60 F.3d 240 (6th Cir. 1995), 94-5644, United States v. Wright

Docket Nº:94-5644.
Citation:60 F.3d 240
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. William Parker WRIGHT, Jr., Defendant-Appellant.
Case Date:July 27, 1995
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 240

60 F.3d 240 (6th Cir. 1995)

UNITED STATES of America, Plaintiff-Appellee,

v.

William Parker WRIGHT, Jr., Defendant-Appellant.

No. 94-5644.

United States Court of Appeals, Sixth Circuit

July 27, 1995

Argued Feb. 2, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Nov. 8, 1995.

Robert E. Simpson (argued), David G. Dake, Jimmie Baxter (briefed), Asst. Attys. Gen., Knoxville, TN, for plaintiff-appellee.

Andrew R. Tillman (briefed), Wynne Hall, Dwight E. Tarwater (briefed), Paine, Swiney & Tarwater, Herbert S. Moncier (argued and briefed), Knoxville, TN, for defendant-appellant.

W. Parker Wright, Jr., Knoxville, TN, pro se.

Before: MERRITT, Chief Judge; BATCHELDER, Circuit Judge; BERTELSMAN, Chief District Judge. [*]

Page 241

MERRITT, C.J., delivered the opinion of the court, in which BERTELSMAN, D.J., joined. BATCHELDER, J. (pp. 242-244), delivered a separate dissenting opinion.

MERRITT, Chief Judge.

The defendant pled guilty to three instances of "mak[ing] a false statement or report" in order to obtain three bank loans in violation of 18 U.S.C. Sec. 1014 (punishable by a maximum fine of $1 million and 30 years imprisonment), and he now appeals his sentence of 16 months imprisonment assessed under Sec. 2F1.1 of the Guidelines governing bank fraud. (This sentence was calculated by beginning with a "base level" of 6 and adding 7 levels for causing a "loss" of $59,750 for one loan, $13,000 for a second and $100,000 for a third, plus two levels for "more than minimal planning," plus two more levels under Sec. 3B1.3 for using "special skills" as a "lawyer," minus three levels for acceptance of responsibility, equaling level 14 which carries a sentencing range of 15 to 21 months for a first offender with a clean record). He appeals on the ground that the Guideline section and its Commentary for the offenses in question were not followed by the district judge in sentencing. He contends that the concept to be followed in sentencing for bank fraud is the amount of "intended loss" or "actual loss" and that this principle was not properly applied because there was no loss in fact, none intended, and none likely to occur.

The real problem in this appeal, as in so many sentencing appeals, is the Commentary and the effort to create in the Commentary a legal rule designed to remove the district judge's discretion. Paragraph seven of the Commentary, having expressly established "actual loss," "intended loss" and "expected loss" (whichever is greater) as the governing legal rule for fraud cases, then--in a so-called "example"--immediately changes the concept from "actual loss" to another legal rule much more difficult to understand and apply because based on the legal concept of a "pledge" of assets. It states:

In fraudulent loan application cases and contract procurement cases, the loss is the actual loss to the victim (or if the loss has not yet come about, the expected loss). For example, if a defendant fraudulently obtains a loan by misrepresenting the value of his assets, the loss is the amount of the loan not repaid at the time the offense is discovered, reduced by the amount the lending institution has recovered (or can expect to recover) from any assets pledged to secure the loan.

Guidelines Sec. 2F1.1, Commentary p 7(b).

In this case the example does not fit the facts. There was no "pledge" on any of the loans in the ordinary legal sense of the word "pledge." The drafters of the Guidelines are lawyers and judges, and they presumably know that the word "pledge" or "pledged" has a distinct and determinative legal meaning. 1 On the first loan, the bank had the right in case of default to foreclose under a mortgage on a piece of real estate and the right to set off cash funds in other accounts--both of which the bank exercised resulting in no loss on the loan. On the third loan there was no loss because the defendant, Wright, was not the debtor on the loan but made a false statement about a deed of trust, and the debtor then collateralized the note to the bank's satisfaction when the bank raised the issue with the defendant.

The example in...

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