Government's Supplemental Sentencing Memorandum, United States v. Joseph Harding (N.D. Fla., October 16, 2023)

Summary

The government's supplemental sentencing memorandum in United States v. Joseph Harding, Case No. 1:22cr32-AW/MAL, in the U.S. District Court for the Northern District of Florida, filed October 16, 2023 as Document 52. It responds to Harding's objections to the loss calculation in the Presentence Investigation Report (ECF No. 41 and ECF No. 46), including that full repayment before charges meant no loss. Citing U.S.S.G. § 2B1.1 commentary and Eleventh Circuit decisions, the memorandum argues that loss in government benefit cases includes funds diverted to unintended recipients regardless of intent to repay. It concludes that loss should include the $150,000 EIDL proceeds received for The Vak Shack and the proceeds Harding unsuccessfully attempted to receive for Harding Farms, and is signed by Assistant United States Attorney Justin M. Keen.

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      Case 1:22-cr-00032-AW-MAL      Document 52      Filed 10/16/23   Page 1 of 5




                 IN THE UNITED STATES DISTRICT COURT
                FOR THE NORTHERN DISTRICT OF FLORIDA
                         GAINESVILLE DIVISION

UNITED STATES OF AMERICA

v.                                             CASE NO. 1:22cr32-AW/MAL

JOSEPH HARDING
______________________________/

     GOVERNMENT’S SUPPLEMENTAL SENTENCING MEMORANDUM

       In his supplemental objection to the Presentence Investigation Report (ECF

No. 41) and in his sentencing memorandum (ECF No. 46 at 37-42), Harding objects

to the loss calculation in the PSR. The Government submits this supplemental

memorandum to specifically address those objections.

         I.    REPAYING THE SBA LOAN DOES NOT PRECLUDE
                INCLUDING IT IN LOSS CALCULATIONS

       Harding argues that “Mr. Harding caused no loss because Mr. Harding

repaid the full amount of the loan before any criminal charges were brought.” ECF

No. 46 at 41. It is true that the text of the Sentencing Guidelines does not

specifically define “loss” in the context of a government benefit program.

However, the definition of “loss” in such cases is not ambiguous—common sense

dictates that “loss” in government benefit program cases can include amounts

diverted from their intended use or to unqualified recipients. This is particularly

true as there is a finite pool of program funds available for qualified recipients.


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When an unqualified recipient fraudulently acquires such funds, it erodes the

mission and purpose of the government benefit program in that the number of

qualified recipients who can obtain such benefits is reduced.

      However, if the Court believes that the definition of “loss” is ambiguous in

this regard, consideration of the guideline commentary would be permissible.

Compare United States v. Smith, 79 F.4th 790, 792 (6th Cir. 2023) and United

States v. You, 74 F.4th 378 (2023) to United States v. Banks, 55 F.4th 246 (2022).

The applicable commentary to § 2B1.1 provides that “[in] a case involving

government benefits (e.g., grants, loans, entitlement program payments), loss shall

be considered to be not less than the value of the benefits obtained by unintended

recipients or diverted to unintended uses, as the case may be.” U.S.S.G. § 2B1.1,

comment. (n.3(F)(ii)). Where none of the government benefit program money goes

towards the intended purposes of the program, such as to unqualified recipients,

then “loss” includes the value of those benefits. United States v. Arteaga, 713 F.

App'x 933, 936 (11th Cir. 2017); see also United States v. Fard, 805 F. App'x 618,

620 (11th Cir. 2020). In a case involving a company fraudulently receiving an SBA

contract based on misrepresentations that the company met the necessary federal

standards to be considered “a small business,” the defendants objected to their

calculated loss amounts because inter alia there was no actual harm to or loss

sustained by the government. United States v. Blanchet, 518 F. App'x 932, 955


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(11th Cir. 2013). In affirming the district court’s finding that the value of the

contract was properly considered the “loss” in that case, the Blanchet court relied

on U.S.S.G. § 2B1.1, comment. (n.3(F)(ii)) and other circuit precedent. Id. (citing

United States v. Maxwell, 579 F.3d 1282, 1302 (11th Cir. 2009) (rejecting

defendant’s claim that he did not deprive the government of money or property,

because, in the end, the government received the work they sought through a

contract)).

  II.     HARDING’S ORIGINAL INTENT TO REPAY THE LOAN DOES
           NOT PRECLUDE INCLUDING THE PROCEEDS THAT
                HE RECEIVED IN LOSS CALCULATIONS

        Harding also objects to the loss calculations in the PSR because he “always

intended to pay the loan back,” ECF No. 41 at 2, and “always treated the loan as a

bona fide loan to be repaid.” ECF No. 46 at 42, 44. This is analogous to objections

raised by the Blanchet defendants who claimed that “they did not have intent to

harm, as they intended for the terms of the contract to be fully and satisfactorily

performed.” Blanchet, 518 F. App'x at 955. That objection was rejected by the

sentencing court—and on appeal—for the reasoning that “[b]y defrauding the

government to obtain the contract, the [d]efendants prevented the government from

awarding the contract to a legitimate small business, and therefore, deprived other

small businesses of the ability to obtain this contract.” Id. at 957. Harding’s




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objection to including the EIDL proceeds that he received and intended to receive

in his loss calculation is similarly without merit.

      Additionally, in a case involving a fraudulent scheme to obtain construction

contracts set aside for socially and economically disadvantaged companies as part

of a federal benefit program, the defendant objected to a loss calculation that

included the contract value because the government received the value of the

contracted work. Maxwell, 579 F.3d at 1305. In rejecting that argument, the

Eleventh Circuit held that regardless of the quality or cost of the work, “the

appropriate amount of loss [was] the entire value of the…contracts that were

diverted to the unintended recipient [i.e., the defendant’s business].” Id. at 1306.

Here, regardless of Harding’s intent to repay the EIDL to the SBA, he still

defrauded a federal government benefit program—one intended to help qualified

small businesses in the wake of the COVID-19 pandemic—by diverting funds

which were meant for qualified small businesses. This is why the PSR correctly

includes the $150,000 EIDL proceeds that Harding received in the loss

calculations.

                            III.   CONCLUSION

      Loss calculations, here, should include both the actual loss that Harding

caused (the $150,000 EIDL proceeds that he received for The Vak Shack) and the




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EIDL proceeds that he unsuccessfully attempted to receive (at least $1 for Harding

Farms). Thus, the PSR loss calculations are correct. PSR at ¶ 32.

                                              Respectfully submitted,

                                              JASON R. COODY
                                              United States Attorney

                                              /s/ Justin M. Keen
                                              JUSTIN M. KEEN
                                              Assistant United States Attorney
                                              Florida Bar Number: 021034
                                              111 North Adams Street, Fourth Floor
                                              Tallahassee, FL 32301
                                              Justin.Keen@usdoj.gov
                                              (850) 942-8430

       CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1(F)

       I HEREBY CERTIFY that this memorandum complies with the type-
volume limitation of Local Rule 7.1(F) because this pleading contains
approximately 1,036 words.
                                              /s/ Justin M. Keen
                                              JUSTIN M. KEEN
                                              Assistant United States Attorney

                          CERTIFICATE OF SERVICE

       I HEREBY CERTIFY that a true and correct copy of the foregoing has been
filed via the Court’s CM/ECF system on this 16th day of October, 2023, which
will send notification of such filing to all counsel of record.


                                              /s/ Justin M. Keen
                                              JUSTIN M. KEEN
                                              Assistant United States Attorney

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