Defendant's Motion for Bond Renewed Motion for Bond Pending Appeal — USA v. Sheppard (Dkt. 273, S.D. Fla.)

Record facts

U.S. District Court for the Southern District of Florida · No. 1:22-cr-20290-BB · Doc. 273 · 2024-06-28 · Docket on CourtListener

Full text

1 
 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF FLORIDA 
 
CASE No. 22-20290-CR-BLOOM 
 
UNITED STATES OF AMERICA, 
 
 
vs. 
 
 
 
 
 
 
 
ERIC DEAN SHEPPARD, 
 
 
 
 
 
 
 
 
 
 
 
Defendant. 
_______________________________/ 
 
DEFENDANT ERIC DEAN SHEPPARD’S RENEWED 
MOTION FOR BOND PENDING APPEAL 
 
Defendant Eric Dean Sheppard renews his motion for bond pending appeal 
under 18 U.S.C. § 3143 based on two important developments postdating this 
Court’s initial denial of bond. 
First, on June 17, the Supreme Court granted certiorari to decide whether 
fraudulent inducement is a valid theory of wire fraud.  See Kousisis v. United States, 
No. 23-909, __ S. Ct. __, 2024 WL 3014475 (U.S. June 17, 2024).  This Court 
sustained Sheppard’s wire fraud convictions on a fraudulent inducement theory.  The 
Court held that Sheppard was guilty of wire fraud for fraudulently inducing two 
banks to extend Paycheck Protection Program (“PPP”) loans, rejecting Sheppard’s 
argument that fraudulent inducement alone, in the absence of actual or “potential 
financial harm,” [D.E. 251 at 29 (quotations omitted)], cannot ground a conviction 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 1 of 16

 
2 
 
for wire fraud.  That issue will be resolved by Kousisis.  And the Supreme Court’s 
grant of certiorari shows that Sheppard’s arguments on appeal are substantial. 
Second, the Court erred in calculating “intended loss” when determining 
Sheppard’s Guidelines range.  In 2015, the Sentencing Commission amended the 
Guidelines to make clear that “intended loss” turns on a defendant’s “subjective” 
intent.  See U.S.S.G. Supp. to App. C, Amend. 792 (2015).  In doing so, the 
Commission approved two loan-fraud cases in which the courts held that the critical 
question is whether the defendant intended to repay the loan.  United States v. 
Confredo, 528 F.3d 143, 152 (2d Cir. 2008); United States v. Sanders, 343 F.3d 511, 
527 (5th Cir. 2003).  Eleventh Circuit case law post-dating the 2015 Amendment is 
in accord.  See United States v. Ridling, 2022 WL 4137723, at *3 (11th Cir. Sept. 13, 
2022) (rejecting recklessness “mental state” as insufficient for purposeful intended 
loss in loan-fraud case (quotations omitted)). 
Here, the Court’s “intended loss” calculation was based in relevant part on the 
face value of two PPP loans totaling approximately $300,000.  The government did 
not argue—and the Court did not find—that Sheppard subjectively intended to 
abscond with the money.  (In fact, the government invoked language and case law 
that was expressly rejected by the Sentencing Commission when it amended the 
Guidelines in 2015.)  And all the evidence in this case shows that Sheppard intended 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 2 of 16

 
3 
 
to pay those two loans back, which he in fact did.  Because the government did not 
carry its burden to prove that Sheppard subjectively intended not to pay back the 
loans, those loans should not have been included in the Court’s “intended loss” 
calculation.  Removing those loans from the “intended loss” loss calculation has a 
significant impact on Sheppard’s Guidelines range.  It reduces his Offense Level by 
four levels, yielding a Guidelines range of 12-18 months (compared to the 24-30 
month range this Court calculated).  
If the Court does not grant bond pending appeal, Sheppard’s ability to appeal 
this sentencing error will be destroyed.  Sheppard is likely to serve his whole 
sentence during appeal, meaning the Eleventh Circuit will have no ability to grant 
effective relief—especially given that the Eleventh Circuit is likely to wait for the 
Supreme Court’s instructions in Kousisis.  And today, the government filed a notice 
of appeal [D.E. 271], meaning the appellate process is likely to take even longer.  
Because all of the Section 3143 factors are satisfied, Sheppard should be granted 
bond.  
ARGUMENT 
18 U.S.C. § 3143(b)(1) and (2) require the Court to release a defendant on 
bond pending appeal if four conditions are met: (i) the defendant is not a flight risk 
or danger to the community; (ii) the appeal is not for the purpose of delay; and 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 3 of 16

 
4 
 
(iii) the appeal raises a substantial question of law or fact that (iv) is likely to result 
in reversal or a more favorable sentence.  The Court has already held that Sheppard 
is not a flight risk or danger to the community.  And in light of new developments—
the Supreme Court’s grant of certiorari in Kousisis and the Court’s “intended loss” 
calculation at sentencing—the Court should now find that the remaining factors are 
satisfied.  If the Court denies bond, Sheppard may be forced to spend time in prison 
he is not obligated to serve or lose his ability to secure effective relief altogether.  
A. 
Sheppard’s Wire Fraud Conviction Presents A Substantial 
Question 
1.  The Supreme Court’s grant of certiorari in Kousisis shows that Sheppard’s 
appeal of his wire fraud convictions will present a substantial question.  In Kousisis, 
the Supreme Court will decide whether fraudulent inducement constitutes a valid 
theory of wire fraud—as framed in the petition, “[w]hether deception to induce a 
commercial exchange can constitute mail or wire fraud, even if inflicting economic 
harm on the alleged victim was not the object of the scheme.”  Pet. for Cert. at i, 
Kousisis v. United States (No. 23-909).  That same question will determine the 
validity of Sheppard’s convictions.  
In United States v. Kousisis, 82 F.4th 230 (3d Cir. 2023), the defendants were 
convicted of wire fraud for fraudulently inducing the Pennsylvania Department of 
Transportation (“PennDOT”) to issue government contracts meant to benefit 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 4 of 16

 
5 
 
disadvantaged businesses (“DBEs”).  Id. at 233-34.  The defendants obtained the 
contracts in part by certifying that they would and did buy millions of dollars of paint 
supplies from a DBE.  Id. at 234-35.  The defendants argued that they did not commit 
wire fraud because they “fully discharged” their obligations under the contracts—
PennDOT, the defendants argued, suffered no financial harm because it “received 
the repairs it paid for.”  Id. at 236, 240.  The Third Circuit rejected the argument and 
sustained the defendants’ convictions.  It held that “DBE participation was an 
essential component of the contract,” and that “[w]ithout it, the nature of the Parties’ 
bargain would have been different.”  Id. at 241.  Thus, the Third Circuit held, the 
defendants were guilty of wire fraud notwithstanding the fact that their scheme was 
not designed to cause PennDOT financial or economic harm.  
 
This Court upheld Sheppard’s conviction on a similar theory.  The Court 
rejected Sheppard’s argument “that the banks received the value of their bargain and 
even stood to gain financially by making the loans,” concluding that his 
“misrepresentation as to his businesses’ eligibility for loans affected the banks’ 
understanding of the nature of the bargain.”  [D.E. 251 at 30.]  Just as PennDOT had 
an interest in knowing whether it was contracting with a company using a DBE, this 
Court held that the lending banks had an “interest” in knowing whether PPP 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 5 of 16

 
6 
 
borrowers were in fact eligible under the program.  [Id. at 30-31 (quoting United 
States v. Watkins, 42 F.4th 1278, 1286-87 (11th Cir. 2022)).]  
In reaching that conclusion, the Court held that it was irrelevant whether the 
banks “faced potential financial harm” from Sheppard’s scheme.  [D.E. 251 at 29 
(quotations omitted).]  In other words, the Court sustained Sheppard’s conviction on 
a theory of fraudulent inducement: Sheppard was guilty of wire fraud for 
fraudulently inducing the banks to enter into the loan agreements, regardless of 
whether the banks were harmed financially.  The Supreme Court’s forthcoming 
decision in Kousisis will almost certainly determine the viability of that theory.  And 
its grant of certiorari shows that the issue is substantial.  After all, the Supreme Court 
does not grant certiorari to resolve insubstantial issues.  Cf. United States v. White, 
2020 WL 4548226, at *4 (S.D. Fla. Aug. 6, 2020) (Bloom, J.) (according “significant 
weight” to Eleventh Circuit’s grant of oral argument in concluding that a question 
was substantial).  
2.  Even setting aside Kousisis, the Court’s previous denial of bond merits 
reconsideration.  The Court concluded that Sheppard’s arguments for acquittal were 
“foreclosed” by the Eleventh Circuit’s decision in Watkins.  [D.E. 251 at 42-43.]  
With respect, that conclusion is at least debatable.  In Watkins, the defendant 
instructed his friend to apply for commercial loans on his own (the friend’s) behalf 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 6 of 16

 
7 
 
while concealing from the bank that the defendant was “the true recipient of the 
loan.”  42 F.4th at 1286.  The defendant argued that he did not commit bank fraud 
“because no misrepresentations were made as to the requested loan amount or the 
terms of the agreement.”  Id.  The Eleventh Circuit rejected that argument as 
“nonsensical.”  Id.  In the commercial loan context, a bank obviously has a financial 
“interest in knowing to whom they are loaning money and for what purpose.”  Id. 
That information affects the nature of the bank’s bargain—i.e., the financial risk the 
bank is incurring and what it must receive in return.  Banks charge one borrower a 
higher interest rate than another based on the borrowers’ credit or require more or a 
different type of collateral.  The same is true of the loan’s intended purpose.  The 
identity of the borrower and purpose of a commercial loan are essential elements of 
a bank’s bargain because they determine the likelihood of repayment and thus the 
“price” (interest rate, collateral, etc.) the bank is willing to pay.  
But the PPP loan context is very different.  Sheppard’s PPP eligibility did not 
affect the “price” the banks were willing to pay because that “price” was etched in 
stone by the federal government.  Federal regulations promulgated by the SBA 
dictated that would-be borrowers were not required to back PPP loans with collateral 
or a personal guarantee.  See 85 Fed. Reg. 20,811, 20,816 (Apr. 15, 2020).  And the 
SBA fixed the interest rate at 1% and pre-determined processing fees by regulation 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 7 of 16

 
8 
 
to incentivize lenders to participate in the program.  See id. at 20,813, 20,8016.  Thus, 
unlike in Watkins, Sheppard’s misrepresentations could not have gone to the nature 
of the bargain because there was no bargain to be had.  The banks enforced the PPP 
eligibility criteria only to enforce the government’s regulatory interest in the 
program, which cannot ground a conviction for fraud.  See Kelly v. United States, 
590 U.S. 391, 400-01 (2020) (government’s “prerogatives over who should get a 
benefit and who should not” are not property interests protected by the fraud 
statutes). 
This Court stated that Watkins rejected the argument that “not all loan contexts 
are the same,” [D.E. 251 at 43], but Watkins does not stand for that proposition. 
Watkins simply held that misrepresentations about the identity of a commercial 
borrower and the purpose of a commercial loan went to the nature of that bargain.  It 
did not hold that all representations made in connection with any type of loan 
automatically go to the nature of the bargain—or that a misrepresentation that speaks 
only to the federal government’s regulatory interest in a loan program can sustain a 
conviction for wire fraud.  Because the applicability of Takhalov and Watkins to the 
facts here is an issue “that very well could be decided the other way,” United States 
v. Giancola, 754 F.2d 898, 901 (11th Cir. 1985), the Court should reconsider its 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 8 of 16

 
9 
 
denial of bond, even setting aside the Supreme Court’s forthcoming decision in 
Kousisis. 
B. 
The Court Should Also Grant Bond Based On Debatable 
Sentencing Error 
Separately, the Court should grant bond pending appeal because it debatably 
erred in calculating “intended loss” under the Sentencing Guidelines without regard 
to Sheppard’s subjective intent to repay the PPP loans. 
Under Section 2B1.1, “intended loss” “means the pecuniary harm that the 
defendant purposely sought to inflict.”  U.S.S.G § 2B1.1, Application Note 3(A)(ii). 
In adopting this definition in 2015, the Commission made expressly clear that 
sentencing courts were to evaluate the defendant’s “subjective” intent.  See U.S.S.G. 
Supp. to App. C, Amend. 792 (2015).  Specifically, the Commission explained that 
it was “adopt[ing] the approach” set out by then-Judge Gorsuch in United States v. 
Manatau, 647 F.3d 1048 (10th Cir. 2011), which held that “a subjective inquiry is 
required.”  U.S.S.G. Supp. to App. C, Amend 792 (2015).  The government and 
district courts within this Circuit have since acknowledged that the “intended-loss 
determination is a subjective inquiry.”  Br. of the U.S., Ridling v. United States, No. 
21-10777, 2021 WL 4988552, at *17 n.3 (11th Cir. 2021); see also United States v. 
Syme, 2024 WL 1053295, at *5 (N.D. Ga. Mar. 11, 2024) (Eleventh Circuit 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 9 of 16

 
10 
 
“holdings on calculating loss under § 2B1.1 are consistent with the idea that the 
critical inquiry is the defendant’s subjective intent”). 
Directly relevant here, the Commission cited approvingly to two loan-fraud 
cases confirming Sheppard’s argument.  In one of those cases, United States v. 
Confredo, 528 F.3d 143 (2d Cir. 2008), the Second Circuit held that “[a] defendant 
who applied for, or caused someone else to apply for, a $1 million loan, fully 
expecting at least $250,000 to be repaid, intended a loss of no more than 
$750,000[.]”  Id. at 152.  The Commission also cited approvingly to United States v. 
Sanders, 343 F.3d 511 (5th Cir. 2003), which similarly held that intended loss in a 
loan-fraud case turns on the defendant’s intent to repay the loan.  Id. at 527.  These 
cases illustrate how the “intended loss” inquiry is supposed to be conducted in loan-
fraud cases:  They confirm that sentencing courts must evaluate whether the 
defendant subjectively intended to repay the loan.  Only if the government proves 
that the defendant did not intend to repay the loan should the full, face value of the 
loan be counted as “intended loss.” 
Eleventh Circuit case law is in accord.  In United States v. Ridling, 2022 WL 
4137723 (Sept. 13, 2022), the defendant argued that the district court improperly 
rejected his argument “that he intended to repay all the loans” by using a recklessness 
standard to determine his intent.  Id. at *2.  Emphasizing the Guidelines use of the 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 10 of 16

 
11 
 
word “purposely,” the Eleventh Circuit held that the district court’s application of a 
“recklessness standard to determine intended loss” was error because “recklessness 
is a less culpable mental state” than purposely.  Id. at *3 (quotations omitted).  That 
analysis confirms that subjective intent to repay is what matters.  If subjective intent 
did not matter, the Eleventh Circuit would have affirmed the district court’s sentence 
in Ridling because under an objective test, no inquiry into the defendant’s mental 
state—reckless or otherwise—would be required.  See also [D.E. 238 at 17-18 
(collecting cases).] 
The government could not carry its burden under this standard—and did not 
even try.  In its sentencing brief [D.E. 241 at 5-8], the government did not cite any 
evidence showing that Sheppard subjectively intended not to repay the two PPP 
loans for which he was convicted (more on the government’s sentencing brief 
momentarily).  Nor did the government adduce any such evidence at trial.   
The trial record shows the opposite—namely, that Sheppard treated the PPP 
loans as typical loans that he was required to pay back.  PPP loans were forgivable, 
so if Sheppard did not intend to pay them back, there was an easy way to accomplish 
that goal: seek forgiveness.  But as to the PPP loans at issue here, Sheppard expressly 
testified that he “never thought about” seeking forgiveness—it “wasn’t part of [his] 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 11 of 16

 
12 
 
thought process.”  [1/9/24 PM Tr. 61:9-63:6 (testifying that he did not consider 
seeking forgiveness “prior to” July 2022)].1   
Sheppard’s actions confirm his testimony.  Sheppard could have sought 
forgiveness on his PPP loans for well over a year before his indictment was unsealed 
but he did not do so.  [Id.]  In fact, by the time the indictment was unsealed, 
Sheppard’s loan-deferral period had all but lapsed,2 meaning he could have—but did 
not—seek to avoid his obligation to start repaying the loans.  And at trial, Sheppard 
testified that he was treating the loans as typical loans and “paying them back” 
[1/8/24 AM Tr. 11:6-24], which he has now done in full.  Of course, Sheppard’s 
payment of the loans after his indictment does not conclusively prove Sheppard’s 
intent at the time he submitted his allegedly fraudulent applications—but it is still 
probative of his intent.  And there is no contrary evidence.  Moreover, Sheppard’s 
 
1 Sheppard sought forgiveness for one PPP loan (an April 2020 loan that was omitted 
from the superseding indictment).  But Sheppard’s testimony about that loan further 
confirms his intent at the time of his applications.  Sheppard explained that his 
“reasoning in seeking forgiveness for the first” PPP loan was that the lender emailed 
him encouraging him to do so.  [1/8/24 AM Tr. 11:6-24.]  That it took emails from 
the lenders to convince Sheppard to seek forgiveness strongly suggests that 
Sheppard’s original intent when he applied for the loans was to treat them as ordinary 
loans and pay them back. 
2 Payments on PPP loans were deferred for 24 weeks plus ten months, unless the 
borrower sought forgiveness during that period.  Sheppard’s deferral period expired 
mere days after his indictment was unsealed.  That means Sheppard had no 
repayment obligations under the terms of the loans until right after the indictment 
was unsealed. 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 12 of 16

 
13 
 
words and conduct before he was indicted align with his post-indictment conduct:  
The undisputed evidence strongly indicates that Sheppard intended to pay these PPP 
loans back.  Certainly, the government marshaled no contrary evidence, and thus 
could not carry its burden.   
Rather than argue that Sheppard intended not to repay the loans, the 
government advocated for a standard that was expressly repudiated by the 
Sentencing Commission—a standard the government has acknowledged in other 
cases no longer applies.  In its sentencing brief, the government argued to this Court 
that “[i]ntended loss is the pecuniary harm that was intended to result from the 
offense.”  [D.E. 241 at 7 (quotation omitted).]  Thus, the government concluded, 
“the combined amount of all the loans that formed part of the defendant’s scheme to 
defraud should be the intended loss in this case.”  [Id. at 8.]   
The government erred because it used the wrong definition of “intended loss.” 
As the government correctly acknowledged to the Eleventh Circuit in its brief in 
Ridling, “[t]he guidelines used to define intended loss as ‘pecuniary harm that was 
intended to result from the offense.’” 2021 WL 4988552, at *17 n.3 (emphasis 
added). But the Commission “amended the definition to make clear that the 
defendant must subjectively intend the loss.”  Id. at n.2.  Not only did the 
government’s sentencing brief rest on the wrong legal standard, but it cited case law 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 13 of 16

 
14 
 
that the Sentencing Commission expressly rejected.  Specifically, the government 
cited United States v. Lane, 323 F.3d 568, 590 (7th Cir. 2003), for the proposition 
that “intended loss under the Sentencing Guidelines … focuses on the conduct of the 
defendant and the objective financial risk to victims caused by that conduct.”  [D.E. 
241 at 8 (emphasis added; quotations omitted).]  But the Commission expressly 
rejected Lane—in fact, the very same quote cited to this Court by the government—
when it amended the Guidelines in 2015 to make clear that a subjective inquiry is 
required.  See U.S.S.G. Supp. to App. C, Amend. 792 (2015).  
Under the amended Guidelines, calculating “intended loss” without regard to 
Sheppard’s subjective intent to repay, as the government urged, was error.  Because 
the government could not carry its burden to prove that Sheppard subjectively 
intended to abscond with the loan money, the two PPP loans on which he was 
convicted—totaling $296,988—should not have been included in the Court’s loss 
calculation.  Correcting for this error essentially halves Sheppard’s Guidelines range, 
from 24-30 months to 12-18 months.  Compare U.S.S.G. § 2B1.1(E), with (G) (four-
point Offense Level reduction).  
If Sheppard is not granted bond pending appeal, his claims of sentencing error 
are likely to be moot.  The time it will take the Eleventh Circuit to decide Sheppard’s 
appeal will in all likelihood exceed the time Sheppard is required to spend in prison.  
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 14 of 16

 
15 
 
The Eleventh Circuit is likely to wait for the Supreme Court’s decision next Term in 
Kousisis.  And the government has filed its own notice of appeal.  [D.E. 271.]  
Assuming the government requests oral argument, Sheppard’s appeal easily could 
exceed the 18 months he is currently required to serve.  Because the bottom of 
Sheppard’s Guidelines range would be six months lower than his current sentence if 
Sheppard is successful on appeal, his sentence on remand could be shorter than the 
“expected duration of the appeal process,” 18 U.S.C. § 3143(b)(1)(B)(iv), and he 
should be granted bond pending appeal.  
CONCLUSION 
 
This Court should grant Sheppard bond pending appeal.  
 
Respectfully submitted,  
 
 
 
 
 
BLACK SREBNICK  
 
 
 
 
 
201 South Biscayne Boulevard, Suite 1300   
 
 
 
 
 
Miami, Florida 33131 / Tel (305) 371-6421   
 
 
 
 
 
By:  /s Howard Srebnick   
 
 
 
 
 
Howard Srebnick  
 
 
 
 
 
  Florida Bar No. 919063  
 
 
 
 
 
 
O’MELVENY & MYERS 
 
 
 
 
 
Jeffrey L. Fisher (admitted pro hac vice) 
 
 
 
 
 
Jason Zarrow (admitted pro hac vice) 
 
 
 
 
 
 
 
 
 
 
 
NELSON MULLINS 
Jayne C. Weintraub 
  Florida Bar No. 320382 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 15 of 16

 
16 
 
Jonathan Etra  
  Florida Bar No. 686905 
Christopher Cavallo  
  Florida Bar No. 0092305 
 
Case 1:22-cr-20290-BB   Document 273   Entered on FLSD Docket 06/28/2024   Page 16 of 16

File and source

File

gov.uscourts.flsd.615773.273.0.pdf

Size

552,543 bytes

SHA-256

80b5202428418281bfc96d310266a98770e516bb126663633e769095f510ef19

Our copy

gov.uscourts.flsd.615773.273.0.pdf

Original

PACER (login required)