Government's Supplemental Sentencing Memorandum — No. 2:20-cr-20355 (Dkt. 30, E.D. Mich.)

Summary

In this supplemental sentencing memorandum, filed 07/09/21 as ECF No. 30 in United States v. Darrell Baker, Criminal No. 20-20355 in the Eastern District of Michigan, the government answers Baker's argument that the court should not consider intended loss under USSG § 2B1.1(b)(1) after United States v. Havis. The government argues that, unlike the guideline in Havis, § 2B1.1 does not define loss, and that the Sixth Circuit's decision in United States v. Murphy treats the intended-loss commentary as a reasonable interpretation of that term. It distinguishes United States v. Riccardi as limited to the $500 minimum loss per access device. The memorandum states that the $590,000 Baker obtained from Customer's Bank is the appropriate measure of loss and that post-discovery recoveries should not reduce it. It is signed by Assistant United States Attorney John K. Neal.

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Case 2:20-cr-20355-LJM-EAS ECF No. 30, PageID.180 Filed 07/09/21 Page 1 of 6

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

UNITED STATES OF AMERICA, CRIMINAL NO. 20-20355

Plaintiff,
Hon. Laurie J. Michaelson
- vs -

DARRELL BAKER,

Defendant.
________________________________/

GOVERNMENT'S SUPPLEMENTAL SENTENCING MEMORANDUM

The United States respectfully submits this supplemental brief to address a

point that Baker did not raise in his objections to the PSR, but now raises for the

first time in his sentencing memorandum. He asserts that the Court should not

consider any intended loss under USSG § 2B1.1(b)(1), arguing that the

commentary provision instructing courts to consider intended loss is invalid after

United States v. Havis, 927 F.3d 382 (6th Cir. 2019) (en banc). Baker is incorrect.

As the Sixth Circuit explicitly held in United States v. Murphy, 815 F. App'x 918,

924 (6th Cir. 2020), the commentary provision is a reasonable interpretation of the

ambiguous term “loss,” rather than an improper addition to it.

The sentencing guidelines generally consist of two parts: (1) the guidelines

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themselves, which are subject to congressional review, and (2) commentary

provisions, which do not go through congressional review, and instead serve to

“interpret the Guidelines’ text, not to replace or modify it.” Havis, 927 F.3d at 386.

Because of this difference, commentary binds courts “if the guideline which the

commentary interprets will bear the construction.” Id. Applying that principle, the

Sixth Circuit explained in Havis that, where a guideline clearly defines a term and

the commentary adds to that definition or modifies it, the commentary provision

does not bind courts. There, the guideline at issue was USSG § 4B1.2(b), which

explicitly defines a “controlled substance offense” as a state or federal felony

prohibiting manufacturing, distributing, or possessing with the intent to distribute

controlled substances. Id. at 384. Commentary note 1 to that guideline, however:

adds to that clear definition, including attempt, conspiracy, and aiding and abetting

offenses as a “controlled substance offense.” Id. The commentary “did not interpret

a term in the guideline itself . . . Rather, the Commission used [the commentary] to

add an offense not listed in the guideline” and thus “deserves no deference.” Id. at

386–87 (emphasis in original).

USSG § 2B1.1(b)(1) stands in stark contrast to § 4B1.2. It simply instructs

the court to adjust the offense level based on the amount of “loss.” USSG

§ 2B1.1(b)(1). Unlike 4B1.2, the guideline does not define “loss” anywhere in its

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text. Id. And the term is itself elastic and ambiguous. As the Sixth Circuit recently

explained “loss can mean different things in different contexts.” United States v.

Riccardi, 989 F.3d 476, 486 (6th Cir. 2021). Examining dictionary definitions, the

Riccardi court described numerous different definitions of loss, ranging from the

“amount of something lost” or the “harm or suffering caused by losing or being

lost” to broader definitions about deprivation, disadvantages, or emotional harms.

A review of the online source “dictionary.com” yields six definitions of the term.

And it is not surprising that § 2B1.1 would use a broad, flexible term like “loss” in

quantifying harm—it is an expansive guideline that applies to an enormous array

of statues, including larceny, embezzlement, theft, stolen property, property

damage, fraud, forgery, counterfeiting, and numerous other offenses.

Unsurprisingly, then, when confronted with the very issue that Baker raises

here, the Sixth Circuit held that the commentary’s inclusion of intended loss is a

reasonable interpretation of the term “loss” in § 2B1.1. United States v. Murphy,

815 F. App'x 918, 924 (6th Cir. 2020). The court explained that Havis involved

guideline commentary that “add[ed] ‘attempt’ crimes to the definition of

‘controlled substance offense’” and thus was “not an interpretation” and

“deserve[d] no deference.” Id. In contrast, “loss is left undefined” in § 2B1.1, and

“[t]he commentary defining loss is consistent with the construction of the

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Guidelines as an interpretation of, rather than an addition to, § 2B1.1(b).” Id.

(internal quotation marks omitted). At least one other court in this Circuit has taken

the same view post-Havis, even before Murphy was decided. United States v.

Talavera, No. 1:19CR404, 2020 WL 2335969, *3 (N.D. Ohio May 11, 2020)

(because loss is not defined under § 2B1.1, the commentary “provide[s]

interpretation, as is necessary”). And other circuits have routinely held that the

intended loss commentary provision is entitled to deference. See, e.g., United

States v. Crowe, 735 F.3d 1229, 1237 (10th Cir. 2013) (“Application Note 3 to

§ 2B1.1 fleshes out how the district court is to calculate ‘loss.’”); United States v.

Nagle, 803 F.3d 167, 179 (3d Cir. 2015); United States v. Dowl, 619 F.3d 494, 502

(5th Cir. 2010).

Riccardi does not counsel otherwise. There, a panel of the Sixth Circuit held

that Application Note 3(F)(i) in the commentary to § 2B1.1—which assigns a

minimum loss amount of $500 for each unauthorized access device the defendant

possessed—was not a reasonable interpretation of the term “loss” in 2B1.1. 989

F.3d at 486 (“No reasonable person would define the “loss” from a stolen gift card

as an automatic $500.”). But its analysis was cabined to that particular application

note, and indeed, it painstakingly outlined the many possible definitions of the

term “loss,” emphasizing its ambiguity. Id. Here, where the interpretation of an

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ambiguous term is a reasonable one, there is no problem under Havis.

Finally, as noted in the government’s sentencing memorandum, the Court

need not even reach this issue. Regardless of the how “loss” is construed or defined

here, Baker’s criminal conduct that led to him obtaining $590,000 from

Customer’s Bank falls within any interpretation of the term. Baker’s assertion that

the victim’s recovery of funds following discovery of the fraud, or the

government’s forfeiture of assets, should reduce the defendant’s “loss” figure and

thus his guideline range would quickly yield absurd results and deeply perverse

incentives. Every recovery of stolen funds—recoveries the defendant had nothing

to do with—would reduce the defendant’s sentencing guidelines and thus his likely

sentencing exposure. In economic crime cases, the government would be in the

untenable situation of having to choose between promoting the pecuniary interests

of victims and promoting the goals of sentencing as set forth in 18 U.S.C.

3553(a)—goals such as deterrence, protection of the public, and providing just

punishment for the offense. The government urges the court to reject the

defendant’s novel argument that the “loss” amount in this case should be reduced

by post-discovery recoveries, and should hold that the $590,000 defendant

fraudulently obtained from the lender here is the appropriate measure of “loss” in

this case.

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Respectfully Submitted,
SAIMA S. MOHSIN
ACTING UNITED STATES ATTORNEY

/s/ John K. Neal
JOHN K. NEAL
Assistant United States Attorney
211 W. Fort Street, Suite 2001
Detroit, MI 48226
(313) 226-9644

CERTIFICATE OF SERVICE

I hereby certify that on July 9, 2021, I caused a copy of the foregoing to be

served on all counsel of record using the Court=s ECF filing system.

/s/ John K. Neal

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