-type scheme, loss is the net loss to losing victims, i.e., the sum of the net losses to each victim who lost all or part of his principal investment as a result of the fraudulent scheme.

(3) Stolen Credit Cards, Access Devices

In cases involving stolen credit cards or access devices, the loss includes any unauthorized charges made with the stolen credit cards (or purloined numbers), but in no event less than $100 per card.

(4) Diversion of Government Program Benefits

[Option A: [In a case involving diversion of government program benefits, loss is the value of the benefits derived from intended recipients or uses.]

[Option B: [In a case involving diversion of government program benefits, use the gain to the criminally responsible participants as the loss. In the case of a grant, the loss is the amount of the grant. In the case of a loan, the minimum loss is the savings in interest over the life of the loan compared with alternative loan terms for which the defendant would have qualified.]

(5) Davis-Bacon Act Cases

In a case involving a Davis-Bacon Act violation (a violation of 40 U.S.C. § 276a, criminally prosecuted under 18 U.S.C. § 1001), the loss is the difference between the legally required and actual wages paid.

[Non-Economic Factors, Option A:

[(E) Departure Considerations. There may be cases in which the loss substantially understates or overstates the seriousness of the offense or the culpability of the defendant. In such cases, a departure may be warranted. The following is a non-exhaustive list of types of circumstances which the court may consider in determining whether a departure may be warranted:

(1) the offense endangered national security or military readiness;

(2) the offense caused a loss of confidence in an important institution;

(3) the offense endangered the solvency or financial security of one or more victims;

(4) the defendant’s gain from the offense substantially exceeded the aggregate loss to the victim(s);

(5) but for the exclusion above, the loss would have included a substantial amount of interest that was bargained for by a victim as part of a transaction which is the subject of the criminal case;

(6) the offense involved [ten or more victims][a large number of victims;]

(7) the loss significantly exceeds the greater of the defendant’s actual and intended personal gain;

(8) the loss intended by the defendant significantly exceeded the amount that realistically could have occurred.]

[Non-Economic Factors, Option B:

(1) a primary objective of the offense was non-monetary;

(2) the offense caused or risked substantial non-monetary harm;

(3) false statements were made for the purpose of facilitating some other crime;

(4) the offense caused physical or psychological harm or severe emotional trauma;

(5) the offense endangered national security or military readiness;

(6) the offense caused a loss of confidence in an important institution;

(7) the offense endangered the solvency or financial security of one or more victims;

(8) the defendant’s gain from the offense substantially exceeded the aggregate loss to the victim(s);

(9) the offense created a serious risk of substantially greater economic harm than the loss that actually occurred;

(10) but for the exclusion above, the loss would have included a substantial amount of interest that was bargained for by a victim as part of a transaction which is the subject of the criminal case;

(11) the offense involved [ten or more victims][a large number of victims;]

(12) the loss significantly exceeds the greater of the defendant’s actual and intended personal gain;

(13) the loss intended by the defendant significantly exceeded the amount that realistically could have occurred.]

(F) Appropriate Deference. Because of the fact-based nature of the determinations, the sentencing judge is in a unique position to assess the evidence and approximate the loss based upon that evidence. Accordingly, the district court’s determinations in this regard are entitled to appropriate deference. See 18 U.S.C. § 3742(e) and (f).".

The Commentary to §2B1.1 captioned "Application Notes" is amended by adding at the end the following new notes:

[Non-Economic Factors, Option A:

["17.If the defendant received an enhancement under subsection (b)(7) but that enhancement does not adequately reflect the extent or seriousness of the conduct involved, an upward departure may be warranted.]

[18. Under subsection (b)(7)(D)(ii), psychological harm or emotional trauma shall be considered to be substantial and severe if it is of prolonged duration and, as a result of such harm, the victim received medical treatment or other professional assistance.

Under subsection (b)(7)(E), a risk of additional loss shall be considered ?substantial’ if the court determines that the additional risked loss would have increased the actual loss, as determined under subsection (b)(1), by at least 4 levels, had the risked loss actually occurred. If the risk of loss was greater than 4 levels, an upward departure may be warranted.".]

The Commentary to §2B1.1 captioned "Background" is amended by inserting after the first paragraph the following additional paragraph:

"Along with other relevant factors under the guidelines, loss serves as a measure of the seriousness of the offense and the defendant’s relative culpability.".

[Non-economic Factors, Option A:

Section 2F1.1(b) is amended by adding at the end the following new subdivision:

["(7)If the offense involved one of the following aggravating factors: (A) the primary objective of the offense was non-monetary; (B) the offense caused or risked substantial non-monetary harm; (C) the offense was committed for the purpose of facilitating another felony offense, other than an offense covered by this guideline; (D) reasonably foreseeable (i) bodily injury, or (ii) psychological harm or emotional trauma that is substantial and severe; or (E) a reasonably foreseeable risk of substantial loss in addition to the loss that actually occurred, increase by [2] levels. If the offense involved more than one of these aggravating factors, increase by [4] levels.".]

The Commentary to §2F1.1 captioned "Application Notes" is amended by striking Note 7 and inserting the following:

"7. ?Loss’ is the greater of the actual loss or the intended loss. ?Actual loss’ means the reasonably foreseeable [economic] harm resulting from the conduct for which the defendant is accountable under §1B1.3 (Relevant Conduct). ?Intended loss’ means the [economic] harm intended to be caused by the defendant and other persons for whose conduct the defendant is accountable under §1B1.3 [and that realistically could have occurred].