Yesterday, in United States v. Snelling, No. 12-4288, the Sixth Circuit affirmed USSG § 2B1.1(B)(1) and its commentary actually mean what is written.
The case concerned a Ponzi scheme that took in almost $9 million, but also paid out about $3.5 million. The district court set the loss for guidelines purposes at over $7 million, which raised Mr. Snelling's offense level by 20 points. It and the government reasoned the $3.5 million in returned funds were part of keeping the Ponzi scheme going and so the defendant should not benefit. Mr. Snelling argued the loss should be under $7 million, taking into consideration the funds returned, which would raise his guidelines 19 points. The district court calculated his guideline range as 121 to 151 months. Mr. Snelling's calculation put him at 97 to 121 months.
The Sixth Circuit agreed with Mr. Snelling. It noted Application Note 3(E) to § 2B1.1 stated loss shall be reduced by money returned prior to discovery of the crime. It further noted Application Note 3(F)(iv)"specifically states that "when calculating the loss figure in a Ponzi scheme, the 'loss shall not be reduced by the money or the value of the property transferred to any individual investor in the scheme in excess of that investor's principal investment.'" For example, if an investor put in $100 and received $80 back in "dividend payments" (or what have you), the $100 loss would be reduced by the $80 returned. However, if the investor put in $100 and received $130 back, the loss would only be reduced by $100.
This case is also interesting because it details how Mr. Snelling preserved the issue for appeal. The disagreement is noted in the plea agreement. The Presentence Report noted the disagreement. Mr. Snelling filed an objection to the PSR's guidelines calculation. At sentencing, Mr. Snelling further argued his objection.