A Fatally Flawed Proxy: The Role of 'Intended Loss' in the U.S. Sentencing Guidelines for Fraud

54 Pages Posted: 30 Mar 2016 Last revised: 13 Feb 2017

Daniel S. Guarnera

Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.

Date Written: March 26, 2016

Abstract

Among the most controversial and least followed provisions in the U.S. Sentencing Guidelines are those covering economic crimes such as fraud. The economic crime guidelines prescribe sentences based predominantly on the financial loss -- actual or intended, whichever is greater -- associated with the offense. In November 2015, the definition of “intended” loss was amended to clarify that only those losses that the defendant “purposely sought to inflict” should count.

This Article analyzes the theoretical and practical shortcomings of the intended loss calculation using the framework of rules and standards. Although intended loss was initially designed as a catch-all, rule-based proxy for culpability, culpability is too multifarious a sentencing factor to be dependably measured by intended loss alone. The 2015 amendment risks further distorting guidelines sentences by excluding categories of plainly culpable defendants who did not act with the “purpose” of inflicting a loss, such as those who intend to repay a loan received through fraud, misreport accounting data hoping that investors will not be harmed, or assist third parties without having any stake in victims’ downstream losses.

In light of the broad and varied scope of the culpability inquiry, this Article argues that the guidelines for economic crimes should assess culpability directly, using standards to structure judicial decision-making rather than employing a fixed rule that equates culpability with the dollar amount of purposeful loss. Such a revision to the guidelines has the potential to generate fairer sentencing recommendations while still channeling judicial discretion, and several proposals are evaluated. If successful, economic crime guidelines that are a hybrid of rules and standards could serve as a model for redesigning other guidelines to help judges better fulfill their obligations under modern (post-United States v. Booker) sentencing procedures.

Keywords: sentencing guidelines, sentencing, white collar crime, rules and standards, mens rea

Suggested Citation

Guarnera, Daniel S., A Fatally Flawed Proxy: The Role of 'Intended Loss' in the U.S. Sentencing Guidelines for Fraud (March 26, 2016). Missouri Law Review, Vol. 81, No. 715, 2016. Available at SSRN: https://ssrn.com/abstract=2755821

Daniel S. Guarnera (Contact Author)

Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C. ( email )

Sumner Square
1615 M Street, N.W. Suite 400
Washington, DC 20036
United States

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