United States v. Rainford
Citation110 F.4th 455
Date Filed2024-08-02
Docket20-359
Cited29 times
StatusPublished
Full Opinion (html_with_citations)
20-359 (L)
United States v. Rainford et al.
In the
United States Court of Appeals
FOR THE SECOND CIRCUIT
AUGUST TERM 2022
Nos. 20-359, 20-2695, 20-2993, 21-1753
UNITED STATES OF AMERICA,
Appellee,
v.
RYAN RAINFORD, BRYAN DUNCAN, ROBERT LOCUST,
Defendants-Appellants,
PETER KALKANIS, KERRY GORDON, aka CURRY,
Defendants. *
On Appeal from the United States District Court
for the Southern District of New York
ARGUED: MAY 1, 2023
DECIDED: AUGUST 2, 2024
Before: JACOBS, MENASHI, and MERRIAM, Circuit Judges.
* The Clerk of Court is directed to amend the caption as set forth above.
The defendants-appellants, who were convicted of
orchestrating a fraudulent slip-and-fall scheme, challenge their
convictions, their guidelines calculations, and their sentences.
Because none of the challenges to the convictions are
persuasive, we affirm the judgments of conviction. We also affirm
with respect to the guidelines calculations, but we remand for
factfinding as to the number of fraudulent accidents the conspiracy
orchestrated while Rainford and Locust were members of the
conspiracy for the purpose of computing the loss enhancement under
U.S.S.G. Ā§ 2B1.1. With respect to the sentences, we (1) vacate and
remand Duncanās forfeiture order, concluding that it was based only
on government allegations, not on factual material, (2) affirm the
district courtās restitution order for Rainford and Locust but modify
the order by $120,000, and (3) affirm Rainfordās sentence but remand
to the district court to reconsider the sentence āas may be just under
the circumstances.ā 28 U.S.C. Ā§ 2106.
Judge Jacobs concurs in a separate opinion. Judge Merriam
concurs in part and dissents in part in a separate opinion.
ALEXANDRA N. ROTHMAN, Assistant United States
Attorney (Nicholas W. Chiuchiolo, Nicholas S. Folly,
David Abramowicz, Assistant United States Attorneys,
on the brief), for Damian Williams, United States Attorney
for the Southern District of New York, New York, NY, for
Appellee.
2
DONNA R. NEWMAN, Law Offices of Donna R. Newman,
PA, New York, NY, for Defendant-Appellant Ryan Rainford.
Bryan Duncan, pro se, for Defendant-Appellant Bryan
Duncan.
RANDALL DOUGLAS UNGER, Law Offices of Randall
Douglas Unger, Kew Gardens, NY, for Defendant-
Appellant Robert Locust.
MENASHI, Circuit Judge:
Defendants-Appellants Ryan Rainford, Robert Locust, and
Bryan Duncan appeal their convictions and sentences for conspiracy
to commit mail and wire fraud in violation of 18 U.S.C. Ā§ 1349. 1
Duncan proceeds pro se on appeal.
The convictions arose from a fraudulent slip-and-fall scheme
that the defendants and others orchestrated. The scheme involved
recruiting poor and homeless people to fake accidents at properties
around the New York area. The recruit would stage an accident and
then seek unnecessary medical treatmentāsometimes including
surgeryāfrom doctors who were part of the scheme. The organizers
of the scheme would then refer the recruit to a lawyer, who would
sue the property owner or the ownerās insurance company for
damages. The proceeds from the lawsuits, which often settled, were
then divided among the co-conspirators, with the recruits receiving
relatively little.
1 Duncan was convicted of two counts of conspiracy to commit mail and
wire fraud as well as one substantive count of mail fraud and one
substantive count of wire fraud.
3
The defendants raise several arguments on appeal. We affirm
with respect to each issue relating to the trial and convictions. See infra
Part I. We affirm the judgment with respect to the sentencing
guidelines calculations, but we remand for factfinding as to the
number of fraudulent accidents orchestrated by the conspiracy while
Rainford and Locust were members for the purpose of performing a
loss calculation under U.S.S.G. Ā§ 2B1.1. See infra Part II. Finally, we
vacate and remand Duncanās forfeiture order, affirm but modify the
restitution order for Rainford and Locust, and affirm Rainfordās
sentence but remand for reconsideration in the interest of justice. See
infra Part III.
BACKGROUND
The conduct underlying this appeal involves two fraudulent
slip-and-fall schemes. The first scheme began around 2013 and
included Rainford, Duncan, and Locust. Peter Kalkanis was the
principal organizer of the first scheme, and Rainford, Duncan, and
Locust were lower-level co-conspirators known as ārunners.ā The
runners would seek out people who were often poor or homeless.
They would then find suitable locations for slip-and-fall accidents and
instruct a recruit to stage a fall at the location and to seek medical
attention for nonexistent injuries. Sometimes, the unnecessary
medical attention included surgery.
The recruit was then referred to a lawyer who would pursue a
personal injury lawsuit on his or her behalf. Kalkanis would typically
sit in on a recruitās meeting with the attorney. At the meeting,
Kalkanis would record pertinent information on an āintake sheet,ā
which included the name of the recruit as well as others involved in
the āaccident,ā including the runner who referred the recruit to the
scheme. Notably, some of the intake sheets processed in this way
4
were not fraudulent but documented genuine slip-and-fall accidents
and legitimate legal claims. When asked at trial how many of the
intake sheets involved fraudulent slip-and-falls, Kalkanis initially
testified that ā[a]t least 80 percentā were fraudulent. Rainford Appāx
884. Kalkanis then backtracked, saying that āpractically all of themā
were fraudulent. Id. When asked to clarify, Kalkanis said āthe
majority of themā were fraudulent. Id. The district court noted that
Kalkanis had given different answers to the same question; Kalkanis
then reiterated that ā[t]he majority of themā were fraudulent. Id.
When asked how many cases he managed during the first conspiracy,
Kalkanis estimated that there were ā[a]pproximately 300, if not
more.ā Id. at 883.
The runners also ensured that the recruits attended medical
and legal appointments by transporting them to those appointments.
The organizers of the scheme would arrange for litigation funding
companies to underwrite the medical expenses and litigation. While
litigation proceeded, the organizers would often arrange āloansā to
the recruits from the litigation funding companies to pay expenses.
One witness testified that he used his loan to pay for āanything,
whether it be rent, billsā as well as āto pay the medical facilities for
the surgeries that [he] would need.ā Id. at 751. The lawsuits frequently
resulted in settlements, often for six figures. The proceeds were
distributed among the organizers, doctors, lawyers, litigation
funders, and others involved in the scheme. The recruit would receive
what was left.
One recruit who testified at trial was Yvette Battle. After
staging a fraudulent slip-and-fall, Battle underwent knee surgery for
which she received anesthesia. She was compensated with $1,000
along with cookies and juice. See id. at 685. A ācouple of months later,ā
she underwent a shoulder surgery and in exchange for the surgery
5
she was paid $1,000. Id. at 685-88. She filed an action against the owner
of the property where she staged the accident. That action was
ā[d]ismissedā and she received nothing of value from that lawsuit. Id.
at 689. During the governmentās examination of Battle, the prosecutor
referred to these $1,000 payments as āloans,ā id., and Battle did not
correct that characterization. Some recruits whose cases settled
received larger payouts. One recruit who underwent shoulder
surgery received $19,000 out of a $100,000 settlement, and another
who underwent back and knee surgery received $35,000 out of a
$225,000 settlement.
In 2015, Duncan and Kerry Gordonāanother co-conspirator in
the Kalkanis schemeābegan a spin-off scheme. That scheme was
substantially similar to the Kalkanis scheme, often using the same
attorneys, doctors, and low-level co-conspirators. Duncan and
Gordon created a business entityāD&G Premier Solutions LLC
(āD&Gā)āto operate the scheme. D&G would connect recruits with
litigation funding companies. D&G would receive a referral fee from
a funding company after the company contracted with a recruit to
provide payments in exchange for the recruitās future settlement
amount.
In 2019, a six-count superseding indictment was returned
against the co-conspirators in the two schemes. Rainford, Duncan,
and Locust were each charged with three counts in connection with
the Kalkanis scheme: conspiracy to commit mail and wire fraud
(Count One), mail fraud (Count Two), and wire fraud (Count Three).
Id. at 60-64. Duncan was indicted on three additional counts relating
to the spin-off scheme: conspiracy to commit mail and wire fraud
(Count Four), mail fraud (Count Five), and wire fraud (Count Six). Id.
at 64-67.
6
The government presented extensive evidence of guilt at trial.
Almost a dozen recruits testified that they had participated in the
schemes by staging accidents and receiving unnecessary medical
treatment. Kalkanis also testified. He stated that he ādirected the
trafficā in the first scheme and āwas a manager in th[e] whole thing.ā
Id. at 819. Kalkanis elaborated that the scheme was fraudulent because
āthese werenāt real accidents.ā Id. And he identified Locust, Rainford,
and Duncan as members of the conspiracy. Id. at 819-20. The
government also introduced the intake sheets, medical records, and
communications between the co-conspirators.
The jury found Rainford, Locust, and Duncan guilty of
conspiracy to commit mail and wire fraud in connection with the
Kalkanis scheme (Count One). See id. at 1226. 2 The jury also found
Duncan guilty of conspiracy to commit mail and wire fraud (Count
Four), mail fraud (Count Five), and wire fraud (Count Six) in
connection with the spin-off scheme. This appeal followed.
DISCUSSION
Rainford, Duncan, and Locust raise several arguments on
appeal. We begin with the arguments relating to the trial and
convictions, and we affirm the judgment of the district court with
respect to those issues. See infra Part I. We next consider the
defendantsā challenges to their sentencing guidelines calculations. We
affirm the judgment with respect to the calculations, but we remand
for additional factfinding relating to the loss enhancements for
Rainford and Locust. See infra Part II. Finally, we address the
defendantsā arguments about their sentences. We vacate and remand
2 The district court declared a mistrial as to Counts Two and Three; the
government then moved to dismiss those counts, and the district court
granted the motion. See Rainford Appāx 1353.
7
Duncanās forfeiture order because the district court relied only on
representations by the government, not on evidence, in calculating
the forfeiture amount. We affirm the district courtās restitution order
for Rainford and Locust, but we modify the order as the parties agree.
And we affirm Rainfordās sentence of imprisonment but remand with
instructions to reconsider it in the interest of justice. See infra Part III.
I
First, we consider the defendantsā challenges to their
convictions.
A
Duncan argues that his due process rights were violated
because the government introduced false testimony by Alvin Martin,
Reginald Dewitt, and Tina Nichols. The government may not
knowingly introduce false evidence or testimony to obtain a
conviction. See United States v. Alston, 899 F.3d 135, 146(2d Cir. 2018). A witness does not perjure himself merely by giving incorrect, confusing, or mistaken testimony: āSimple inaccuracies or inconsistencies in testimony do not rise to the level of perjury.ā United States v. Monteleone,257 F.3d 210, 219
(2d Cir. 2001). Rather, a witness commits perjury āif he gives false testimony concerning a material matter with the willful intent to provide false testimony.ā United States v. Aquart,912 F.3d 1, 20
(2d Cir. 2018) (quoting Monteleone,257 F.3d at 219
).
Duncan has identified no false testimony by Martin, Dewitt, or
Nichols that was material to his conviction and that the government
knew was false. Duncan points to (1) Martinās testimony that
Kalkanis was his attorney; (2) Martinās confusion as to whether his
attorneyās office was in Astoria, Queens; (3) Martinās testimony as to
who entered a meeting with the lawyer at a certain time; (4) Martinās
8
recollection of a personās name; and (5) Martinās testimony as to
whether his mother lied to the government. But Duncan has not
established that any of this testimonyāassuming it was falseāwas
material to his conviction or that the government knew the testimony
was false. The same is true of Duncanās claim that Dewitt perjured
himself by stating that he was not involved in any cases in 2014,
despite an intake form from 2014 listing him as a runner for the
conspiracy.
Finally, Duncan notes that Nichols testified that she had been
recruited by Duncan, but other pieces of evidence indicated that
Dewitt made the referral. This may not be a contradictionā
recruitment and referral may be different conceptsābut in any event
Duncan has not established how the testimony was material. He has
identified, at most, a ā[s]imple ā¦ inconsistenc[y].ā Monteleone, 257
F.3d at 219.
Because Duncan has not identified a material falsity known to
the government, we affirm with respect to this issue.
B
Duncan also argues that the district court erred by admitting
intake sheetsādocuments Kalkanis created that recorded pertinent
information about each slip-and-fall accidentāinto evidence.
Duncanās brief does not make clear the basis of his argument. But
because ā[a] document filed pro se is to be liberally construed,ā Boykin
v. KeyCorp, 521 F.3d 202, 214(2d Cir. 2008) (quoting Erickson v. Pardus,551 U.S. 89, 94
(2007)), we interpret Duncanās brief as (1) arguing that
the intake sheets were not relevant because Kalkanis testified he had
no personal knowledge of which cases were fraudulent and which
were legitimate and (2) raising a Confrontation Clause claim.
9
We review a district courtās evidentiary decisions for abuse of
discretion. See United States v. Persico, 645 F.3d 85, 99 (2d Cir. 2011).
Duncanās argument that the intake sheets were irrelevant is mistaken.
Kalkanis testified that he personally filled out the intake sheets and
that he did so while meeting with the recruit. See Rainford Appāx 857
(āThese are combination intake sheets that I did with each individual
patient.ā). Even if Kalkanis himself could not say which intake sheets
involved fraudulent slip-and-falls and which involved legitimate
accidents, we cannot conclude that the intake sheets documenting the
accidents in the scheme had no ātendency to make a fact more or less
probable than it would be without the evidence.ā Fed. R. Evid. 401(a).
Separately, Duncan contends that intake sheets were admitted
for recruits who did not testify, which violated his Sixth Amendment
right āto be confronted with the witnesses against him.ā U.S. Const.
amend. VI. The Confrontation Clause prohibits the admission of
ātestimonial statements of a witness who did not appear at trial unless
he was unavailable to testify, and the defendant had had a prior
opportunity for cross-examination.ā Crawford v. Washington, 541 U.S.
36, 53-54 (2004). In this case, Duncan had the opportunity to cross-
examine Kalkanis, who drafted the intake sheets, so there was no
violation of the Confrontation Clause.
We affirm the district courtās judgment with respect to the
admission of the intake sheets into evidence.
C
Locust argues that the district courtās summary denial of his
motion for appointment of new counsel deprived him of his right to
effective assistance of counsel. We disagree.
We review the denial of a motion to substitute counsel for
abuse of discretion. United States v. Simeonov, 252 F.3d 238, 241 (2d Cir.
10
2001). We consider four factors: (1) whether the motion for new
counsel was timely; (2) whether the district court adequately inquired
into the matter; (3) whether the conflict between the defendant and
his attorney was so great that it caused a lack of communication and
prevented an adequate defense; and (4) whether the defendant
substantially and unjustifiably contributed to the breakdown in
communication. United States v. Hsu, 669 F.3d 112, 122-23 (2d Cir.
2012).
Locustās argument fails because he waived the argument before
the district court. One trial day after Locustās motion was denied, the
district court directly asked Locust: ā[Y]ouāve indicated that you
donāt want to go pro se here and you want to continue with
Dinnerstein and Cecutti [Locustās trial counsel], correct?ā Supp.
Appāx 25-26. Locust replied: āYes, sir.ā Id. at 26. That statement was
an āintentional relinquishment or abandonment of a known right,
and ā¦ permanently extinguishe[d] the right to raise the claimā on
appeal. United States v. Polouizzi, 564 F.3d 142, 153 (2d Cir. 2009)
(internal quotation marks omitted).
Locust responds that he did not waive the argument because
the district court was clear that any motion for new counsel would
have been futile. But the cases on which Locust relies for that
propositionādespite using the term āwaiverāāeach address the
failure to object, not the intentional relinquishment of a right. See
Anderson v. Branen, 17 F.3d 552, 556-57(2d Cir. 1994); Ostrowski v. Atl. Mut. Ins. Cos.,968 F.2d 171, 177-79
(2d Cir. 1992). Locust misses this critical distinction. āWaiver is different from forfeiture. Whereas forfeiture is the failure to make the timely assertion of a right, waiver is the intentional relinquishment or abandonment of a known right.ā United States v. Olano,507 U.S. 725, 733
(1993) (emphasis added)
(internal quotation marks omitted). We have ādiscretion to correct
11
errors that were forfeited because not timely raised in the district court,
but no such discretion applies when there has been true waiver.ā
United States v. Spruill, 808 F.3d 585, 596 (2d Cir. 2015). Locustās
response when the district court asked if he wished to proceed was
intentional and affirmativeāand it qualified as a waiver.
Accordingly, Anderson and Ostrowski provide no basis for applying a
discretionary exception. Locust has waived this argument.
Even if he had not waived it, the argument would fail. Locustās
motion for new counsel was made during the trial. ā[O]nce trial has
begun, a defendant has no unbridled right to reject assigned counsel
and demand anotherā because defendants may āmanipulat[e] ā¦ the
right so as to obstruct the orderly procedure in the courts or to
interfere with the fair administration of justice.ā United States v. John
Doe No. 1, 272 F.3d 116, 122(2d Cir. 2001) (internal quotation marks omitted). Locust contends that the motion was timely because it responded to his counselās performance at trial. Indeed, Locust identifies several comments by the trial judge indicating dissatisfaction with Locustās counsel. That may affect our analysis of the timeliness prong. See Hsu,669 F.3d at 122
. But it cuts against Locust overall. If Locustās belief that his counsel was deficient was based on his counselās performance at trial, then the district court did not need to make a special inquiry into his counselās performance; the district court had witnessed the counselās performance during the trial. And the district court evaluated that performance. In denying Locustās motion, the district court stated that it āf[ou]nd the representation of [Locustās trial counsel] to be quite good.ā Locust Appāx 37. Moreover, Locust confirmed to the district court that the purported deficiency was ādue to the conduct of the trial,ā id. at 38, and was not based on a lack of communication, see Hsu,669 F.3d at 123
.
12
Locust suggests that the district court should have asked more
targeted questions. But, on these facts, we see no abuse of discretion
in failing to inquire further about the counselās conduct at trial.
Locustās challenge on appeal therefore would fail on the merits even
if it had not been waived.
We affirm the district courtās judgment with respect to the
denial of Locustās motion for new counsel.
D
Locust further argues that the prosecutor committed āseveral
serious improprietiesā at closing argument, prejudicing his right to a
fair trial. Locust Br. 32.
Prosecutorial remarks ādo not amount to a denial of due
process unless they constitute āegregious misconduct.āā United States
v. Shareef, 190 F.3d 71, 78(2d Cir. 1999) (quoting Donnelly v. DeChristoforo,416 U.S. 637, 647
(1974)). So long as a prosecutor does not āmisstate the evidence,ā he or she is entitled to āwide latitude during closing arguments.ā United States v. Tocco,135 F.3d 116, 130
(2d Cir. 1998). Even if a prosecutorās remarks were improper, a defendant will succeed on a misconduct claim only when āthe remarks, taken in the context of the entire trial, resulted in substantial prejudice.ā United States v. Thomas,377 F.3d 232, 244
(2d Cir. 2004) (quoting United States v. Perez,144 F.3d 204, 210
(2d Cir. 1998)). When evaluating prejudice, we consider three factors: (1) āthe severity of the misconduct,ā (2) āthe measures adopted to cure the misconduct,ā and (3) āthe certainty of conviction absent the misconduct.ā United States v. Elias,285 F.3d 183, 190
(2d Cir. 2002). A new trial is ordered only in a ārare case.ā United States v. Rodriguez,968 F.2d 130, 142
(2d Cir. 1992) (quoting Floyd v. Meachum,907 F.2d 347, 348
(2d Cir. 1990)). When the
defendant failed to object to the challenged remarks, we review for
13
plain error and will not reverse unless the remarks āamount to
flagrant abuse which seriously affects the fairness, integrity, or public
reputation of judicial proceedings, and causes substantial prejudice to
the defendant.ā United States v. Williams, 690 F.3d 70, 75 (2d Cir. 2012)
(internal quotation marks omitted). 3
Locust identifies four purported improprieties. None require
reversal.
First, Locust contends that the government vouched for four
witnesses: Tucker, Dewitt, Kalkanis, and Martin. Locust did not object
to the comments that allegedly vouched for those witnesses, so we
review for plain error. Locust explains that the prosecutor vouched
when she made statements such as āDewittās telling the truth.ā Locust
Br. 35. But the government surrounded these statements with
references to items submitted into evidence, so the statements āturn
out on closer examination to be permissible reference to the evidence
in the caseā rather than vouching. Perez, 144 F.3d at 210. In context, the governmentās statements that the witnesses were telling the truth ādid not imply the existence of extraneous proof and cannot be characterized as improper vouching.ā Williams,690 F.3d at 76
(internal quotation marks omitted). Even if the statements did 3 āThe Supreme Court has identified four prongs of plain error analysis: (1) there must be an error; (2) the error must be plain, meaning it must be clear or obvious, rather than subject to reasonable dispute; (3) the error must have affected the appellantās substantial rights in that it affected the outcome of the proceedings; and (4) if these other three prongs are satisfied, the court of appeals has the discretion to remedy the error if the error seriously affects the fairness, integrity or public reputation of judicial proceedings.ā United States v. Montague,67 F.4th 520, 528
(2d Cir. 2023) (internal quotation marks and alteration omitted), judgment vacated on other grounds, No. 23-959,2024 WL 3014465
(U.S. June 17, 2024).
14
amount to vouching, such statements do not constitute āflagrant
abuse.ā Id. at 75. The district court did not plainly err by failing to
intervene.
Second, Locust argues that the prosecutor ādenigratedā the
defense by saying, for example, that its case was a ātotal sideshow.ā
Locust Br. 33; see Locust Appāx 113. Locust did not object to these
statements, so we again review for plain error. One component of
Locustās defense was that the government should have focused on the
corrupt lawyers rather than low-level co-conspirators such as Locust.
See Supp. Appāx 1, 61. In describing that strategy as a āsideshow,ā the
prosecutor responded to the defenseās arguments, which is
permissible in a closing argument. See United States v. Salameh, 152
F.3d 88, 139(2d Cir. 1998) (ā[T]he Government is ordinarily permitted to respond to arguments impugning the integrity of its case and to reply with rebutting language suitable to the occasion.ā) (quoting United States v. Bagaric,706 F.2d 42, 60
(2d Cir. 1983)). We again see no
plain error.
Third, Locust claims that the prosecutor misstated the evidence
when she said that Locust orchestrated three slip-and-fall accidents.
Locust did not object when the government stated in closing that
Locust brought three recruits into the schemeāGilford, Roberts, and
Wrightāso we review for plain error. Locust notes that those recruits
were not called to testify. Locust argues that, even assuming that he
introduced the three recruits to the other members of the scheme,
there was no evidence that their claims were fraudulent because
Kalkanis testified that he could not specify which claims were
fraudulent and which were genuine. For that reason, Locust says, the
government misstated the evidence.
15
But there was evidence that Locust brought in these recruits to
make fraudulent claims. The intake sheets for these recruits listed the
name āRobertā or āRobā as the runner. Supp. Appāx 110-11, 113.
Locustās first name is Robert. Dewitt testified that Locust had
reported staging fake slip-and-fall accidents at a Wendyās restaurant,
at a bike shop, and at a Dominoās restaurantāthe locations at which
Gilford, Roberts, and Wright had accidents. Rainford Appāx 199-200.
While the governmentās description of Dewittās testimony and the
intake sheets may have been somewhat conclusory, we again see no
āflagrant abuse,ā Williams, 690 F.3d at 75, and the district court did
not plainly err in failing to intervene.
Fourth, Locust argues that the prosecutor lowered the burden
of proof by asserting that it did not matter whether Locust knew for
certain that the slip-and-fall accidents were staged. The prosecutor
stated at closing that ā[e]ven if Locust did not know for certain, he is
still guilty. He was aware there was a high probability that these
patients had staged accidents.ā Locust Appāx 117. Locustās counsel
promptly objected, saying ā[t]hatās not the standard.ā Id.The district court sustained the objection and reminded the jury immediately that āthe governmentās burden is proof beyond a reasonable doubt. Remember that.āId.
Accordingly, even if the governmentās statement constituted misconduct, Locust has not established prejudice. The jury was immediately reminded that the standard is beyond a reasonable doubt, and we presume that juries follow the instructions. See United States v. Becker,502 F.3d 122, 130
(2d Cir. 2007). We are not persuaded that any misconduct affected the verdict. See Elias,285 F.3d at 190
.
For these reasons, Locust has not shown that the government
committed misconduct or that, if it did, the misconduct prejudiced the
16
outcome of his trial. We affirm the district courtās judgment with
respect to this issue.
II
Second, we consider the defendantsā challenges to their
sentencing guidelines calculations. We affirm the district courtās
judgment with respect to the calculation for each defendant.
However, we remand for factfinding as to the number of fraudulent
accidents the conspiracy orchestrated while Rainford and Locust
were members for the purpose of performing a loss calculation under
U.S.S.G. Ā§ 2B1.1(b)(1). 4
We review a district courtās application of the guidelines de
novo, but factual determinations are reviewed for clear error. See
United States v. Cramer, 777 F.3d 597, 601(2d Cir. 2015). However, when a defendant fails to object to a procedural error in the district courtās guidelines calculation, we review for plain error. See United States v. Verkhoglyad,516 F.3d 122, 128
(2d Cir. 2008).
A
All three defendants argue that the district court erred when it
included a guidelines enhancement due to the ālossā associated with
4 The practice of leaving in place a judgment but āremand[ing] partial
jurisdiction to the district court to supplement the record on a discrete
factual or legal issue while retaining jurisdiction over the original appealā
is known in this circuit as a Jacobson remand. United States v. Rosa, 957 F.3d
113, 121 n.29 (2d Cir. 2020) (quoting CorporaciĆ³n Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-ExploraciĆ³n y ProducciĆ³n,832 F.3d 92, 115
(2d Cir. 2016) (Winter, J., concurring)); see United States v. Jacobson,15 F.3d 19, 22
(2d Cir. 1994).
17
the schemes. We agree, but only insofar as the argument applies to
Rainford and Locust.
U.S.S.G. Ā§ 2B1.1(b)(1) imposes an enhancement when the ālossā
exceeds certain levels. As relevant here, if the loss is between $9.5
million and $25 million, the defendant receives a twenty-level
increase; if the loss is between $25 million and $65 million, the
defendant receives a twenty-two-level increase. U.S.S.G.
Ā§ 2B1.1(b)(1)(K)-(L). The application note clarifies that the āloss is the
greater of actual loss or intended loss.ā Id. Ā§ 2B1.1, comment. (n.3(A)).
And the āintended lossā means āthe pecuniary harm that the
defendant purposely sought to inflict,ā even including āpecuniary
harm that would have been impossible or unlikely to occur.ā Id.
Ā§ 2B1.1, comment. (n.3(A)(ii)). In Stinson v. United States, the Supreme
Court explained that ācommentary in the Guidelines Manual that
interprets or explains a guideline is authoritative unless it violates the
Constitution or a federal statute, or is inconsistent with, or a plainly
erroneous reading of, that guideline.ā 508 U.S. 36, 38(1993). Here, the application note defining loss is neither inconsistent with nor a plainly erroneous reading of the guideline. ā[T]he term ālossā in Ā§ 2B1.1 has no one definition and can mean different things in different contexts,ā so the guideline does not contradict the understanding expressed in the commentary that ālossā encompasses intended loss. United States v. You,74 F.4th 378, 397
(6th Cir. 2023)
(internal quotation marks omitted).5
5 The continuing vitality of Stinson is subject to debate. See John S. Acton,
The Future of Judicial Deference to the Commentary of the United States
Sentencing Guidelines, 45 Harv. J.L. & Pub. Polāy 349, 355 (2022) (describing
āfour discrete issuesā that have ācomplicated ā¦ Stinson deferenceās
scopeā). The holding in Stinson rested on the comparison of the guidelines
18
To apply Ā§ 2B1.1(b)(1), the sentencing court āis only required to
make a āreasonable estimate of the loss.āā United States v. Lacey, 699
F.3d 710, 719(2d Cir. 2012) (quoting U.S.S.G. Ā§ 2B1.1, comment. commentary to āan agencyās interpretation of its own legislative rule.ā508 U.S. at 44
(citing Bowles v. Seminole Rock & Sand Co.,325 U.S. 410, 414
(1945)). After the Supreme Court modified the framework for reviewing an agencyās interpretation of its own rule, see Kisor v. Wilkie,588 U.S. 558
, 574- 75 (2019), circuit courts have disagreed as to whether the application note defining ālossā to include the intended loss should continue to receive deference. Compare United States v. Banks,55 F.4th 246
, 258 (3d Cir. 2022) (ā[T]he ordinary meaning of the word ālossā is the loss the victim actually suffered. ā¦ Because the commentary expands the definition of ālossā by explaining that generally āloss is the greater of actual loss or intended loss,ā we accord the commentary no weight.ā), with You,74 F.4th at 397
(āApplying Kisorās framework, we defer to the Sentencing Commissionās interpretation of āloss.āā). We adhere to Stinson and defer to the application note for two reasons. First, the Supreme Court has not overruled Stinson. ā[I]f a precedent of [the Supreme] Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to [the Supreme] Court the prerogative of overruling its own decisions.ā Agostini v. Felton,521 U.S. 203, 237
(1997) (quoting Rodriguez de Quijas v. Shearson/Am. Exp., Inc.,490 U.S. 477, 484
(1989)). Second, the guidelines commentary would meet the Kisor standard in any event. Because the Sentencing Commission adopts the commentary alongside the guidelines, see United States v. Moses,23 F.4th 347, 353
(4th Cir. 2022) (ā[T]he Commission, in practice, generally follows the same process for adopting and amending policy statements and commentary as it uses for the promulgation and amendment of the Guidelines themselves.ā), the commentary necessarily reflects the Commissionās āauthoritative, expertise-based, fair, or considered judgment,ā Kisor,588 U.S. at 573
(internal quotation marks and alteration omitted). Indeed, the guidelines and the commentary āoperate together as a reticulated whole,ā Moses,23 F.4th at 355
, and accordingly āthe two are to be read together,ā United States v. Pedragh,225 F.3d 240, 244
(2d Cir. 2000).
19
(n.3(C))). Even so, the sentencing court must āmake findings that are
sufficiently specific to permit meaningful appellate review.ā United
States v. Flores, 945 F.3d 687, 721(2d Cir. 2019). āA district court satisfies its obligation to make findings sufficient to permit appellate review if the court indicates, either at the sentencing hearing or in the written judgment, that it is adopting the recommendations in the PSRāāthat is, the Presentence Report. United States v. Wagner-Dano,679 F.3d 83, 90
(2d Cir. 2012) (internal quotation marks and alterations omitted) (quoting United States v. Prince,110 F.3d 921, 924
(2d Cir. 1997)). But āadoption of the PSR does not suffice if the PSR itself does not state enough facts to permit meaningful appellate review.ā United States v. Ware,577 F.3d 442, 452
(2d Cir. 2009). When the sentencing court makes findings adequate to permit appellate review, āits findings of fact will be overturned only if they are clearly erroneous.ā Flores,945 F.3d at 721
.
We have held that a sentencing courtās methodology was not
ātoo crudeā when it calculated a loss amount based on two factors:
the total profits of the scheme and testimony as to the underlying
percentage that was fraudulent. United States v. Moseley, 980 F.3d 9, 29(2d Cir. 2020); see also United States v. Uddin,551 F.3d 176, 180
(2d Cir.
2009) (āA district court may make a reasonable estimate by
extrapolating the average amount of loss from known data and
applying that average to transactions where the exact amount of loss
is unknown.ā) (internal quotation marks omitted). That is the method
the district court used in this case to calculate the loss, and the
defendants do not challenge the district courtās methodology.
We therefore proceed to evaluate for clear error the district
courtās factual determinations regarding (1) the intended loss of the
20
schemes and (2) the number of fraudulent accidents in which each
defendant was involved. 6
1
The defendantsā PSRs indicated that the intended loss for each
fraudulent accident was $100,000 and that this estimate is a
āconservativeā one because it represents a ālow settlement amount
for a ā¦ Fraudulent Case.ā Rainford PSR Ā¶ 43; Locust PSR Ā¶ 38;
Duncan PSR Ā¶ 32. In support of that conclusion, the PSRs referenced
(1) Clarence Tuckerās testimony that his case settled for $100,000,
(2) Kasheem Jonesās testimony that his case settled for $225,000 and
that his girlfriendās case settled for $250,000, (3) Carol Whiteās
testimony that that her case settled for $80,000, and (4) Alvin Martinās
testimony that his case settled for $120,000. See, e.g., Rainford PSR
Ā¶ 24. The district court adopted these findings for each defendant. See
Rainford Appāx 1281 (Locust); id. at 1299 (Rainford); id. at 1234
(Duncan). It thereby satisfied its obligation to adopt findings of fact
āsufficient to permit appellate review.ā Wagner-Dano, 679 F.3d at 90; see also Ware,577 F.3d at 452
.
Even if it had not adopted the facts in the PSRs, the district court
made several statements at the sentencing hearings indicating that it
had independently found the intended loss for each fraudulent
accident was, conservatively, about $100,000. The district court
observed that āsometimes it was held out to people that they could
make up to a hundred thousand dollars.ā Rainford Appāx 1278. And
6 As explained below, Locust objected specifically to the loss calculation, so
we review for clear error, but Rainford and Duncan did not. See infra Part
II.A.2. Because we conclude that the factual finding about the intended loss
of $100,000 per fraudulent case was not clearly erroneous, we need not
conduct a separate plain error analysis for Rainford and Duncan.
21
the district court showed that it was focused on intended lossāas
opposed to actual lossāwhen it asked the government, āwhere does
the foreseeable loss per recruit of each victim of a hundred thousand
come from?ā Id. at 1279. The government responded with specific
evidence: āClarence Tucker testified at trial ā¦ that he was told by Mr.
Locust he could make a hundred thousand dollars or better in staging
an accident.ā Id. These figures were conservative; if the recruit were
told to expect compensation of about $100,000, then the intended loss
to the insurance company would need to be substantially higher in
order to pay runners, organizers, doctors, lawyers, and others who
were involved in the conspiracy.
Moreover, to conduct a clear error review, we must review the
āentire evidence.ā United States v. Mattis, 963 F.3d 285, 291(2d Cir. 2020) (quoting United States v. Sabhnani,493 F.3d 63, 75
(2d Cir. 2007)). Here, there was evidence introduced at trial indicating that many cases settled for six figures. See Rainford Appāx 528, 562, 1087. And the district judge emphasized several times at the sentencing hearings that he presided over the trial and had a command of the evidence. See, e.g., id. at 1255 (āI am quite comfortable, as the judge who presided over your trial, that there was extensive evidence, extensive credible evidence.ā). We have never required a sentencing court to have stated all the facts in the record on which it based its findings, only enough to āpermit meaningful appellate review.ā Flores,945 F.3d at 721
. And on clear error review, even if there are ātwo permissible viewsā of the facts, āthe factfinderās choice between them cannot be clearly erroneous.ā United States v. Norman,776 F.3d 67, 76
(2d Cir. 2015) (quoting United States v. Abiodun,536 F.3d 162, 170
(2d Cir.
2008)).
In this case, the settlement numbers fell along a range. It may
have been possible for a reasonable factfinder to conclude that the
22
intended loss was less than $100,000. But there was also enough
evidence to conclude that the intended loss was $100,000 or more. For
that reason, the district courtās choice of the latter view ācannot be
clearly erroneous,ā Norman, 776 F.3d at 76, and we will not disturb
the district courtās finding that the intended loss for each fraudulent
accident was $100,000.
2
The number of fraudulent cases is a more complicated
question. The sentencing court relied on the PSRs for the finding that
the fraud involved more than 400 recruits. See Rainford PSR Ā¶ 24;
Duncan PSR Ā¶ 24; Locust PSR Ā¶ 24 (āDuring the Fraud Scheme, more
than 400 Patients were referred by LOCUST, DUNCAN, RAINFORD
and their co-conspirators to the lawyers in order to initiate fraudulent
cases.ā) (emphasis omitted). But that reliance was misplaced because
the PSRs merely assertedāwithout reference to any admitted
evidenceāthe claim of 400 fraudulent cases. Accordingly, the
sentencing courtās āadoption of the PSR does not sufficeā because
āthe PSR itself does not state enough facts to permit meaningful
appellate review.ā Ware, 577 F.3d at 452.
The question then is whether there are facts āsufficiently
specific to permit meaningful appellate reviewā elsewhere in the PSR
or that the district court recognized at the sentencing hearings. Flores,
945 F.3d at 721. We must consider whether the sentencing court erred when it concluded that those facts were established by a preponderance of the evidence. See United States v. Thorn,317 F.3d 107, 117
(2d Cir. 2003). We proceed defendant by defendant.
a
Duncan āobjected to the entiretyā of his PSR on the ground that
the Probation Office āsolely adopted [facts] from whatever the
23
government said the facts were.ā Rainford Appāx 1233. Although the
government acknowledges that Duncan lodged a timely general
objection to the PSR and concedes that we should review for clear
error, Appelleeās Br. 46, ā[t]o preserve an objection for appellate
review, a defendant must articulate it to the trial court āwith sufficient
distinctness to alert the court to the nature of the claimed defect,āā
United States v. Dorvee, 616 F.3d 174, 179(2d Cir. 2010) (quoting United States v. Gallerani,68 F.3d 611, 617
(2d Cir. 1995)). Duncan did not articulate an objection with distinctness; he did not alert the district court to the ānatureā of his objection to the extent that he challenged the loss calculation for any particular reason. We therefore review for plain error. See Verkhoglyad,516 F.3d at 128
.
Duncan received a twenty-two-level loss enhancement on the
ground that the intended loss from the schemes was about $30
million. See Duncan PSR Ā¶ 52. We resolve Duncanās challenge to the
loss calculation based on the third prong of plain error review,
prejudice. Assuming arguendo that the PSRās estimation that the
Kalkanis scheme involved 400 cases was plainly erroneous, it would
not have been erroneous had it estimated the number to be 300. That
is because Kalkanis estimated that his scheme involved
ā[a]pproximately 300ā cases. Rainford Appāx 883, 1018. To be sure,
Kalkanis testified inconsistently about the percentage of those cases
that were fraudulent, starting with ā[a]t least 80 percent,ā then
āpractically all,ā and finally ā[t]he majority of them.ā Id. at 884. But
even if we assume conservatively that only 50 percent of the cases
were fraudulent, that would yield a total of 150 fraudulent cases. And
in light of the district courtās factual determination that each
fraudulent accident had an intended loss of $100,000, Duncanās loss
from the Kalkanis scheme would be $15,000,000.
24
That is just the Kalkanis scheme. Duncan also participated in a
spin-off scheme that he conducted with Gordon. Duncanās PSR
estimated that the spin-off scheme involved āat least 300 Patients,ā
Duncan PSR Ā¶ 28, a fact on which the district court expressly relied,
Rainford Appāx 1340. The district court acknowledged that, although
there was evidence that not all of these accidents were fraudulent,
āitās still what I think amount to hundreds of accidents.ā Id. Even if
the district court reduced the 300-accident figure by two-thirds, down
to 100 accidents, and if each of those accidents had an intended loss
of $100,000, that would generate an additional intended loss of $10
million.
That meansāreading the evidence as to the number of
fraudulent accidents in Duncanās favor as much as possibleāthere
was a $15 million intended loss from the Kalkanis scheme and a $10
million intended loss from the spin-off scheme. That is $25 million,
which is the threshold under Ā§ 2B1.1(b)(1)(L) for a twenty-two-level
enhancement.
Given these conservative estimates, we conclude that any error
did not prejudice Duncanās substantial rights. We affirm the
judgment with respect to the twenty-two-level loss enhancement.
b
Locust specifically objected to his loss calculation, id. at 1280-
81, which estimated a loss between $9.5 million and $25 million. We
therefore review for clear error, but we conclude that the district court
did not āmake findings that are sufficiently specific to permit
meaningful appellate review.ā Flores, 945 F.3d at 721. So we remand
with instructions for the district court to make a factual finding as to
the number of fraudulent accidents that the Kalkanis conspiracy
orchestrated during Locustās involvement with the conspiracy.
25
Locust received a twenty-level loss enhancement. Locust
objected to the loss calculation on the ground that it was not ābased
in evidence.ā Rainford Appāx 1281. The district court simply
āden[ied] the objection to loss amountā and āadopt[ed] the loss
amount of between [$]9.5 and $25 million.ā Id.But the district court never made a factual finding; it said only that the range described in the PSR was āappropriate.āId.
In other words, the district court never
determined how many fraudulent accidents implicated Locust.
The district courtās reliance on the PSR does not save the loss
enhancement. The PSR said only that Locust ājoined the scheme in
2015, and there were at least 200 Patients recruited into the scheme
after LOCUST joined.ā Locust PSR Ā¶ 38 (emphasis omitted). The PSR
cites no testimony or other admitted evidence supporting that figure.
In sum, the PSR did not state, the district court did not find, and
we have located no statement in the record indicating that Locust
participated in the conspiracy for a total of 200 cases. We cannot say
whether that is a permissible or a clearly erroneous reading of the
evidence. Accordingly, we remand for factfinding.
c
Rainford did not object to his loss calculation, so we review for
plain error, as Rainford concedes we should on appeal. Rainford Br.
36. But we conclude that the district court again did not āmake
findings that are sufficiently specific to permit meaningful appellate
review.ā Flores, 945 F.3d at 721. We therefore remand with
instructions for the district court to make a factual finding as to the
number of fraudulent accidents the Kalkanis conspiracy orchestrated
during Rainfordās involvement with the conspiracy.
Rainford received a twenty-two-level loss enhancement.
Rainford PSR Ā¶ 51. Rainfordās PSR explained the loss enhancement
26
by stating that ā[t]he value of the intended loss was estimated in the
amount of at least $30,000,000.ā Id. While the PSR acknowledged the
$100,000 intended loss per fraudulent accident, see id. Ā¶ 43, the
Rainford PSR never provided evidence for the number of fraudulent
accidents touching the conspiracy during his tenure. The PSR offered
three statements regarding the number of fraudulent accidents in
which Rainford was involved. But each of those statements is
insufficient to sustain the loss enhancement.
First, the Rainford PSR asserted that the Kalkanis conspiracy
involved āmore than 400 Patients,ā id. Ā¶ 24, but it did so without
reference to evidence. We have located no evidence in the Rainford
PSR, in the transcripts of the sentencing hearings, or in the record
indicating that there were 400 cases orchestrated by the conspiracy
while Rainford was a member.
Second, the PSR stated that āRAINFORD participated in the
scheme from approximately 2012 through 2018, and there were at
least 300 Patients recruited into the scheme during that time.ā Id. Ā¶ 43
(emphasis omitted). That appears to refer to the Kalkanis testimony.
But the district court never determined the percentage of those 300
cases that were fraudulent. Moreover, Kalkanis testified
inconsistently. As explained above, see supra Part II.A.2.a., Kalkanis
indicated at one point that at least 50 percent of those cases were
fraudulent. If so, then Rainfordās intended loss would be $15 million. 7
That factual finding would support only a twenty-level loss
enhancement, not a twenty-two-level loss enhancement. Accordingly,
7 Kalkanis testified that there were approximately 300 cases and that the
majority were fraudulent, leading to a total of at least 150 fraudulent cases.
Because each fraudulent case had an intended loss of $100,000, the total
intended loss would be at least $15 million.
27
the statement in the PSR that Rainford participated in the scheme for
300 cases is not sufficient to sustain the twenty-two-level loss
enhancement.
Third, the PSR noted that Rainford ārecruited patientsā for the
spin-off conspiracy, but it puts the number only at āat least two.ā
Rainford PSR Ā¶ 41. That would not be enough to salvage the loss
calculation.
Because (1) the PSR did not cite evidence for the statement that
Rainford was involved in 400 cases and (2) neither the PSR nor the
district court explained what percentage of cases was fraudulent, we
remand with instructions to make sufficient findings of fact.
d
In sum, we conclude that the district courtās finding that the
intended loss for each fraudulent accident was $100,000 was not
clearly erroneous. We affirm the judgment with respect to Duncanās
twenty-two-level loss enhancement. But we remand for factfinding
regarding the number of fraudulent cases in which Locust and
Rainford were involved. See supra note 4.
B
The district court added a four-level enhancement to Duncanās
guidelines calculation for his leadership role in the conspiracy. The
guidelines state that a leadership enhancement is appropriate for an
āorganizer or leader of a criminal activity that involved five or more
participants or was otherwise extensive.ā U.S.S.G. Ā§ 3B1.1(a).
On appeal, Duncan argues correctly that the PSR and the
district court did not make specific findings as to the five individuals
involved in the spin-off scheme. See Duncan PSR Ā¶Ā¶ 26-28. But he
does not argue that the scheme was not āotherwise extensive.ā Nor
28
could he make such an argument. The PSR explained that Duncanās
spin-off scheme lasted for three years, covered several hundred cases,
and obtained over a million dollars in profit. That is extensive. For
these reasons, we see no error in the district courtās application of the
four-level leadership enhancement.
C
Duncan and Locust each argue that they should have received
a guidelines reduction on account of minor or minimal participation
in the Kalkanis conspiracy. We disagree.
The guidelines provide for a four-level decrease if the
defendant was a āminimal participantā and a two-level decrease if the
defendant was a āminor participant.ā For participants in between
these categories, the guidelines provide for a three-level decrease.
U.S.S.G. Ā§ 3B1.2. A āminimal participantā is one who had ālack of
knowledge or understanding of the scope and structure of the
enterprise and of the activities of othersā and who is āplainly among
the least culpable of those involved.ā Id. Ā§ 3B1.2, comment. (n.4). A
āminor participantā is one who is āless culpable than most other
participants in the criminal activity, but whose role could not be
described as minimal.ā Id. (n.5). The guidelines also explain that
assessing whether a defendant was a minimal or a minor participant
involves the consideration of five factors. 8
8 Those factors are ā(i) the degree to which the defendant understood the
scope and structure of the criminal activity; (ii) the degree to which the
defendant participated in planning or organizing the criminal activity;
(iii) the degree to which the defendant exercised decision-making authority
or influenced the exercise of decision-making authority; (iv) the nature and
extent of the defendantās participation in the commission of the criminal
29
Locust argues that he was a minor participant and entitled to a
two-level reduction. Locust Br. 49. Locust notes that the government
ārepeatedly conceded that Locust was the least culpable of the
defendants who proceeded to trial.ā Id. at 50. Perhaps. But we have
explained that the relevant inquiry is not whether a conspirator
āplayed a lesser role than his co-conspiratorsā but whether a
conspirator had a āāminorā or āminimalā [role] as compared to the
average participant in such a crime.ā United States v. Carpenter, 252 F.3d
230, 235(2d Cir. 2001) (emphasis added) (quoting United States v. Rahman,189 F.3d 88, 159
(2d Cir. 1999)). Locust fails to explain how
his role in the Kalkanis conspiracy fits that description.
Duncan argues that he was a minimal participant and, in the
alternative, that he was a minor participant. But the evidence
suggested that Duncan was integral to the first schemeāthat is, the
Kalkanis schemeāfor which he identified recruits, transported them
to facilitate the scheme, referred doctors and lawyers, and so on.
Duncan PSR Ā¶Ā¶ 17-24. We are not persuaded that the district court
erred in failing to reduce his guidelines calculation. Duncanās
arguments focus on his culpability compared to his co-conspirators.
As noted, however, the relevant inquiry is whether the conspiratorās
role was āāminorā or āminimalā as compared to the average participant
in such a crime.ā Carpenter, 252 F.3d at 235. The district court did not
err in failing to apply a minor or minimal role reduction for either
Duncan or Locust.
activity, including the acts the defendant performed and the responsibility
and discretion the defendant had in performing those acts; [and] (v) the
degree to which the defendant stood to benefit from the criminal activity.ā
U.S.S.G. Ā§ 3B1.2, comment. (n.3(C)).
30
D
Rainford argues that the recruits to the scheme were
co-conspirators rather than victims. See Rainford Br. 26. For that
reason, he contends, the district court erroneously added three
victim-related enhancements to each defendantās guidelines
calculation: a vulnerable victim enhancement under U.S.S.G.
Ā§ 3A1.1(b)(1); a ten-or-more victims enhancement under
Ā§ 2B1.1(b)(2)(A)(i); and a risk of death or serious bodily injury
enhancement under Ā§ 2B1.1(b)(16). We disagree.
1
Section 3A1.1(b)(1) provides for a two-level enhancement when
āthe defendant knew or should have known that a victim of the
offense was a vulnerable victim.ā U.S.S.G. Ā§ 3A1.1(b)(1). The
commentary clarifies that a vulnerable victim āis [1] a victim of the
offense of conviction ā¦ who [2] is unusually vulnerable due to age,
physical or mental condition, or who is otherwise particularly
susceptible to the criminal conduct.ā Id. Ā§ 3A1.1(b)(1), comment. (n.2).
Rainford argues that it was a mistake to conclude that the
ācoconspirator[s] ā¦ qualified as āvictims.āā Rainford Br. 27.
This issue is controlled by United States v. Borst, 62 F.3d 43(2d Cir. 1995). In that case, we considered a fraud scheme in which Borst āhandle[d] all of the paperwork in obtaining loansā for several couples hoping to purchase mobile homes.Id. at 45
. The documentation that Borst submitted to the bank ācontained false statements regarding the year, model, purchase price, and serial number of the mobile homes.āId.
On appeal, Borst contended that a
vulnerable victim enhancement was improper.
We noted that at least one of the couples appeared to know that
Borst entered fraudulent information on the loan application forms:
31
Mrs. Russell noticed a discrepancy between the sales
agreement Borst had prepared, which indicated that they
were purchasing a 1988 Skyline mobile home, and the
bankās promissory note, which stated that the mobile
home was a 1992 model. Borst explained away the
discrepancy as a means of expediting the transaction.
Mrs. Russell later informed the probation officer that she
accepted Borstās explanation and overlooked the
discrepancy because her diabetic husband required
constant medical care and they were temporarily
homeless.
Id.The facts supportedāand we recognizedāthat at least one of the borrowers knew of the fraud and inquired about it but was sufficiently vulnerable that she acquiesced rather than acting to āthwartā it.Id.
at 46 (quoting United States v. Kaye,23 F.3d 50, 54
(2d
Cir. 1994)).
We then turned to the question most relevant to the present
appeal: whether the āĀ§ 3A1.1 enhancement was inappropriately
applied because the three couples were not the actual victims of
Borstās crimes.ā Id. at 47. We said that the couples were still victims
for purposes of Ā§ 3A1.1 and announced a rule: āWhether or not the
three couples ā¦ were āunwitting instrumentalitiesā of Borstās criminal
conduct in light of their apparent knowledge of Borstās
misrepresentations to the bank, they were exploited and suffered
harm as a result of his actions.ā Id. at 48. In other words, even if the
couples knew that Borst was making fraudulent statements to banks
and thereby acted as instrumentalities of the fraud, the couples were
victims of Borstās scheme nonetheless.
That rule applies straightforwardly in our case. Regardless of
whether the recruits in the slip-and-fall scheme knew of the fraud,
āthey were exploited and suffered harm as a resultā of the fraud. Id.
32
As in Borst, these victims were exploited precisely because their
economic vulnerability made them willing to engage in conduct that
harmed them. The partial dissent argues that this case differs from
Borst because the recruits were āknowing, willing, and voluntary, co-
conspirators.ā Post at 8. But in both Borst and this case, the supposed
victims knew of the fraud and willingly participated in it in the hope
of obtaining a benefit. Yet they nevertheless were victims. The
defendants āknew or should have known that these individuals were
susceptible to [their] criminal conduct and less likely to thwart the
crime.ā Borst, 62 F.3d at 46.
Even if we could distinguish Borst from this case, the Ā§ 3A1.1
enhancement still would properly apply. We begin with the text of
Ā§ 3A1.1 and its commentary. See Stinson, 508 U.S. at 38; see also supra note 5. Section 3A1.1 does not define āvictim,ā saying only that the defendant āknew or should have known that a victim of the offense was a vulnerable victim.ā U.S.S.G. Ā§ 3A1.1(b)(1). The commentary defines a āvulnerable victimā in part as someone āwho is a victim of the offense of conviction and any conduct for which the defendant is accountable under Ā§ 1B1.3.ā Id. Ā§ 3A1.1(b)(1), comment. (n.2). That does not provide a definition of āvictimā either. 9 9 Apart from Borst, we have never precisely defined a āvictimā for purposes of Ā§ 3A1.1. In United States v. McCall, we discussed ālimits on the kinds of conduct that will justify a vulnerable victim enhancement.ā174 F.3d 47, 50
(2d Cir. 1998). We identified three limits: (1) the āvulnerability of the victim must bear some nexus to the criminal conduct,ā (2) āthe defendant generally must have singled out the vulnerable victims from a larger class of potential victims,ā and (3) ābroad generalizations about victims based upon their membership in a class are disfavored where a very substantial portion of the class is not in fact particularly vulnerable to the crime in question.āId.
The limits we identified concerned the victimās vulnerability
rather than the status of being a victim in the first place.
33
As a matter of plain meaning, a victim is a āperson harmed by
a crime, tort, or other wrong.ā Victim, Blackās Law Dictionary (11th
ed. 2019). We think the dictionary definition of victim supports the
conclusion that the recruits here were victims. A victim is a āperson
subjected to oppression, deprivation, or suffering,ā āsomeone tricked,
duped, or subjected to hardship,ā or āsomeone badly used or taken
advantage of.ā Victim, Websterās Third New International Dictionary
(2002). The recruits were victims because the adverse burdens of the
conspiracy fell on their shouldersāthey were subjected to hardship
by the doctors. The organizers of the conspiracy charged in this case,
by contrast, were not. It is beyond dispute that some of the recruits
were injured, and therefore endured a hardship, while the organizers
were not. And the record indicates that the recruits were duped. 10
Even if they engaged in the scheme voluntarily, the organizers of the
conspiracy took advantage of their economic vulnerability to lead
them to undertake serious physical and legal risks.
10 The record indicates, for example, that recruits were duped into
borrowing high-interest loans from litigation funding companies that
consequently collected large portions of any settlements. The litigation
funding companies would underwrite the recruitās medical expenses, small
personal loans to recruits, and referral fees, at interest rates between 25 and
50 percent. Recruits testified that their signatures had been forged on the
loan agreements or that they were not aware that they had borrowed high-
interest loans. See, e.g., Rainford Appāx 480 (āI donāt know what it was that
I signed. All I know, [Kalkanis] said itās to start the lawsuit.ā); id. at 526
(āNo, I really didnāt [read the papers], I just signed it. I just wanted to, you
know, do whatever they told me to do to sign it up and thatās it.ā); id. at 658
(āI called Bryan and told him I see my signature on some stuff that I took
out loans for surgery and stuff and thatās not my signature.ā); id. at 1095
(ā[My mom] said somebody forged her signature and she got a loan out in
her name and she didnāt know anything about it.ā).
34
Moreover, the definition of āvictimā used in Ā§ 2B1.1āthough
inapplicable to Ā§ 3A1.1 11 āsuggests the scope of the term. Section
2B1.1 says that a victim is āany person who sustained any part of the
actual loss determined under subsection (b)(1)ā or āany individual
who sustained bodily injury as a result of the offense.ā U.S.S.G.
Ā§ 2B1.1, comment. (n.1). It does not mention voluntariness or
willfulness at all. It does not exclude co-conspirators. Under this
definition, the recruits were victims.
The partial dissent does not dispute that the plain meaning of
āvictimā includes co-conspirators. 12 But it argues that applying this
plain meaning āwould lead to absurd outcomesā in which āactive and
essential participants in a conspiracy could be considered victims.ā
Post at 15. Not so. The plain meaning is consistent with the purpose
of the guideline and results in no āgenuine ā¦ absurdityā that would
ājustify departure from the plain text.ā Gibbons v. Bristol-Myers Squibb
Co., 919 F.3d 699, 706(2d Cir. 2019). The purpose of the sentencing enhancement is to account for conduct that is āmore culpable than that of the typical perpetrator of that crime.ā United States v. Morrill,984 F.2d 1136, 1137
(11th Cir. 1993). A defendant who commits an
offense that causes harm to othersāincluding others who are
exploited as participants in the conspiracyāis more culpable than a
defendant who commits the same offense without such harm to
11Application note 1 in the commentary to Ā§ 2B1.1, which provides several
definitions including āvictim,ā states at the very beginning that the
definitions apply ā[f]or purposes of this guideline.ā U.S.S.G. Ā§ 2B1.1,
comment. (n.1) (emphasis added). As a result, the definition may be
persuasive but it is not controlling for purposes of Ā§ 3A1.1.
12 Rainford similarly acknowledges that a āliteral reading,ā Rainford Br. 27,
or a ābroad reading,ā Rainford Reply Br. 10, of the guidelines would lead
to that conclusion.
35
others. In this case, the defendants profited by recruiting
economically desperate people to undergo unnecessary surgeries.
Such conduct is more culpable than that of a defendant who, say,
commits fraud by undergoing the unnecessary surgery himself. 13
Our interpretation of the Mandatory Victims Restitution Act
(āMVRAā) supports this conclusion. As the partial dissent observes,
ā[u]nder the plain text of the MVRA ā¦ co-conspirators have just as
much right to restitution as do innocent victims.ā Post at 20 (quoting
United States v. Lazarenko, 624 F.3d 1247, 1250(9th Cir. 2010)). We have departed from that plain-text reading because it would ārequire[] ārestitutionaryā payments to the perpetrators of the offense of conviction,ā which would not make sense in the context of statute that aims to compensate the victims of a crime. United States v. Reifler,446 F.3d 65, 127
(2d Cir. 2006); see also Lazarenko,624 F.3d at 1251
(āCongress could not have intended that result. Otherwise, the
federal courts would be involved in redistributing funds among
wholly guilty co-conspirators, where one or more co-conspirators
may have cheated their comrades.ā). But that context is absent here.
While the MVRA aims at compensation, the sentencing
13 The partial dissent argues that, if the Sentencing Commission intended
for the enhancements to apply to co-conspirators, it would have expressly
said so. See post at 18. It points to U.S.S.G. Ā§ 2D1.1, which provides for a
sentencing enhancement when a defendant ādistributed a controlled
substanceā to a vulnerable individual or otherwise āinvolved that
individual in the offense.ā U.S.S.G. Ā§ 2D1.1(b)(16)(B). But Ā§ 2D1.1 imposes
an enhancement for merely āinvolv[ing]ā a vulnerable person in the offense
without regard to whether that person was harmed, and therefore Ā§ 2D1.1
sweeps more broadly than a guideline that applies only to victims. We do
not see why the Commission would have been expected to āuse that same
language if it wished to impose an adjustmentā for conduct that harmed
others. Post at 19.
36
enhancements aim at assigning culpability. Even the partial dissent
acknowledges that the distinction makes a substantive difference in
the reach of each provision. 14
The partial dissent further suggests that under our purportedly
āliteral readingā of the application note, the term āvictimā would
include not only co-conspirators but also āa lone defendant ā¦ who
suffered bodily harm as a result of his own offense.ā Post at 15. But
here it is the partial dissent that is being unreasonably literalistic. At
least in law, a person generally cannot be his own victim. A person
does not commit a crime against himself or recover from himself in
tort. See Riggs v. Palmer, 115 N.Y. 506, 511-12(1889) (ā[A]ll laws as well as all contracts may be controlled in their operation and effect by general, fundamental maxims of the common law. No one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime. These maxims are dictated by public policy, have their foundation in universal law administered in all civilized countries, and have nowhere been superseded by statutes.ā); Sieffer v. McLean,26 S.W. 315, 315
(Tex. Civ. App. 1894) (āThe general rule may be found expressed in the maxim that no man can make his own misconduct the ground for an action in his own favor. If he suffers because of his own wrongdoing, the law will not relieve him. 14 See post at 31 n.15 (ā[T]he MVRA is intended to compensate victims, while sentencing enhancements for loss amount under the Guidelines are predicated on the notion that fraudsters who cause more monetary harm are more culpable and should therefore generally be given longer terms of imprisonment. As we have held, because a defendantās culpability will not always equal the victimās injury, an amount-of-loss calculation for purposes of sentencing does not always equal such a calculation for restitution.ā) (quoting United States v. Niebuhr,456 F. Appāx 36, 39
(2d Cir. 2012)).
37
The law cannot recognize equities as springing from a wrong, in favor
of one concerned in committing it.ā) (quoting Thomas M. Cooley, A
Treatise on the Law of Torts 167 (2d ed. 1888)); see also People v.
Latzman, 395 N.W.2d 56, 58 (Mich. App. 1986) (explaining that the
ādefinition of victimā under state sentencing guidelines ācannot be
construed so as to include defendant as a victim of his own crimeā).
Given that legal background, 15 we do not agree that either Ā§ 3A1.1 or
Ā§ 2B1.1 would include a defendant who suffered harm as a result of
his own offense.
The remaining question is whether these victims were
āvulnerableā within the meaning of Ā§ 3A1.1. We conclude that they
were. The application note defines a vulnerable victim as a person
āwho is a victim of the offense of conviction and any conduct for
which the defendant is accountable under Ā§ 1B1.3ā and who is
āunusually vulnerable due to age, physical or mental condition, or
who is otherwise particularly susceptible to the criminal conduct.ā
U.S.S.G. Ā§ 3A1.1, comment. (n.2). The schemes in this case targeted
the ādown and out,ā including the homeless. Rainford Appāx 1277.
We have come close to saying that homelessness necessarily renders
a victim vulnerable. See United States v. Irving, 554 F.3d 64, 75(2d Cir. 2009) (āThe facts that Irvingās victims in Mexico and Honduras were children who were homeless and were without parental or other appropriate guidance made them unusually vulnerable, independently of their ages.ā). The recruits here were vulnerable too. 15 Cf. United States v. Scott,990 F.3d 94, 128
(2d Cir. 2021) (Menashi, J.,
concurring in part and concurring in the judgment) (āThe ultimate objective
is to determine the meaning the law assigns to the text and therefore its
legal effect.ā).
38
We reject Rainfordās arguments that the recruits were not
victims within the meaning of Ā§ 3A1.1 because they were co-
conspirators. We affirm the judgment with respect to the vulnerable
victim enhancements.
2
Based on a similar argument, Rainford challenges the
enhancement under Ā§ 2B1.1(b)(2)(A)(i), which provides for a two-
level enhancement when the offense āinvolved 10 or more victims.ā
U.S.S.G. Ā§ 2B1.1(b)(2)(A)(i). Rainford concedes that the nine insurance
companies were victims, but he contends that the recruits were not
victims because they were co-conspirators. See Rainford Br. 32. For
that reason, he says, his crime did not implicate ten victims, so the
Ā§ 2B1.1(b)(2)(A)(i) enhancement is inappropriate. We again disagree.
The application note explains that a victim is āany person who
sustained any part of the actual loss determined under subsection
(b)(1)ā or anyone who āsustained bodily injury as a result of the
offense.ā U.S.S.G. Ā§ 2B1.1, comment. (n.1). It further explains that
āpersonā includes a natural person as well as a business entity. Id. The
āloss determined under subsection (b)(1)ā is a financial loss. See id.
Ā§ 2B1.1, comment. (n.3(A)) (noting that āloss is the greater of actual
loss or intended lossā and that āā[a]ctual lossā means the reasonably
foreseeable pecuniary harm that resulted from the offenseā). It is
undisputed that the nine insurance companies that submitted claims
for restitution were victims within the meaning of Ā§ 2B1.1(b)(2)(A)(i).
In determining that the recruits were victims for purposes of
Ā§ 2B1.1(b)(2)(A)(i), the district court applied the application note,
which is subject to Stinson deference. We see no error in the district
courtās analysis. The guideline provision and the commentary āare to
be read togetherā because ā[n]o threshold test of ambiguity need be
39
passed before the commentary can be consulted.ā Pedragh, 225 F.3d at
244. Only when āthe commentary contradict[s] the provisionās textā does āthe provisionās plain language ā¦ control[].ā United States v. Lewis,93 F.3d 1075, 1080
(2d Cir. 1996). As discussed above, a
straightforward application of the application note indicates that the
recruits were victims: a victim is anyone who āsustained bodily injury
as a result of the offense,ā and several of the recruits sustained such
injuries. Accordingly, they are victims.
To reach the opposite conclusion, one must decide that the
application note is a āplainly erroneousā interpretation of the
guideline insofar as it understands the word āvictimā to include co-
conspirators. But for the reasons stated above, the word āvictimā does
not necessarily exclude co-conspirators. Moreover, we have
previously applied the application note without issue. See Lacey, 699
F.3d at 716.
We conclude that at least one of the recruits was a victim,
meaning there were ten or more victims implicated by the schemes.
We affirm the judgment with respect to the enhancement under
Ā§ 2B1.1(b)(2)(A)(i).
3
Rainford makes a similar challenge to a third victim-related
enhancement: a two-level enhancement for committing an offense
that involved the āconscious or reckless risk of death or serious bodily
injuryā under U.S.S.G. Ā§ 2B1.1(b)(16). Rainford argues that his
conduct ādid not risk or cause bodily injury to the insurance
companies, the only victims here.ā Rainford Br. 31. He says that the
recruits were willing participants who āput themselves at risk by
agreeing to stage a slip-and-fall accident or to undergo surgery.ā Id.
40
That is incorrect. Section 2B1.1(b)(16) is not limited to
nonparticipants. As the government points out, Ā§ 2K1.4(a)(1) already
provides for an enhancement when the offense ācreated a substantial
risk of death or serious bodily injury to any person other than a
participant in the offense.ā Appelleeās Br. 56. We do not understand
Ā§ 2B1.1(b)(16) to be inapplicable when the person subject to the risk of
injury was a participant, as the recruits were here. Their consent is
immaterial.
Rainford does not say that the staged accidents or the surgeries
did not contain a substantial risk of death or serious bodily injury.
Unnecessary surgery is āthe type of risk that is obvious to a
reasonable person and for which disregard of said risk represents a
gross deviation from what a reasonable person would do.ā United
States v. Lucien, 347 F.3d 45, 56-57 (2d Cir. 2003). We affirm the
judgment with respect to the two-level enhancement for risk of death
or serious bodily injury.
E
Duncan suggests in passing that the district court erred by
applying a two-level enhancement for obstruction of justice. Duncan
Br. 3. He does not offer an argument, however, so the issue is waived.
See United States v. Brennan, 650 F.3d 65, 137 (2d Cir. 2011). Even so,
the record contained evidence that Duncan pressured a co-
conspirator to encourage his mother to state that her slip-and-fall
claims were not fraudulent. See Supp. Appāx 134 et seq. We see no
reason to disturb the enhancement.
III
Third, the defendants offer three challenges to their sentences
apart from the guidelines calculations. Duncan argues that his
41
forfeiture order cannot be sustained. We agree, vacate the order, and
remand for reconsideration. Rainford and Locust argue that their
restitution order cannot be sustained. We disagree, but we modify the
amount of the restitution order. Finally, Rainford argues that his term
of imprisonment must be vacated because it is inconsistent with
Duncanās and Locustās sentences. We affirm the judgment with
respect to Rainfordās sentence but remand for reconsideration in the
interest of justice.
A
The district court imposed a forfeiture order of $644,056 on
Duncan for his involvement in the spin-off scheme. See Rainford
Appāx 1347. 16 On appeal, Duncan challenges that order as lacking an
evidentiary basis and says that it violates the Excessive Fines Clause
of the Eighth Amendment. We agree with his first argument and do
not reach the Excessive Fines Clause claim.
āWhen a forfeiture award is challenged on appeal, this Court
reviews the district courtās legal conclusions de novo and its factual
findings for clear error.ā United States v. Treacy, 639 F.3d 32, 47(2d Cir. 2011). Because forfeiture is part of sentencing, a sentencing court must ādetermine forfeiture amounts by a preponderance of the evidence.ā United States v. Capoccia,503 F.3d 103, 116
(2d Cir. 2007). Computing a forfeiture amount is not an āexact science.ā Treacy,639 F.3d at 48
. The district court must make only a āreasonable estimate of the loss, given the available information.ā Uddin,551 F.3d at 180
. It may āuse
general points of reference as a starting point for calculating the losses
or gains from [the criminal activity] and may make reasonable
16 The forfeiture order was joint and several with Gordon, Duncanās
partner in D&G. Rainford Appāx 1347.
42
extrapolations from the evidence established by a preponderance of
the evidence at the sentencing proceeding.ā Treacy, 639 F.3d at 48.
Some additional background is necessary to understand
Duncanās argument. In 2020, when Duncan first appeared for
sentencing, the government requested forfeiture of about $1.6 million.
That figure represented the entire amount that Duncanās company,
D&G, received in referral fees from when Duncan started the
company in 2015 until his arrest in 2018. Duncan objected, and the
district court adjourned for more time to decide the issue. When
Duncanās sentencing resumed six months later, the government had
reduced the request to $644,056.
At the hearing, the government stated that it had reduced the
amount based on information from a ācooperating witness whoās
very familiar with the D&Gās operation and its revenue.ā Rainford
Appāx 1332-33. 17 The government also represented that the notes
from the Gordon interview were produced to Duncanās counsel.
Rainford Appāx 1333. Purportedly, Gordon had told the government
that each entry in D&Gās books would need to be analyzed to
determine whether it was fraudulent. Id.But he had also said that, generally speaking, only about ā40 percent of our cases were trip and falls and the rest were non[-]trip and falls. In total, around 80 percent of all cases were fraudulent, but of all the cases, 40 percent were related to trip-and-fall cases.āId.
The government argued to the district court that its forfeiture
request did not need to be limited to trip-and-fall cases because āthe
indictment doesnāt limit the allegations to trip and falls.ā Id. However,
17On appeal, the government notes that the witness was Gordon and that
Duncan was aware at the time that Gordon was the cooperating witness.
Appelleeās Br. 78 n.18.
43
the government acknowledged that it did not introduce evidence at
trial regarding any non-trip-and-fall cases, so it decided to ācut[] the
60 percent he estimated were non-trip-and-fall cases.ā Id.In other words, the government decided to confine the forfeiture request to the 40 percent of D&Gās revenue that was attributable to slip-and-fall cases. The government observed that this was a conservative request because Gordon had also stated that the ātrip-and-fall cases are funded easier ā¦ so the ledger is going to understate revenues for [those claims].āId.
In other words, even though slip-and-falls were
only 40 percent of D&Gās claims, slip-and-falls would compose more
than 40 percent of D&Gās revenue because it was easier to receive
financing for those claims. For that reason, the government said, its
forfeiture request āunderstate[d] considerably what the total amount
of criminal proceeds would be.ā Id. at 1334.
In response, Duncan noted that several items on the ledger
were from āentities that arenāt even [litigation] funding companies,ā
so the government was ājust pulling numbers from everywhere.ā Id.
at 1339.
The district court agreed with the government and imposed a
restitution order in the amount of $644,056. Id. at 1347. After
describing the spin-off scheme in detail, the district court said: āI do
conclude that the government has proven the much-reduced figure of
$644,000 by a preponderance of the evidence, which is a conservative
estimate of the proceeds traceable to Duncanās criminal conduct.ā Id.
at 1343. The district court acknowledged that Duncan had pointed to
some entries in the ledger used to calculate the forfeiture amount that
had nothing to do with the slip-and-fall scheme. But it concluded that
ā[w]ithout specific evidence showing that certain claims were
fraudulent, his general challenge is unsuccessfulā and the āsignificant
reduction from 1.6 million down to 644,000, by a preponderance, ā¦
44
does represent the proceeds Duncan derived from fraud scheme 2.ā
Id. at 1344.
We vacate and remand the forfeiture order. The district courtās
determination was clearly erroneous for two reasons. First, the district
court based its forfeiture order only on the representations of the
government about Gordonās statements. The notes from the meeting
were never presented to the district court, and Gordon never testified
as to those figures. So the only evidence on which the district court
relied to reach the $644,056 figure was the governmentās word. But
the governmentās word is not evidence. True, the district court may
take āgeneral points of reference as a starting point for calculating the
losses or gains,ā Treacy, 639 F.3d at 48, but an unsubstantiated
government claim is not a āpoint[] of reference.ā
Second, even if the governmentās allegations about Gordonās
statements had been corroborated, the government arrived at the
forfeiture amount by crediting only part of Gordonās statement. The
government reduced the forfeiture request by 60 percent because
Gordon said that only 40 percent of D&Gās cases were slip-and-falls.
Yet the government entirely disregarded his other statement: that
only 80 percent of all cases were fraudulent. Neither the government
nor the district court has explained why the initial forfeiture request
of $1.6 million should be cut by 60 percent but the resulting $644,000
should not be cut by another 20 percent to account for slip-and-fall
claims that were not fraudulent.
For these reasons, we vacate the district courtās forfeiture order
and remand for reconsideration consistent with this opinion.
B
Rainford and Locust were ordered to pay approximately $3.9
million in restitution to defrauded insurance companies. They bear
45
that responsibility jointly and severally with Kalkanis, Gordon, and
Dewitt. On appeal, Rainford argues that (1) the district court relied on
incorrect loss numbers from several insurance companies, and (2) the
district court used a faulty computation methodology. We disagree,
so we affirm the order with a modification.
We review an order of restitution for abuse of discretion. See
United States v. Ojeikere, 545 F.3d 220, 222(2d Cir. 2008). Review of restitution orders is āextremely deferential,ā United States v. Grant,235 F.3d 95, 99
(2d Cir. 2000) (quoting United States v. Giwah,84 F.3d 109, 114
(2d Cir. 1996)), because āordering restitution requires a delicate balance of diverse, sometimes incomparable, factors, some of which not only lack certainty but may indeed be based on mere probabilities, expectations, guesswork, even a hunch,ā United States v. Rossi,592 F.3d 372, 376
(2d Cir. 2010) (internal quotation marks and
alteration omitted).
The MVRA provides for mandatory restitution for offenses
ācommitted by fraud or deceitā in which āan identifiable victimā has
suffered āpecuniary loss.ā 18 U.S.C. Ā§ 3663A(c)(1). In each case, the
district court orders restitution āin the full amount of each victimās
losses as determined by the court and without consideration of the
economic circumstances of the defendant.ā Id. Ā§ 3664(f)(1)(A). The
ācalculation of these losses need not be mathematically precise.ā
United States v. Rivernider, 828 F.3d 91, 115(2d Cir. 2016) (internal quotation marks omitted). The district court need make only a āreasonable estimateā of the loss ābased on the evidence before it.ā United States v. Milstein,481 F.3d 132, 137
(2d Cir. 2007).
Here, nine insurers submitted a total of thirty-eight claims for
restitution, totaling about $4.9 million. The government sought to
hold the defendants accountable for 80 percent of that figure because
46
Kalkanis stated that ā[a]t least 80 percentā of the cases he managed
were fraudulent. Rainford Appāx 883-84. That yields the figure of $3.9
million.
Rainford makes two arguments, both of which concern minor
errors. First, he says that two claims by insurance companies used to
compute the restitution amount were incorrect. Rainford suggests
that one of the AmTrust claims is off by $2,500. Rainford Br. 44. But
the figure on which the government relied is substantiated elsewhere
in a sealed portion of the record. Rainford also suggests that a
Hartford claim for $30,000 was erroneously included. He argues that
the claim should not have been included because Hartfordās own
records list the claim as open. Because listing the claim as āopenā and
unpaid may have been an administrative mistake by Hartford, we are
not āleft with the definite and firm conviction that a mistake has been
committedā by the district court. Easley v. Cromartie, 532 U.S. 234, 242 (2001) (quoting United States v. U.S. Gypsum Co.,333 U.S. 364, 395
(1948)). We see no clear error and thus no abuse of discretion. See Garcia v. Garland,64 F.4th 62, 69
(2d Cir. 2023) (explaining that a decision that rests on a āclearly erroneous factual findingā or that ācannot be located within the range of permissible decisionsā constitutes an abuse of discretion) (quoting Morgan v. Gonzales,445 F.3d 549, 551-52
(2d Cir. 2006)).
Second, Rainford and Locust contend that there was no
evidence that the claims were in fact fraudulent. Rainford Br. 45;
Locust Br. 43. For that reason, they say that the district court should
have evaluated each claim by an insurance company to determine
whether it was fraudulent. The district court adopted a different
method. It credited Kalkanisās testimony that 80 percent of the cases
he managed were fraudulent. The district court thereby treated all the
claims as fraudulent but applied a 20 percent reduction to the total in
47
recognition of Kalkanisās statement. Because restitution may be based
on āguessworkā or āeven a āhunch,āā Rossi, 592 F.3d at 376(quoting United States v. Atkinson,788 F.2d 900, 902
(2d Cir. 1986)), we do not
think the district courtās methodology relied on clearly erroneous
facts or that it ācannot be located within the range of permissible
decisionsā such that it would amount to an abuse of discretion. Garcia,
69 F.4th at 69.
There is, however, one flaw in the restitution order. The
government concedes that one of the thirty-eight claims by an
insurance company was not related to a fraudulent accident. The
claim was submitted to the insurance company by Alvin Martin, and
Martin testified at trial that the claim was legitimate. Rainford Appāx
1221. That claim settled for $150,000. Because of the 20 percent
reduction on account of Kalkanisās testimony, Martinās claim
contributed only $120,000 to the restitution order. The government
therefore recognizes that it would be appropriate either to vacate and
remand to correct this issue or to affirm the judgment with a
modification. Appelleeās Br. 74 & n.16. We affirm the restitution order
but reduce it by $120,000.
C
Finally, Rainford argues that we should remand his term of
imprisonment for reconsideration in the interest of justice pursuant to
28 U.S.C. Ā§ 2106. That statute permits us to āaffirm, modify, vacate, set aside or reverse any judgment, decree, or order ā¦ and ā¦ remand the cause and direct the entry of such appropriate judgment, decree, or order, or require such further proceedings to be had as may be just under the circumstances.ā28 U.S.C. Ā§ 2106
; see also United States v. Jones,878 F.3d 10
, 24 n.6 (2d Cir. 2017) (Calabresi, J., concurring)
(noting that ā28 U.S.C. Ā§ 2106 permits affirmances and remands for
48
further proceedings in the interest of justice, and has been applied in
criminal situationsā). We are persuaded by Rainfordās arguments.
Accordingly, we affirm his sentence but remand for reconsideration
āas may be just under the circumstances.ā
Some background is necessary to understand Rainfordās claim.
The first sentencing hearing in this case occurred on January 7, 2020.
At that hearing, the district court sentenced Duncan to 80 months of
imprisonment, but it reserved judgment on forfeiture. Rainford
Appāx 1260, 1262. It sentenced Rainford to 68 months of
imprisonment, but it reserved judgment on restitution. Id. at 1316-18.
And it sentenced Locust to 60 months of imprisonment, but it
reserved judgment on restitution. Id. at 1289-92.
Duncanās forfeiture amount was determined at a hearing on
July 27, 2020. As noted above, supra Part III.A., the government
conceded at that hearing that a significant percentage of the proceeds
from the spin-off scheme were not fraudulent, so it reduced the
requested forfeiture amount. Rainford Appāx 1333. After concluding
that the spin-off scheme involved fewer fraudulent cases than
originally thought, the district court reduced the forfeiture amount
and also ādecrease[d] the sentence of Mr. Duncan from 80 months to
72 months.ā Id. at 1340.
Locustās restitution hearing was held about a year later on July
9, 2021. The district court recalled that it had lowered Duncanās
sentence on account of the governmentās concession that the spin-off
scheme involved non-fraudulent claims. See id. at 1375 (ā[M]y
intention at this point is I need to take into consideration the change
in Duncan so that the people are comparable for everything, with each
other and in between each other.ā). In light of Duncanās reduced
49
sentence, the district court found it āmore appropriateā that Locustās
sentence be ā48 months rather than 60,ā so it made that reduction. Id.
Rainfordās sentence has not been reconsidered. That appears to
be inconsistent with the district courtās other decisions. The district
court sentenced all three defendants on the same day in January 2020
in proportion to their relative culpability. It later reduced Duncanās
sentence in light of new information regarding the spin-off scheme. It
then reduced Locustās sentence in light of Duncanās reductionāeven
though Locust was not involved in the spin-off scheme. But Rainford
has not had his sentence reconsidered in light of the Duncan and
Locust reductions. This result is perplexing because Rainfordāunlike
Locustāwas involved in the spin-off scheme. Rainford PSR Ā¶ 41.
Thus, Rainfordās case for a reduction based on Duncanās reduction
would be stronger than Locustāsābut only Locust received a sentence
reduction. True, the defendantsā current sentences align with their
levels of culpability: Duncan at 72 months, Rainford at 68 months, and
Locust at 48 months. But on these facts, we remand for the district
court to consider whether it wants to adjust Rainfordās sentence as it
did for the other two defendants.
The government argues that we should not do so, saying that
Rainfordās reliance on United States v. Jones is misplaced. We disagree.
In Jones, we affirmed a sentence but remanded for reconsideration
pursuant to Ā§ 2106. See 878 F.3d at 13. The government says that Jones is inapplicable because Jones received a āvery, very high sentence in contrast with almost every similarly situated defendantā as a result of ātiming quirksā and that no similar facts are present here. Appelleeās Br. 67-68 (quoting Jones,878 F.3d at 24
(Calabresi, J., concurring)). But
these are similar facts. Rainford received a higher sentence relative to
his codefendants as a result of timing quirksābecause the district
court had a chance to reconsider Locustās sentence, but not Rainfordās
50
sentence, following its reconsideration of Duncanās sentence. Remand
is warranted because of the district courtās stated intention to adjust
the sentences in accordance with the defendantsā relative culpability,
though the district court is not required to make any adjustment if it
determines that the sentences are warranted.
We affirm Rainfordās sentence but remand for reconsideration
āas may be just under the circumstances.ā 28 U.S.C. Ā§ 2106.
CONCLUSION
We affirm the judgment of the district court except as follows.
We affirm the judgment with respect to Rainfordās and Locustās
guidelines calculations but remand to the district court for factfinding
as to the number of fraudulent accidents that were orchestrated by
the scheme during Rainfordās and Locustās tenures for the purpose of
computing the loss enhancement. We vacate Duncanās forfeiture
order and remand for further proceedings consistent with this
opinion. We affirm Rainford and Locustās restitution order but reduce
the amount of restitution by $120,000. And we affirm Rainfordās
sentence but remand for reconsideration under 28 U.S.C. Ā§ 2106.
In light of the Jacobson remand on the issue of the loss
enhancement, see supra note 4, upon the district courtās issuance of a
new order, any party may restore the matter to the active docket of
this court by letter without filing a notice of appeal. If further action
is sought from this court, the matter will be referred to this panel.
51
DENNIS JACOBS, Circuit Judge, concurring:
The majority opinion, which I join in full, persuasively explains why co-
conspirators can sometimes be deemed victims pursuant to U.S.S.G.
Ā§Ā§ 2B1.1(b)(2)(A)(i) and 3A1.1(b)(1). See Majority Op. at 31ā40. This
interpretation is supported by precedent, the plain meaning of the Guidelines,
and the Application Note to Ā§ 2B1.1, to which we owe a qualified deference. See
id. at 18 n.5.
The partial dissent challenges this interpretation of the word victim
because the co-conspirators here also played an active role in defrauding the
insurance companies. But this assignment of victim status is a mere irony, and
the law is full of them. Thus, a doctor who trafficked in the organs of persons
willing to sell body parts has committed an offense that has real victims. See 42
U.S.C.A. Ā§ 274e. Mayhem is an ancient offense; and someone paid to mutilate a
reluctant draftee committed a crime with a real victim. See Major Eugene R.
Milhizer, Maiming As A Criminal Offense Under Military Law, ARMY LAW, 5 May
1991, at 5ā13.
The undeniable irony in this case does not defeat our precedent, the plain
text of the Guidelines, and Ā§ 2B1.1ās Application Note.
1 SARAH A. L. MERRIAM, Circuit Judge, concurring in part and dissenting in part:
2 I concur with Parts I., II.A.2.b., II.A.2.c., II.B., II.C., II.D.3., II.E., III.A., and
3 III.C. of the majority opinion. However, I dissent as to Parts II.A.1., II.A.2.a.,
4 II.D.1., II.D.2., and III.B. of the majority opinion. I would remand on three
5 additional grounds. First, the District Court erred by treating criminally liable,
6 active co-conspirators as āvictimsā for purposes of adjustments under
7 Ā§3A1.1(b)(1) and Ā§2B1.1(b)(2)(A) of the United States Sentencing Guidelines.
8 Second, the District Court failed to adequately explain how it calculated a
9 $100,000 intended loss per claim for purposes of determining the loss amount
10 under Ā§2B1.1(b)(1), and the record does not support such a calculation. Third, the
11 District Court erred in its calculation of restitution under the Mandatory Victims
12 Restitution Act.
13 I. Criminally Liable, Actively Involved Co-Conspirators Are Not āVictimsā
14 Under the Guidelines.
15
16 The District Court erred when it treated the co-conspirator claimants as
17 āvictimsā and imposed, as a result of that classiļ¬cation, oļ¬ense level adjustments
18 under Ā§2B1.1(b)(2)(A)(i) and Ā§3A1.1(b)(1). Criminally liable, active co-
19 conspirators cannot be considered āvictimsā under the Guidelines. The District
1
1 Court imposed 1 a two-level increase under Ā§2B1.1(b)(2)(A)(i) because the oļ¬ense
2 supposedly involved ten or more āvictims,ā and a two-level increase under
3 Ā§3A1.1(b)(1) because defendants āknew or should have known that a victim of
4 the oļ¬ense was a vulnerable victim.ā This was the result of an erroneous
5 understanding of who constitutes a āvictimā under the Guidelines.
6 The claimants were not victims. To the contrary, they were essential co-
7 conspirators. This slip-and-fall scheme necessarily relied on each claimantās
8 knowing, willing, and voluntary participation. Each claimant willingly agreed to
9 stage an accident, fake an injury, and undergo medical treatment, all in order to
10 obtain fraudulent payments. They did so knowing that the scheme posed a risk
11 of physical harm ā after all, they each volunteered to stage an accident and in
12 many cases to undergo unnecessary surgeries.
13 The claimants who staged the accidents were not āvictimsā because they
14 knowingly joined the conspiracy and willingly participated in the scheme from
15 start to ļ¬nish. For example, Wanda Diaz testiļ¬ed that she staged the accident by
16 herself. See Rainford Appāx at 376. Keona Norwood testiļ¬ed: āI was told from
17 my friend . . . about it because she was doing the same thing, and when she told
1The District Court imposed these adjustments on all three defendants, but only
Rainford expressly challenges the adjustments on appeal.
2
1 me that it was a lawsuit and money coming involved, I deļ¬nitely agreed to do
2 it.ā Id. at 75. Willie Barbour testiļ¬ed someone told him āthat he had staged an
3 accident . . . and how easy it was and how much money he was getting from a
4 lawsuit and how I could do the same,ā so Barbour āagreed and said [he] would
5 like to do it.ā Id. at 382, 383. Kasheem Jones, who had heard about the scheme
6 previously, testiļ¬ed that he decided to lie about his injury and join the
7 conspiracy after he was already at the hospital for injuring his hand by punching
8 his TV during an argument with his wife. See id. at 553-54.
9 Several claimants testiļ¬ed at trial. Not one testiļ¬ed that he or she was
10 duped into joining the conspiracy without understanding what he or she would
11 be doing. For example, Norwood testiļ¬ed she had no problem telling her lawyer
12 she had a physical injury when she did not have one. See id. at 131. Reginald
13 Dewitt testiļ¬ed: āWhat [Duncan] said was, you go to the hospital, you receive the
14 paperwork from the hospital, tell them that you hurt your knee and your back,
15 and once you get that paperwork, give him a call, and heāll pick up the
16 paperwork and heāll take care of everything from there.ā Id. at 162. Clarence
17 Tucker testiļ¬ed that it was his idea to hold a bag of chips because he thought it
18 would make his staged slip-and-fall look better. See id. at 543-44. Yvette Battle
3
1 testiļ¬ed that she agreed to stage a slip-and-fall after she was asked if she wanted
2 to make some money doing so. See id. at 677-78, 695.
3 Sustaining bodily injury was not merely a possible consequence of
4 participation, but the very essence of each claimantās criminal agreement. The
5 testimony made clear that the claimants agreed to stage the accidents and
6 undergo unnecessary surgeries knowingly. Norwood testiļ¬ed that she was told:
7 āIf I do the slip-and-fall, I would undergo surgery, and because I would have
8 surgery, the lawsuit would give me more money.ā Id. at 73. Tucker testiļ¬ed:
9 ā[Locust] explained to me that you have to fall ā you have to fall a certain way.
10 When you fall, you have to fall.ā Id. at 514.
11 Indeed, the only evidence regarding any sort of misrepresentation made to
12 any claimant was related to the amount of money that each claimant was likely
13 to receive for his or her participation. See, e.g., id. at 599 (Jasmond Cunningham
14 testifying that he was upset because he was told he wasnāt going to get the
15 money he expected from the scheme). But the amount makes no diļ¬erence; the
16 governmentās theory is that these people are āvictimsā because they suļ¬ered
17 physical, not ļ¬nancial, harm. If each claimant had received exactly the amount of
18 money promised to them at the outset of the scheme, that would not alter the
4
1 outcome under the governmentās theory. Any such misrepresentations are thus
2 irrelevant to the question of whether the claimants were victims because some of
3 them suļ¬ered bodily harm. 2
4 The government and the majority opinion read āvictimā under Ā§3A1.1 and
5 Ā§2B1.1 too expansively; this reading risks broadening the deļ¬nition of āvictimā
6 under the Guidelines beyond its natural limits.
7 A. Guidelines Section 3A1.1
8 The term āvictimā is not deļ¬ned within Ā§3A1.1. An Application Note to
9 Ā§3A1.1 deļ¬nes āvulnerable victim,ā but as the majority opinion observes, that
10 deļ¬nition speaks more to the meaning of āvulnerableā than āvictim.ā See Maj.
11 Op. at 33. Thus, in classifying the claimants as āvictimsā under Ā§3A1.1, the
12 majority opinion relies on United States v. Borst, 62 F.3d 43 (2d Cir. 1995), in
13 support of its contention that the claimants here were āvulnerable victimsā under
14 Ā§3A1.1. See Maj. Op. at 31-33.
2 Furthermore, ļ¬nancial losses suļ¬ered by criminally liable co-conspirators should not
be considered in calculating the Guidelines. Cf. United States v. Harris, 821 F.3d 589,
606 (5th Cir. 2016) (ļ¬nding that losses suļ¬ered by āwilling participants in the
fraudulent schemeā are not countable in calculating the loss amount under the
Guidelines).
5
1 Borst is persuasive ā in how its facts diļ¬er from the facts of this case. In
2 Borst, the defendant, who was convicted of mortgage fraud in connection with
3 loan applications he processed for three couples, argued that the vulnerable
4 victim āenhancement was inappropriately applied because the three couples
5 were not the actual victims of Borstās crimes.ā 62 F.3d at 47. The Court disagreed, 6 holding āthat even though the harm Borst caused the three couples was not an 7 element of any of the crimes of which he was convicted, the district court did not 8 err in considering them vulnerable victims for purposes of section 3A1.1.āId.
at 9 48 (citation and quotation marks omitted). The argument there focused on 10 whether the harm that the three borrower couples suļ¬ered as a result of Borstās 11 mortgage fraud scheme was tied to the elements of the oļ¬ense of conviction. See 12id. at 47-48
. Thus, the relevance of the Borst decision lies in how the role of the 13 borrowers there contrasted with the role of the claimants in this case. 14 The question of whether the borrowers should properly be considered co- 15 conspirators was not addressed in Borst, probably because the borrower-victims 16 so clearly were not co-conspirators. Borst lied to the borrowers, including to the 17 one borrower who actually inquired of him about a discrepancy in the 18 paperwork. Seeid. at 45
. In one instance, he failed to pay loan proceeds to the
6
1 seller, resulting in a borrowerās eviction. See id.In another case, he obtained a 2 promissory note for a diļ¬erent mobile home than had been agreed upon by the 3 borrowers. Seeid. at 46
. The only mention in Borst that the borrowers might have 4 had any idea that fraud was afoot is this: āWhether or not the three couples in the 5 case before us were āunwitting instrumentalitiesā of Borstās criminal conduct in 6 light of their apparent knowledge of Borstās misrepresentations to the bank, they 7 were exploited and suļ¬ered harm as a result of his actions.āId. at 48
. The basis
8 for the allusion to āapparent knowledgeā is not clear from the opinion. But at
9 most, this language suggests that the borrowers might have been aware that
10 Borst made misrepresentations to the banks in connection with their loans. The
11 borrowers did not enter into the transactions knowing they would be fraudulent,
12 and they certainly did not agree to incur the harm they eventually suļ¬ered. They
13 did not collude with Borst so that they could jointly proļ¬t with Borst from the
14 fraud. They did not take any aļ¬rmative steps to advance the fraud. They did not
15 recruit additional participants into the fraud. They did not, themselves, make
16 misrepresentations to the lenders. Perhaps they looked the other way when they
17 suspected that Borst was not doing things quite right, but they were not
7
1 knowing, willing, and voluntary, co-conspirators. The claimants in this case
2 were.
3 Additionally, the bulk of the analysis ā and the primary precedential
4 holding ā in Borst relates to the question of whether the borrowers targeted by
5 the defendant were vulnerable, not on whether they were criminally liable as co-
6 conspirators. In other words, Borst skipped to the question of whether the
7 borrowers were vulnerable, without addressing the question of whether they
8 were victims. See Borst, 62 F.3d at 46-47. After ļ¬nding vulnerability, the Borst 9 Court turned to the defendantās argument that the borrowers should not be 10 considered victims ābecause the three couples were not the actual victims of 11 Borstās crimes.āId. at 47
. The question confronted by the Court was not whether 12 a knowing, voluntary, active criminal co-conspirator could be considered a 13 āvictimā for Guidelines purposes. Rather, the question was whether the 14 borrowers could be considered victims even though they did not suļ¬er the 15 primary economic losses of Borstās actions. Seeid. at 47
. That is not the question
16 presented here.
17 Borst did state that āthe couplesā precarious ļ¬nancial situation alone may
18 serve as the sole basis of a Ā§3A1.1 enhancement,ā but it did so in the context of
8
1 addressing the defendantās argument āthat the vulnerability requirement of
2 Ā§3A1.1 cannot be fulļ¬lled solely on the basis of the couplesā socioeconomic
3 circumstances.ā Id. at 46-47. Here, the question is whether the co-conspirators
4 were victims at all ā not whether they were vulnerable. We do not need to reach
5 the vulnerability 3 inquiry because the analysis ends at the threshold question:
6 Were the criminally liable co-conspirator claimants āvictimsā under the
7 Guidelines? They were not. In stark contrast to the borrowers in Borst, the
8 claimants here knowingly and willingly joined in and furthered the conspiracy
9 by deliberately taking repeated, aļ¬rmative, criminal actions. These co-
10 conspirators, like many other criminal defendants, may have been vulnerable, in
11 a colloquial sense, but they were not victims by any means. 4
3The majority opinion focuses on the alleged vulnerability of the co-conspirators. See
Maj. Op. at 34 (āEven if they engaged in the scheme voluntarily, the organizers of the
conspiracy took advantage of their economic vulnerability to lead them to undertake
serious physical and legal risks.ā). But being a āvictimā and being āvulnerableā are two
separate inquiries. The question of whether one is vulnerable should not impact
whether one is a victim. It is an unfortunate reality that the vast majority of criminal
defendants, particularly lower-level members of criminal conspiracies, are vulnerable
and desperate in various ways. They are often in dire ļ¬nancial straits, mentally ill,
and/or suļ¬ering from addiction. Nonetheless, we do not treat those co-conspirators as
victims of their own crimes, even when they suļ¬er bodily harm, ļ¬nancial harm, or other
serious consequences as a result of their participation in an oļ¬ense.
4The majority opinion also relies on the Blackās Law Dictionary deļ¬nition of āvictimā as
a āperson harmed by a crime, tort, or other wrong.ā Maj. Op. at 34. But this deļ¬nition is
9
1 Borst also draws on United States v. Echevarria, 33 F.3d 175(2d Cir. 1994), 2 abrogated on other grounds by United States v. Hussey,254 F.3d 428
(2d Cir. 3 2001). There, the vulnerable victim adjustment applied because Echevarria posed 4 as a doctor and tricked his unwitting patients, āluring them to his inadequate 5 and dangerous medical attention for the purposes of defrauding third-party 6 medical insurers.ā Id. at 180. Echevarria compared the factual circumstances 7 there to the facts in United States v. Bachynsky,949 F.2d 722
(5th Cir. 1991),
8 noting that the patients in Bachynsky were vulnerable victims āboth because
9 they falsely believed that they were receiving eļ¬ective medical attention, and
10 because they were unwitting instrumentalities of the fraud.ā Echevarria, 33 F.3d
too broad to apply in this context; surely, a person who suļ¬ers harm during the
commission of his own crime cannot be considered a victim of that crime. A getaway
driver for a robbery crew who suļ¬ers serious injuries in a car crash ļ¬eeing the scene has
been harmed by the crime ā but do we consider him, legally, a victim of it? The majority
opinionās citation to other dictionary deļ¬nitions of āvictimā as āa āperson subjected to
oppression, deprivation, or suļ¬ering,ā āsomeone tricked, duped, or subjected to
hardship,ā or āsomeone badly used or taken advantage ofāā is likewise misplaced. Id.
Here, the claimants testiļ¬ed that they joined the scheme willingly and with knowledge
of what they would be doing to make money; they were not tricked or duped. And
though the claimants may have endured hardship and suļ¬ering, the same can, sadly, be
said of many criminal defendants. That a criminal act may cause its perpetrator
hardship does not transform the perpetrator from a criminally liable participant into a
victim, in a legal sense.
10
1 at 180. The Court concluded that the patients in Echevarria āwere similarly
2 duped.ā Id. The same cannot be said of the claimants here. 5
3 The diļ¬erences between the claimants here and the borrowers in Borst and
4 the patients in Echevarria are telling. The claimants took numerous aļ¬rmative
5 steps to advance their joint venture with defendants. They were active
6 participants, not mere instrumentalities, in the scheme. The conspiracy required
7 the claimants to perform numerous overt acts in furtherance of its goals. Any
8 claimant could have stopped participating at any time. But the claimants took
9 part voluntarily step, after step, after step.
5 The majority opinion concludes that the claimants were ādupedā because some of
them ātestiļ¬ed that their signatures had been forged on . . . loan agreements.ā Maj. Op.
at 34 & n.10. This is not evidence that the claimant conspirators were duped into joining
the conspiracy. Indeed, it is not even evidence that they were unaware that someone
else might sign documents on their behalf. To the contrary, the testimony cited by the
majority opinion describes events that appear to be part and parcel of the scheme the
claimants voluntarily joined. See, e.g., Rainford Appāx at 526 (āI signed the papers and
then I received a check.ā); id. at 659 (A claimant āgot [$] 6,000 . . . because of the
paperwork that was signedā on her behalf.). In one instance cited by the majority
opinion, the claimant conceded that signing documents without reading or fully
understanding them was not something she did only in the context of this conspiracy.
See id. at 481 (āSo do you have a habit of signing things you donāt read? . . . Sometimes I
do, sometimes I donāt.ā). In the other instance cited by the majority opinion, the
claimant testiļ¬ed that āsomebody called [his mom] and said somebody forged her
signature on a piece of paper,ā but the issue was quickly resolved. Id. at 1095-96 (āHe
said heāll get back to me, and then couple days later, him and my mother resolved the
issue.ā).
11
1 They traveled to the accident site. They staged or play-acted an accident at
2 the site. They called an ambulance. They lied to the responding emergency
3 personnel about the accidents and their injuries. They checked into hospitals
4 under their real names, then lied to hospital personnel about the accidents and
5 their injuries. They continued to lie to medical personnel over many months.
6 They met with lawyers and signed paperwork to bring fraudulent lawsuits. They
7 underwent medical procedures that were either entirely unnecessary or
8 necessitated by previous conditions rather than by any accident. Some even lied
9 in depositions taken in the fraudulent lawsuits. See Rainford Appāx at 366 (Diaz);
10 id. at 562 (Jones); id. at 595-96 (Cunningham); id. at 639-41 (White). And a
11 number of claimants testiļ¬ed that they were so satisļ¬ed with the experience that
12 they referred close friends and family to the scheme as additional claimants,
13 including their parents and signiļ¬cant others. See id. at 186 (Dewitt told his
14 sister, his brother, his daughter, his wife and āa few other people.ā); id. at 458
15 (Nichols brought her friends into the conspiracy.); id. at 563 (Jones brought his
16 girlfriend into the conspiracy.); id. at 1087 (Alvin Martin brought his mother and
17 two others into the conspiracy.). These co-conspirators cannot be considered
18 vulnerable victims under Ā§3A1.1.
12
1 B. Guidelines Section 2B1.1
2 The term āvictimā is not deļ¬ned in Ā§2B1.1. Thus, the majority opinion
3 relies on the following Application Note to classify the claimants as āvictimsā:
4 āāVictimā means (A) any person who sustained any part of the actual loss
5 determined under subsection (b)(1); or (B) any individual who sustained bodily
6 injury as a result of the oļ¬ense.ā U.S.S.G. Ā§2B1.1 cmt. n.1. There is no contention
7 here that any claimant suļ¬ered any part of the ļ¬nancial loss; the majority
8 opinion contends that the claimants are āvictimsā under this deļ¬nition because
9 some of them sustained bodily injury as a result of their involvement in the
10 oļ¬ense.
11 However, the Application Note is not binding on the Court. As the
12 majority opinion notes, that commentary is considered āauthoritativeā only if it
13 does not violate āthe Constitution or a federal statute,ā or is not āinconsistent
14 with, or a plainly erroneous reading of, that guideline.ā Stinson v. United States,
15 508 U.S. 36, 38 (1993). 6 Applying this Application Note to classify the claimants as
6
The majority opinion goes to great lengths to conclude that Stinson has not been
overruled, and thus applies here, see Maj. Op. at 18 & n.5, but that issue was not
presented in this appeal. None of the parties have suggested that Stinson should be
ignored or that it has been overruled. As a practical matter, it makes no diļ¬erence to the
outcome. Even if āStinson deferenceā has survived recent developments in the law, the
13
1 victims results in a āplainly erroneous readingā of the Guideline, under which an
2 unindicted co-conspirator, or, indeed, a named defendant, may also be a victim
3 under the Guidelines. Such an interpretation would lead to absurd results. 7
4 We have long held that ā[a] statute should be interpreted in a way that
5 avoids absurd results.ā United States v. Dauray, 215 F.3d 257, 264(2d Cir. 2000); 6 see United States v. Venturella,391 F.3d 120, 126-27
(2d Cir. 2004) (āThe absurd
7 results canon cited in Dauray . . . is a rule of statutory construction that serves to
8 help resolve ambiguity.ā (citation and quotation marks omitted)). 8 The majority
Application Note is not authoritative as to the meaning of āvictimsā because reading
the Application Note to Ā§2B1.1 to classify the claimants as victims is both inconsistent
with, and results in a plainly erroneous reading of, the guideline. Because the issue of
the continuing validity of Stinson has not been presented here, and does not alter the
outcome, I would not reach it, and I neither concur in nor dissent from footnote 5 of the
majority opinion.
7On remand, it is entirely possible that the government would be able to oļ¬er evidence
of an additional insurance company victim, such that the āten or more victimsā
adjustment pursuant to Ā§2Bl.l(b)(2)(A) would be warranted. But it was error for the
sentencing court to count the claimants in that analysis.
8Canons of statutory construction also apply to the Sentencing Guidelines. See, e.g.,
United States v. Herrera, 974 F.3d 1040, 1047 (9th Cir. 2020) (āCanons of statutory
construction can also guide the interpretation [of the Sentencing Guidelines].ā); United
States v. Jones, 15 F.4th 1288, 1291 (10th Cir. 2021) (āWhen interpreting the Guidelines,
we . . . apply traditional canons of statutory construction.ā (citation and quotation
marks omitted)); United States v. Bryant, 996 F.3d 1243, 1259-60 (11th Cir. 2021) (āOur
interpretation of the Sentencing Guidelines is governed by traditional rules of statutory
construction.ā (citation and quotation marks omitted)); United States v. Cortez-
Gonzalez, 929 F.3d 200, 203 (5th Cir. 2019) (āWhen interpreting the Sentencing
14
1 opinionās deļ¬nition of āvictimā as including any person who suļ¬ered bodily
2 injury as a result of an oļ¬ense would lead to absurd outcomes where individuals
3 who had repeatedly manifested their criminal intent and were active and
4 essential participants in a conspiracy could be considered victims.
5 Reading the Application Note literally, as the majority opinion suggests,
6 would mean that a lone defendant, participating in a crime on his own, who
7 suļ¬ered bodily harm as a result of his own oļ¬ense, would be deemed a āvictimā
8 under the Guidelines. A single individual could engage in a fraud like the one
9 perpetrated here, but with no co-conspirators. He could fake an accident, lie
10 about his injuries, seek unneeded medical care, and demand payment. If, in the
11 course of committing that fraud, he suļ¬ered bodily injury, a literal reading of the
12 Application Note would declare him ā a solitary defendant ā to be a āvictimā of
13 his own oļ¬ense. That would be an unreasonable reading of the Application Note
14 because, as the majority opinion points out, in law, āa person generally cannot be
15 his own victim.ā Maj. Op. at 37.
Guidelines, we apply the ordinary rules of statutory construction. When the language of
the guideline is unambiguous, the plain meaning of that language is controlling unless
it creates an absurd result.ā (citation and quotation marks omitted)).
15
1 Likewise, in a conspiracy in which several defendants are charged and
2 those defendants suļ¬er bodily harm as a result of their criminal conduct, those
3 defendants would be counted as victims of themselves and their co-defendants.
4 In a conspiracy charging ten defendants, all of whom suļ¬ered physical injuries
5 as a result of their oļ¬ense conduct, would all ten defendants be eligible for a two-
6 level increase under Ā§2B1.1 because they were all serving dual roles as victims
7 and perpetrators? What if there were eleven defendants, and only ten were hurt;
8 would only the un-injured defendant be eligible for the increase? Or would they
9 all be eligible? If a defendant sells drugs to nine customers, and takes some of the
10 drugs himself, and all ten people suļ¬er overdoses and serious medical
11 consequences, are there ten victims of the oļ¬ense? Or only nine?
12 Here, the government recognized the criminal liability of the claimants; it
13 provided non-prosecution or immunity agreements to each claimant who
14 testiļ¬ed. See, e.g., Rainford Appāx at 567-69. The government chose not to
15 prosecute the claimants, but it very well could have done so. Yet, had the
16 government actually charged the claimants as co-conspirators, it is hard to
17 imagine that the government would have sought to classify those claimants as
18 victims. Is it, then, a prosecutorās charging decision that determines whether an
16
1 acknowledged criminal co-conspirator is also a victim? The majority opinion
2 appears to take that approach, asserting: ā[W]e do not agree that either Ā§ 3A1.1
3 or Ā§ 2B1.1 would include a defendant who suļ¬ered harm as a result of his own
4 oļ¬ense.ā Maj. Op. at 38 (emphasis added). The claimants here were not
5 defendants, because the government elected to give them immunity in exchange
6 for their testimony, rather than charging them. But the fact that they are
7 unindicted co-conspirators rather than defendants does not make it any more
8 sensible to declare them āvictimsā under these Guidelines provisions. A person,
9 after all, cannot be his own victim.
10 The government does not argue that Rainford, Locust, or Duncan
11 performed the allegedly harmful surgeries, or that they physically harmed their
12 co-conspirators by directly inļ¬icting injuries on them. Nonetheless, the majority
13 opinion contends that those three should be treated as āmore culpable than . . . a
14 defendant who, say, commits fraud by undergoing the unnecessary surgery
15 himselfā because they āproļ¬ted by recruiting economically desperate people.ā
16 Maj. Op. at 36. That may well be true. But Ā§2B1.1 is not how the Guidelines
17 impose increased penalties on those who recruit others to join a conspiracy;
18 culpability for recruiting and supervising co-conspirators is addressed
17
1 elsewhere. See, e.g., United States v. Burgos, 324 F.3d 88, 92 (2d Cir. 2003) (An
2 increase in oļ¬ense level for role in the oļ¬ense under Ā§3B1.1 may be appropriate
3 for a defendant who āplayed a signiļ¬cant role in the decision to recruit or to
4 supervise lower-level participants.ā (citation and quotation marks omitted)). 9
5 Moreover, had the Sentencing Commission wanted the adjustment under
6 Ā§2B1.1 to apply to conspirators who were involved in the oļ¬ense itself, and
7 suļ¬ered bodily harm as a result of that involvement, the Guidelines would have
8 explicitly said so. Indeed, the Commission did exactly that in Ā§2D1.1, which calls
9 for an adjustment when a ādefendant, knowing that an individual was (i) less
10 than 18 years of age, (ii) 65 or more years of age, (iii) pregnant, or (iv) unusually
11 vulnerable due to physical or mental condition or otherwise particularly
12 susceptible to the criminal conduct, distributed a controlled substance to that
13 individual or involved that individual in the oļ¬ense.ā U.S.S.G. Ā§2D1.1(b)(16)(B)
14 (emphasis added). Notably, Ā§2D1.1 does not classify individuals who were
15 āinvolvedā in the oļ¬ense as victims, but still imposes an adjustment on a
16 defendant who āinvolvedā them in the oļ¬ense by, for instance, recruiting them
9In fact, Duncanās oļ¬ense level was increased four levels under Ā§3B1.1(a), because he
āorganize[d] all of the lawyers, doctors and funders for the Patients he and his co-
conspirators recruited into the scheme.ā Appelleeās Br. at 62 (quoting Duncan PSR Ā¶26).
18
1 to participate in a conspiracy. The Commission used explicit language to impose
2 an adjustment on a defendant who involved others in a drug oļ¬ense; so why
3 would the Commission not use that same language if it wished to impose an
4 adjustment on a defendant who involved others in a fraud oļ¬ense? Because it
5 did not intend Ā§2B1.1 to impose an adjustment if the person who suļ¬ered harm
6 was a co-conspirator.
7 The errors in the District Courtās calculation of restitution under the
8 Mandatory Victims Restitution Act (āMVRAā) are addressed later, but it is
9 notable that we do not treat co-conspirators as victims under the MVRA. The
10 MVRA has a broad deļ¬nition of victim:
11 For the purposes of this section, the term āvictimā means a person
12 directly and proximately harmed as a result of the commission of an
13 oļ¬ense for which restitution may be ordered including, in the case of
14 an oļ¬ense that involves as an element a scheme, conspiracy, or
15 pattern of criminal activity, any person directly harmed by the
16 defendantās criminal conduct in the course of the scheme, conspiracy,
17 or pattern.
18
19 18 U.S.C. Ā§3663A(a)(2). But, under the MVRA, a co-conspirator may not receive
20 compensation as a victim because courts have recognized the absurdity of that
21 proposition. See United States v. Reiļ¬er, 446 F.3d 65, 127 (2d Cir. 2006) (ā[A]ny
22 order entered under the MVRA that has the eļ¬ect of treating coconspirators as
19
1 āvictims,ā and thereby requires ārestitutionaryā payments to the perpetrators of
2 the oļ¬ense of conviction, contains an error so fundamental and so adversely
3 reļ¬ecting on the public reputation of the judicial proceedings that we may, and
4 do, deal with it sua sponte.ā); see also United States v. Archer, 671 F.3d 149, 171 5 (2d Cir. 2011) (ā[C]o-conspirators, who, by deļ¬nition, know of the scheme, are 6 not victims and may not receive restitution.ā); United States v. Ojeikere,545 F.3d 7 220, 222-23
(2d Cir. 2008) (Victims who arguably had unclean hands were still 8 entitled to restitution because they āwere not involved in the oļ¬ense of 9 conviction, which was a fraudulent scheme to obtain money from them.ā). The 10 Ninth Circuit, relying on Reiļ¬er, has made it clear: 11 Under the plain text of the MVRA . . . co-conspirators have just as 12 much right to restitution as do innocent victims. 13 14 But courts have recognized that Congress could not have intended 15 that result. Otherwise, the federal courts would be involved in 16 redistributing funds among wholly guilty co-conspirators, where one 17 or more co-conspirators may have cheated their comrades. 18 19 United States v. Lazarenko,624 F.3d 1247, 1250-51
(9th Cir. 2010) (emphasis
20 added). This analysis applies equally to the deļ¬nition of āvictimā in the
21 Application Note to Ā§2B1.1. The majority opinion would classify willing co-
20
1 conspirators as victims if they suļ¬er bodily harm ā but the Commission could
2 not have intended that absurd result.
3 The claimants are co-conspirators who knowingly, willingly, and
4 voluntarily participated in and even promoted the scheme. 10 It was therefore
5 error to treat them as āvictimsā for purposes of Ā§3Al.l(b)(l) and Ā§2Bl.l(b)(2)(A),
6 and I would remand for resentencing on that basis.
7 II. The District Court Erred in Determining that the Intended Loss as to
8 Each Claim was $100,000.
9
10 The majority opinion correctly concludes that remand is necessary for the
11 District Court to make factual ļ¬ndings regarding the number of fraudulent
12 accidents the Kalkanis conspiracy orchestrated. 11 But remand is also necessary
10The concurrenceās reliance on 42 U.S.C. Ā§274e is misplaced. That statute does not
deļ¬ne or indeed even mention āvictims,ā and a search of all federal cases reported on
Westlaw reveals no decisions holding that a willing seller of an organ qualiļ¬es as a
āvictimā under that law simply because he or she undergoes surgery. The statute
provides no insight into the issue presented here.
11While the majority opinion limits its remand on this basis to only Rainford and
Locust, I would also remand as to Duncan. The failure to adequately support the loss
calculation extends to all three defendants. Furthermore, it is impossible to know
whether a recalculation would aļ¬ect Duncanās sentence because we do not know what
the revised calculations will be. The majority opinion too quickly assumes that Duncan
was not āprejudicedā because it assumes the number of claims the District Court would
deem fraudulent on remand, and also credits the unsupported $100,000 intended loss
ļ¬gure. Notably, the District Court reduced Duncanās sentence in light of new
information about āthe increasing percentage . . . of nonfraudulent accidents from
21
1 because the District Court did not āmake findings that are sufficiently specific to
2 permit meaningful appellate reviewā when it calculated an intended loss of
3 $100,000 per claim. United States v. Flores, 945 F.3d 687, 721(2d Cir. 2019). 4 Additionally, a review of the record reveals that the District Courtās intended 5 loss ļ¬gure of $100,000 is not āgrounded in the evidenceā in the record and 6 instead impermissibly āderive[s] from mere speculation.ā United States v. 7 Coppola,671 F.3d 220, 249
(2d Cir. 2012).
8 Section 2B1.1(b)(1) provides for an adjustment to the Base Offense Level
9 when the monetary loss from an offense exceeds certain thresholds. The District
10 Court held Rainford and Duncan responsible for a loss between $25 and $65
11 million, which resulted in a twenty-two-point increase to their Base Offense
12 Levels. See Duncan Pre-Sentence Report (āPSRā) Ā¶52; Rainford PSR Ā¶51; U.S.S.G.
13 Ā§2B1.1(b)(1)(L). The District Court held Locust responsible for a loss between $9.5
14 and $25 million, which resulted in a twenty-point adjustment to his Base Offense
15 Level. See Locust PSR Ā¶51; U.S.S.G. Ā§2B1.1(b)(1)(K).
D&G.ā Rainford Appāx at 1340. This suggests that further reconsideration of the loss
calculation might impact Duncanās sentence.
22
1 These aggregate loss amounts were based on a $100,000 intended loss per
2 claim ā but the District Court failed to explain how it arrived at that number. 12
3 When calculating a Guidelines adjustment, the District Court āis required to
4 make ļ¬ndings that are suļ¬ciently speciļ¬c to permit meaningful appellate
5 review.ā Flores, 945 F.3d at 721; see also United States v. Patasnik,89 F.3d 63
, 69 6 (2d Cir. 1996) (ā[I]t is clear under our precedents that an implicit finding is not 7 enough.ā); United States v. Carter,489 F.3d 528, 538
(2d Cir. 2007) (āAlthough
8 this requirement of making specific factual findings may interfere with the
9 smooth operation of the sentencing hearing, we require specific factual findings
10 to permit meaningful appellate review.ā (citation and quotation marks omitted)).
11 To be sufficiently specific to permit meaningful appellate review, it is
12 not enough for the court merely to repeat or paraphrase the language
13 of the guideline and say conclusorily that the defendant meets those
14 criteria. And although a sentencing court may sometimes satisfy its
15 obligation to make findings by adopting the factual statements in the
16 defendantās presentence report, adoption of the PSR does not suffice
12The majority opinion addresses the continuing validity of Stinson in its discussion of
the District Courtās ļ¬ndings as to loss amount. But the Application Note relied upon by
the majority opinion ā which discusses the use of intended loss rather than actual loss
for calculation of the oļ¬ense level ā has no impact on the problem actually presented.
The District Courtās error was not in relying on intended loss versus actual loss. Its error
was in failing to accurately calculate either actual or intended loss, based on evidence in
the record, and in failing to explain how it calculated the $100,000 per claim loss
amount. Again, I would not reach the question of whether Stinson deference remains
valid, because it has not been argued and does not aļ¬ect the outcome of this appeal.
23
1 if the PSR itself does not state enough facts to permit meaningful
2 appellate review.
3
4 United States v. Skys, 637 F.3d 146, 157(2d Cir. 2011) (citations and quotation 5 marks omitted). 6 On appeal, we are required to ādetermine whether the trial courtās method 7 of calculating the amount of loss was legally acceptable.ā United States v. 8 Rutkoske,506 F.3d 170, 178
(2d Cir. 2007) (citation and quotation marks omitted).
9 The District Court failed to articulate the method and the numbers it relied on to
10 come to the conclusion that the intended loss per claim was $100,000. The record
11 is completely lacking in any meaningful analysis of the loss amount and thus
12 there cannot be any meaningful appellate review of the District Courtās decision.
13 The majority opinion acknowledges that the District Court did not make
14 suļ¬ciently speciļ¬c factual ļ¬ndings on the number of fraudulent accidents that
15 were part of the conspiracy. See Maj. Op. at 23, 28. But the District Courtās failure
16 to explain infects both aspects of the loss calculation because the District Court
17 oļ¬ered no more of an explanation for the intended loss per claim than it did for
18 the number of fraudulent accidents. Instead, the majority opinion and the
19 government rely on post-hoc rationalizations to justify the District Courtās
20 adoption of the $100,000 ļ¬gure.
24
1 At Locustās sentencing, the District Court asked the government how it
2 ācame up with the loss amount here?ā Rainford Appāx at 1278. In response, the
3 government āpoint[ed] the Court to paragraph 38 of the PSR, which set forth
4 how the government calculated the loss amount for Mr. Locust.ā Id. The District
5 Court then asked: ā[W]here does the foreseeable loss per recruit of each victim of
6 a hundred thousand come from?ā Id. at 1279. In response, the government
7 stated:
8 Clarence Tucker testiļ¬ed at trial ā this is page 543 to 544 of the
9 transcript āthat he was told by Mr. Locust he could make a hundred
10 thousand dollars or better in staging an accident. So in terms of the
11 individual ability to recover, Mr. Locust had knowledge of that. And
12 then in terms of the volume of patients, he also had knowledge of
13 that because of the frequency of which he was driving patients every
14 day to doctorās appointments, to lawyerās appointments, cars full of
15 patients. I mean, he got a bigger car, with Mr. Kalkanisā assistance so
16 he could transport more patients. So a conservative estimate here of
17 a reasonably foreseeable loss amount is what the guidelines are as
18 calculated in the PSR.
19
20 Id. Based on that response, the District Court, without further elaboration,
21 adopted the āļ¬ndings of fact in the presentence reportā and found the āintended
22 loss range of between 9.5 and 25 million [dollars]ā to be āappropriate.ā Id. at
23 1281. It similarly adopted the ļ¬ndings of fact in the PSRs for Rainford and
24 Duncan. See id. at 1299, 1234.
25
1 Neither the District Court nor the government oļ¬ered any explanation of
2 how they determined that $100,000 was a reasonable assessment of the intended
3 loss per claim. Was one conspiratorās testimony about the amount he was told he,
4 personally, could make by participating in the fraud really the entire basis for
5 calculating the intended loss for every claim brought in the entire scheme? The
6 District Court never shared its reasoning, so we are left to speculate.
7 Furthermore, the District Courtās āadoption of the PSR does not sufficeā
8 because the āPSR itself does not state enough facts to permit meaningful
9 appellate review.ā Skys, 637 F.3d at 157 (citation and quotation marks omitted).
10 The majority opinion takes a guess at how the District Court might have come up
11 with the $100,000 figure:
12 In support of [the conclusion that the intended loss for each
13 fraudulent accident was $100,000], the PSRs referenced (1) Clarence
14 Tuckerās testimony that his case settled for $100,000, (2) Kasheem
15 Jonesās testimony that his case settled for $225,000 and that his
16 girlfriendās case settled for $250,000, (3) Carol Whiteās testimony that
17 that her case settled for $80,000, and (4) Alvin Martinās testimony that
18 his case settled for $120,000. See, e.g., Rainford PSR Ā¶24. The district
19 court adopted these ļ¬ndings for each defendant. See Rainford Appāx
20 1281 (Locust), id. at 1299 (Rainford), id. at 1234 (Duncan).
21
22 Maj. Op. at 21. The District Court did adopt the factual ļ¬ndings in defendantsā
23 PSRs, but it provided no meaningful explanation as to how those factual ļ¬ndings
26
1 supported the $100,000 ļ¬gure. Indeed, the government has never articulated a
2 coherent basis for the loss calculations. Simply listing the settlement amount for
3 ļ¬ve cases mentioned in the PSRs, without further explanation, is not suļ¬cient to
4 permit appellate review. Further, the PSRās conclusion that āthe attempted loss
5 per recruited patient was only $100,000ā makes no reference to the portion of the
6 PSR cited by the majority opinion, and does not appear to rely on it. Compare,
7 e.g., Rainford PSR Ā¶38, with Rainford PSR Ā¶24. Indeed, there is no indication that
8 any of the PSR information relied upon on appeal actually served as the District
9 Courtās basis for its calculation of the intended loss. 13
10 The majority opinion also points to the District Courtās statement that
11 āsometimes it was held out to people that they could make up to a hundred
12 thousand dollars.ā Maj. Op. at 21 (quoting Rainford Appāx at 1278). However,
13 without further elaboration, this passing comment is not a form of factļ¬nding
14 suļ¬cient to support meaningful appellate review. And, even if claimants were
13Indeed, the District Judge appeared to recognize the lack of an evidentiary basis in the
PSR for the loss amount, prompting him to ask, upon review of the PSR, where āthe
foreseeable loss per recruit of each victim of a hundred thousandā came from. Rainford
Appāx at 1279. The District Court did not inquire further, however, suggesting that it
accepted the governmentās explanation. If that is so, then the District Court based its
entire loss calculation on the testimony of a single co-conspirator claimant about what
he was told he might be able to make.
27
1 āsometimesā told they could make $100,000, that alone is not suļ¬cient to
2 support a ļ¬nding that $100,000 was the intended loss for every single claim.
3 The District Courtās failure to make the requisite ļ¬ndings with suļ¬cient
4 speciļ¬city is enough to warrant remand. But even if we were to engage in review
5 of the factual determination, we would be bound to ļ¬nd that the $100,000 ļ¬gure
6 is not supported by the evidence in the record. While a district court need not
7 calculate the loss amount with āabsolute precision,ā it must āmake a reasonable
8 estimate of the loss given the available information,ā and that reasonable
9 estimate must be supported āby a preponderance of the evidence.ā United States
10 v. Rivernider, 828 F.3d 91, 112(2d Cir. 2016) (citation and quotation marks 11 omitted). āIn determining a loss amount for purposes of Guidelines calculation, a 12 district courtās ļ¬ndings must be grounded in the evidence and not derive from 13 mere speculation.ā Coppola,671 F.3d at 249
.
14 Here, the loss calculations can only have been based on speculation
15 because the evidence presented to the District Court does not support an
16 intended loss per claim of $100,000. As discussed, the District Court asked one
17 question about the basis for the $100,000 estimate, to which it received an utterly
18 unsatisfactory answer. The government failed to explain why Clarence Tuckerās
28
1 testimony about the amount he was told he could make could be extrapolated to
2 serve as an average amount for every claim in the conspiracy. The government
3 contends that an intended loss of $100,000 per claim is a āconservative estimate.ā
4 Appelleeās Br. at 49. But any estimate ā conservative or otherwise ā must be
5 supported by evidence in the record. 14
6 In sum, the District Court failed to adequately explain the basis for its
7 ļ¬nding that the intended loss per victim was $100,000, and the record does not
8 support that ļ¬gure. Therefore, I would remand for the District Court to conduct
9 a proper analysis of the intended loss per victim.
10 III. The District Court Erred in Calculating Restitution under the MVRA.
11 The District Court ordered Rainford and Locust to pay restitution in the
12 total amount of $3,928,133.60 pursuant to the MVRA, as requested by the
13 government. See Rainford Appāx at 1379, 1390. This award was not supported by
14The record on appeal includes the trial testimony from the testifying claimants as well
as a number of spreadsheets, apparently submitted by insurance companies identiļ¬ed
as potential victims. āBased on the information provided by the insurance companies,ā
the government, in the Restitution Letter, compiled a chart of āPatients for which the
insurance companies paid out settlements or judgments.ā Rainford Sealed Appāx at 5. It
includes numerous claims that are below the $100,000 āconservativeā intended loss per
claim amount. See id. at 6-7 (listing claim payments of $90,000, $82,500, $25,000, $70,000,
$30,000, $41,667, $75,000, $50,000, $65,000, $2,000, $5,000, $85,000, $89,500, $80,000).
These broadly varying payment amounts only further demonstrate that the District
Court needed to provide more of an explanation as to how it concluded that the
intended loss per claim was $100,000.
29
1 speciļ¬c ļ¬ndings as to which payments made by which insurance companies
2 were based on fraudulent claims. Therefore, it must be vacated.
3 Calculating restitution under the MVRA is not meant to be a guessing
4 game. Restitution is meant to compensate victims for their loss, their whole loss,
5 and nothing but their actual loss. ā[B]ecause the MVRA itself limits restitution to
6 āthe full amount of each victimās loss,ā a restitution order must be tied to the
7 victimās actual, provable, loss.ā United States v. Zangari, 677 F.3d 86, 91(2d Cir. 8 2012) (emphasis added) (quoting18 U.S.C. Ā§3664
(f)(1)(A)). āIn determining the 9 proper amount of restitution, a court must keep in mind that the loss must be the 10 result of the fraud.ā United States v. Paul,634 F.3d 668, 676
(2d Cir. 2011) 11 (citations and quotation marks omitted); see also United States v. Marino, 65412 F.3d 310, 319-20
(2d Cir. 2011) (ā[R]estitution is authorized only for losses that 13 were directly caused by the conduct composing the oļ¬ense of conviction, and 14 only for the victimās actual loss.ā (citations and quotation marks omitted)). āThe 15 Government bears the burden of proving a victimās actual loss by a 16 preponderance of the evidence.ā Zangari,677 F.3d at 92
.
17 Even though the two calculations are independent, many of the defects
18 discussed above in relation to the calculation of the Guidelines loss amount also
30
1 infect the restitution orders. 15 The governmentās method of calculating restitution
2 in this matter ā which was adopted without analysis by the District Court ā is
3 deeply ļ¬awed. It looks simple enough: The government started with a total of
4 $4,910,167, which is the amount that nine insurance companies 16 reported they
5 āpaid out on [38] cases that the Government ha[d] identiļ¬ed as being part of the
6 Fraud Scheme.ā Rainford Sealed Appāx at 5. Then, presumably relying on Peter
7 Kalkanisās testimony, the government reduced the total amount by 20%, so that
8 the ārestitution orders [were] based on 80% of the total amount of money that
9 was paid out by the insurance companies,ā because āapproximately 80% of the
15ā[T]he MVRA is intended to compensate victims, while sentencing enhancements for
loss amount under the Guidelines are predicated on the notion that fraudsters who
cause more monetary harm are more culpable and should therefore generally be given
longer terms of imprisonment. As we have held, because a defendantās culpability will
not always equal the victimās injury, an amount-of-loss calculation for purposes of
sentencing does not always equal such a calculation for restitution.ā United States v.
Niebuhr, 456 F. Appāx 36, 39 (2d Cir. 2012) (summary order) (citations and quotation
marks omitted). Indeed, we may require more precision in calculating restitution than
we do in calculating loss under the Guidelines; an estimate that may āsuļ¬ce[] for
purposes of Guidelines calculations,ā may nonetheless be inadequate to support āan
order of restitution.ā United States v. Reiļ¬er, 446 F.3d 65, 127 (2d Cir. 2006).
16 It is notable that the government did not seek restitution on behalf of the criminally
liable co-conspirator claimants, though it argues that they suļ¬ered serious harms. This
reinforces the reality that the claimants are not victims under the law. See, e.g., United
States v. Archer, 671 F.3d 149, 173 (2d Cir. 2011) (observing that any person who
knowingly participated in a fraud would not be entitled to restitution for any losses
suļ¬ered in the fraudulent scheme).
31
1 cases in the Fraud Scheme were fraudulent.ā Id. at 7. That left a total restitution
2 amount of $3,928,133.60. See Rainford Appāx at 1379, 1390.
3 All parties acknowledge the most glaring error in that restitution
4 calculation: the inclusion of Alvin Martinās legitimate $150,000 claim. While the
5 majority opinion and the government concede this error, they fail to
6 acknowledge its broader signiļ¬cance ā that it reļ¬ects the lack of evidence
7 supporting a ļ¬nding that each of the 38 cases aggregated by the government was
8 actually a part of the charged fraud. A review of the record reveals that the only
9 āevidenceā of the allegedly fraudulent claims is the governmentās summary
10 (āRestitution Letterā) and a set of spreadsheets apparently prepared by the
11 insurance companies.
12 The governmentās Restitution Letter indicates that the government
13 identiļ¬ed the claims to be included in the restitution order ā[b]ased on the
14 information provided by the insurance companies.ā Rainford Sealed Appāx at 5.
15 The spreadsheets that were sent to the government by the insurance companies
16 do not tell us much. They are not accompanied by aļ¬davits or certiļ¬cations
17 explaining their contents. No restitution hearing took place, and thus, there was
18 no testimony from any representatives of the companies explaining the
32
1 spreadsheets. The spreadsheets are not consistent with each other, and do not
2 provide all the information one would expect or hope to see. The Restitution
3 Letter does not adequately explain why certain claims are included (or,
4 potentially, excluded).
5 There is little other evidence indicating that any of these 38 claims were
6 related to the fraud. There was testimony at trial from three of the conspirators ā
7 Kasheem Jones, Alvin Martin, and Clarence Tucker ā about their own claims (and
8 in the case of Jones, the claim of his girlfriend CF). 17 These claims were included
9 in the 38 claims on which the restitution order was based. See Rainford Sealed
10 Appāx at 3. But the only evidence the government oļ¬ers to show that the
11 remaining payouts were part of the fraud is that āthe insurersā restitution claims
12 related to cases involving an attorney, broker, runner, doctor, and/or funding
13 company that participated in the conspiracy.ā Appelleeās Br. at 76. This approach
14 is problematic in several ways.
15 First, in one instance, we know that the assumption that a claim was
16 fraudulent simply because a participant in the scheme was involved in it was
17 false because the government has conceded that the ārestitution totals should not
17Claimants who participated in the scheme but did not testify at trial are referred to
herein only by their initials.
33
1 have factored in AmTrustās $150,000 settlement for Alvin Martinās 2014 claim
2 because, as Martin testiļ¬ed at trial, that claim ā unlike Martinās fraudulent 2012
3 claim ā was legitimate.ā Id. at 74.
4 There are other signiļ¬cant questions about the 38 claims on which the
5 restitution order was based:
6 ā¢ As to at least one claim, the only connection that claim had to the
7 scheme was that the litigation funding ļ¬rm āFast Trakā was
8 involved. See Appelleeās Br. at 76. But Fast Trak is a national
9 company, and likely had involvement in many cases unrelated to
10 this scheme.
11 ā¢ The Hanover claims in the record appear to have been presumed
12 fraudulent based solely on the attorneys involved ā though there
13 was no evidence that Attorneys Elefant and Constantine brought
14 only fraudulent claims related to the charged scheme during this
15 time period. See Appelleeās Br. at 76; Rainford Sealed Appāx at 25.
16 ā¢ $30,000 in restitution was awarded to Hartford Financial Services
17 Group for KGās claim, see Rainford Sealed Appāx at 6, but that claim
18 is reported as āopenā rather than āpaidā on the spreadsheet, see id.
34
1 at 30, and thus presumably was not paid. The government dismisses
2 this as a typo but it provides no basis for that assertion. See
3 Appelleeās Br. at 75.
4 ā¢ $89,500 in restitution was awarded to Nationwide for JTās claim, see
5 Rainford Sealed Appāx at 7, even though the Nationwide
6 spreadsheet indicates that company paid only $2,500 and a co-
7 defendant paid the remaining $87,000, see id. at 28. Similarly, $5,000
8 in restitution was awarded to Nationwide for BTās claim, see id. at 7,
9 even though Nationwide reported that a co-defendant paid the
10 āmajorityā of the $5,000 payout for BT, see id. at 28. In both
11 instances, the government included the full amount of the claim in
12 the restitution award, without taking into account the notes in the
13 spreadsheet indicating that Nationwhide actually paid out a lower
14 amount.
15 More importantly, the entire basis of the restitution calculation is
16 erroneous. Kalkanisās estimate that 80% of claims were fraudulent is unreliable
17 and insuļ¬cient to support the restitution order. He testiļ¬ed that āas high as 80
18 percent of those cases were fraudulent,ā Rainford Appāx at 1018, but he also
35
1 testiļ¬ed that āpractically allā of the āintake sheets involved fraudulent slip-and-
2 fallsā and when he was asked to clarify that statement, he stated only that ā[t]he
3 majority of themā were fraudulent, id. at 884. But even assuming an 80% rate to
4 be accurate, a 20% reduction to the total amount of restitution does not
5 accurately account for a ļ¬nding that 20% of the claims made were not fraudulent.
6 The District Court had an obligation to determine the exact amount of
7 restitution owed to each victim and to award that amount, ensuring that it
8 neither overpaid nor underpaid any victim. But this restitution award does both.
9 It overpays insurance companies who did not actually suļ¬er the full loss claimed
10 and underpays insurance companies who did actually suļ¬er the full loss
11 claimed.
12 Our decision in United States v. Reiļ¬er is instructive. There, the sentencing
13 court ordered restitution based on a list of payees that admittedly included
14 persons who were not properly classiļ¬ed as victims under the MVRA. See 446
15 F.3d at 125. The government never āin fact identiļ¬ed the entries forā amounts 16 that should not have been included in the restitution order, nor āremoved them 17 fromā the exhibit on which the restitution order was based.Id.
The exhibit on
18 which the restitution order was based included payments to investors whom
36
1 āthe government conceded could not be considered victims,ā as well as to certain
2 co-conspirators who the government conceded it knew were ānot victims.ā Id.3 Instead of actually excluding those who were improperly classiļ¬ed as victims 4 from the restitution calculation, the government āconceptually exclud[ed]ā them 5 āby requesting that Reiļ¬er be held accountable for losses of only $3 million, 6 rather than the $6 millionā in total claims appearing in the governmentās exhibit. 7Id. at 126
. 8 We found the governmentās eļ¬orts to āestimateā the losses inadequate: āIn 9 sum, the Reiļ¬er Amended Judgment orders Reiļ¬er to pay restitution to persons 10 listed in Government Exhibit 3, but Exhibit 3 includes persons who were not . . . 11 conspiracy victims within the meaning of the MVRA, either because their losses 12 resulted from purchases they made after the conspiracy had ended or because 13 they were coconspirators.āId. at 127
. The district courtās restitution order not 14 only resulted in improper payments to ineligible parties, but in underpayment to 15 true victims. Seeid. at 133
(āBut the [district courtās] order that Reiļ¬er pay only
16 $2 million to the persons listed in Government Exhibit 3, whose total losses are
17 listed at more than $6 million, means that the maximum amount of restitution to
18 be received from Reiļ¬er by each person on that list āā victims and nonvictims
37
1 alike āā is less than one-third of the speciļ¬ed loss.ā). 18 As a result, we vacated the
2 restitution order. The government and the District Court took the same rough
3 estimate approach here, and we should vacate the restitution order in this case as
4 well.
5 The claims in Reiļ¬er were extremely complex, and the ābest guessā
6 approach was an understandable temptation. But here, it would have been
7 simple enough for the government to evaluate each of the 38 claims; determine
8 whether each was indeed fraudulent; calculate exactly how much was paid on
9 each fraudulent claim; and then seek a proper restitution order based on that
10 information. But it inexplicably failed to do so. The government concedes that at
11 least 20% of the claims were not fraudulent, but rather than making an eļ¬ort to
12 determine which claims were fraudulent and which were not, it āconceptuallyā
13 excluded the legitimate claims by reducing the total amount to be paid to each
14 victim by 20%. We found that approach improper in Reiļ¬er, and it is improper
15 here. See Reiļ¬er, 446 F.3d at 134 (observing that āthe presence of nonvictims on
16 the list of persons to whom restitution is to be paid has the eļ¬ect of diluting the
18The government suggested that the court award restitution of $3 million, that is, about
half the losses listed in its exhibit, but the sentencing court reduced the percentage
awarded further to only $2 million. Neither blanket reduction was supported by the
evidence. See Reiļ¬er, 446 F.3d at 133.
38
1 amount the victims will receiveā); Zangari, 677 F.3d at 93(ā[T]he MVRA . . . does 2 not allow a sentencing court to substitute gain for loss . . . .ā). We simply do not 3 know which claims constitute the 20% that the government appears to concede 4 are legitimate. Are they the largest or the smallest claims? Which victims 5 sustained those losses? What if all of the legitimate claims were paid by a single 6 insurance company ā why should that company be paid at all, and the other 7 companiesā payments be reduced by 20%? 8 ā[E]ven where a defendantās complex fraud scheme results in many 9 victims whose identities and losses are diļ¬cult to ascertain, the district court 10 should identify the victims and their actual losses prior to imposing restitution 11 under the MVRA.ā United States v. Catoggio,326 F.3d 323, 329
(2d Cir. 2003) 12 (emphasis added). This fraud was not complex. There were steps the District 13 Court (and the government) could have taken to determine the actual restitution 14 amount: 15 The court may, for example: ārequire additional documentation or 16 hear testimony,ā18 U.S.C. Ā§3664
(d)(4); allow additional time āfor the 17 ļ¬nal determination of the victimās losses, not to exceed 90 days after 18 the sentencing,āid.
Ā§3664(d)(5); and ārefer any issue arising in
19 connection with a proposed order of restitution to a magistrate judge
20 or special master for proposed ļ¬ndings of fact and recommendation
21 as to disposition,ā id. Ā§3664(d)(6).
22
39
1 Zangari, 677 F.3d at 93. The District Court could have declined to order 2 restitution: 3 Ultimately, if the court ļ¬nds that ācomplex issues of fact related to the 4 cause or amount of the victimās losses would complicate or prolong 5 the sentencing process to a degree that the need to provide restitution 6 to any victim is outweighed by the burden on the sentencing process,ā 7 then the court may, in the exercise of its sound discretion, decide not 8 to order restitution at all. 18 U.S.C. Ā§3663A(c)(3)(B); see also USSG 9 Ā§5E1.1(b)(2) (same). 10 11 Id.; see also Marino, 654 F.3d at 319 (āCongress explained [the MVRAās] 12 causation standards as follows: . . . āThe committee believes that losses in which 13 the amount of the victimās losses are speculative, or in which the victimās loss is 14 not clearly causally linked to the oļ¬ense, should not be subject to mandatory 15 restitution.āā (quoting S. Rep. No. 104-179, at 19 (1995))). 16 The majority opinion and the government, relying on United States v. 17 Rossi,592 F.3d 372
(2d Cir. 2010) (per curiam), contend that ārestitution may be 18 based on āguessworkā or āeven a hunch.āā Maj. Op. at 48 (quoting Rossi,592 F.3d 19 at 376
); see also Appelleeās Br. at 73; Maj. Op. at 46 (ā[O]rdering restitution
20 requires a delicate balance of diverse, sometimes incomparable, factors, some of
21 which not only lack certainty but may indeed be based on mere probabilities,
40
1 expectations, guesswork, even a hunch.ā (quoting Rossi, 592 F.3d at 376)). 19 This 2 reliance on Rossi is misplaced, because the language about āguessworkā and āa 3 hunchā was in the context of determining restitution under the Victim and 4 Witness Protection Act (āVWPAā), not the MVRA. See Rossi,592 F.3d at 374
5 (āThe issue of restitution in this case is governed by the VWPA.ā). 20 And in Rossi, 6 we found that the sentencing judge had been ācautious and restrainedā in her 7 restitution analysis, and observed that she had properly declined to award 8 restitution based on āspeculating and choosing numbers.ā Rossi,592 F.3d at 376
9 (citation and quotation marks omitted).
10 The restitution order in this case was based on the MVRA, which requires:
11 āIn each order of restitution, the court shall order restitution to each victim in the
12 full amount of each victimās losses as determined by the court and without
13 consideration of the economic circumstances of the defendant.ā 18 U.S.C.
14 Ā§3664(f)(1)(A). Under the MVRA, the District Court had an obligation to review
19The quoted language in Rossi in turn quotes United States v. Atkinson, 788 F.2d 900,
902 (2d Cir. 1986), which predates the adoption of the MVRA and is no longer good
law. As this Court has noted, the MVRA wrought signiļ¬cant changes in the law
applicable to restitution. See United States v. Walker, 353 F.3d 130, 131 (2d Cir. 2003).
20āIn contrast to the MVRA, . . . restitution under the VWPA is discretionary.ā United
States v. Battista, 575 F.3d 226, 230 (2d Cir. 2009).
41
1 the insurance company claims and determine which claims were part of the
2 charged scheme, and to then award 100% of the losses on the fraudulent claims,
3 and only the fraudulent claims, to the actual victims. See United States v. Walker,
4 353 F.3d 130, 133(2d Cir. 2003). Guesswork was not permissible. 5 I agree with the majority opinion that a restitution calculation under the 6 MVRA need not always be āmathematically precise.ā Maj. Op. at 46 (quoting 7 Rivernider,828 F.3d at 115
). But, again, the context of that quoted language is 8 important. Rivernider took the phrase āmathematically preciseā from United 9 States v. Gushlak,728 F.3d 184, 195
(2d Cir. 2013) (ā[W]e have never used the 10 word āactualā in this context to mean āmathematically precise.āā). Gushlak 11 explained that in calculating restitution, āa āreasonable approximationā will 12 suļ¬ce, especially in cases in which an exact dollar amount is inherently 13 incalculable.āId. at 196
(emphasis added) (citations omitted). Here, the exact 14 dollar amount was absolutely calculable. 15 Furthermore, Gushlak held that a district courtās āreasonable 16 approximationā must be āsupported by a sound methodology.āId.
Gushlak
17 presented a complex āpump-and-dumpā investment scheme; calculating the
18 restitution required determining āif and to what extent particular investors ha[d]
42
1 been harmed by artiļ¬cial prices that [were] the result of deliberate
2 misinformation of one sort or another (including manipulative trading practices
3 designed to inļ¬ate the price).ā Id.And while Gushlak spoke of approximation of 4 loss, the district court there actually undertook a detailed and involved inquiry 5 to determine the loss amount. Seeid. at 197-201
. Simply reducing the total 6 restitution amount by 20% does not constitute a āreasonable approximation of 7 losses [that was] supported by a sound methodology.āId. at 196
.
8 Therefore, I would hold that remand is required for the District Court to
9 determine āthe full amount of each victimās lossesā under the MVRA. 18 U.S.C.
10 Ā§3664(f)(1)(A).
11 IV. Conclusion
12 I would remand for resentencing to address three errors beyond those
13 identiļ¬ed by the majority opinion. First, the District Court erred by treating the
14 criminally liable co-conspirators as āvictimsā for purposes of Ā§3A1.1(b)(1) and
15 Ā§2B1.1(b)(2)(A) of the Guidelines. Second, the District Court failed to adequately
16 explain its calculation of an intended loss per fraudulent claim of $100,000 for
17 purposes of Ā§2B1.1(b)(1) of the Guidelines, and that amount is not supported by
18 the record. Third, the District Court erred by failing to make factual ļ¬ndings as
43
1 to which payments made by which insurance companies were based on
2 fraudulent claims when it ordered restitution under the MVRA. Accordingly, I
3 respectfully dissent as to Parts II.A.1., II.A.2.a, II.D.1., II.D.2., and III.B. of the
4 majority opinion.
44