United States v. Banks

On November 30, 2022, the Third Circuit in United States v. Banks held that the loss enhancement under United States Sentencing Guidelines (§ 2B1.1) is limited to actual loss, not intended loss. The court’s decision deviates from the historical interpretation of this guideline enhancement that used intended loss for crimes like fraud and embezzlement.    Federal fraud defendants in the Third Circuit, which includes New Jersey, Delaware, Pennsylvania and  the United States Virgin Islands,  just got a tremendous benefit going forward in sentencing calculations.  In federal fraud cases, sentencing decisions are largely driven by the amount of loss.  After Banks, the criminal defendants will only be liable for losses that actually occurred, as opposed to any potential “intended loss.”

To set the stage as to how the Banks decision was arrived at – Mr. Banks was convicted of four counts of wire fraud and an additional count of aggravated identity theft.  He had engaged in a scheme that involved making electronic deposits into a company, Gain Capital Group, by using bank accounts that lacked sufficient funds to complete the transactions. However, because Gain Capital did not actually transfer funds to Mr. Banks, there was no actual loss suffered. At sentencing, the district court included “intended loss” in its calculations, leading to a 12-point increase on the base offense level under § 2B1.1(b)(1)(G). As a result, Mr. Banks was sentenced to 104 months in prison. Based on the Third Circuit’s decision, Mr. Banks will be resentenced based only on actual loss.

This decision will have a significant impact on federal prosecutions for financial crimes such as fraud and embezzlement, at least states that sit within the Third Circuit, and if other Circuit courts follow suit, the decision may have a profound impact nationwide.  Defendants’ sentences could now be drastically shorter in situations where intended loss amounts were high, and actual loss amounts low.   LGR Law is a federal criminal defense firm that stays on top of changes in the law to make sure that your rights are protected and your freedom is safeguarded.

To discuss the federal criminal defense update or criminal law more generally, reach out to New Jersey and New York criminal defense lawyer Lorraine Gauli-Rufo at 973-239-4300 or LGR LAW for a consultation today. For more information about the firm, please visit LGR LAW’s website.

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