U.S. v. Brach, 1204

• Decision Date: 15 August 1991
• Docket Number: No. 1204,1204
• Parties: UNITED STATES of America, Appellee, v. Jacob BRACH, also known as Jack, also known as Jack Brock, also known as Jacob Brock, Defendant-Appellant. Docket 90-1742.
• Court: U.S. Court of Appeals — Second Circuit

Page 141

942 F.2d 141

UNITED STATES of America, Appellee, v. Jacob BRACH, also known as Jack, also known as Jack Brock also known as Jacob Brock, Defendant-Appellant.

No. 1204 Docket 90-1742.

United States Court of Appeals Second Circuit.

Argued Feb. 11, 1991.

Decided Aug. 15, 1991.

Nathan Lewin, Washington, D.C. (Edith R. Lampson, Miller, Cassidy, Larroca & Lewin, Washington, D.C., of counsel), for defendant-appellant.

Kerry A. Lawrence, Asst. U.S. Atty. for the Southern District of New York, New York City (Otto G. Obermaier, U.S. Atty. for the Southern District of New York, Daniel C. Richman, Asst. U.S. Atty., New York City, of counsel), for appellee.

Before VAN GRAAFEILAND, WINTER and WALKER, Circuit Judges.

VAN GRAAFEILAND, Circuit Judge:

Jacob Brach appeals from a judgment of the United States District Court for the Southern District of New York (Broderick, J.) that followed his guilty plea to a charge of wire fraud, 18 U.S.C. § 1343. Brach challenges various determinations made by the district court in arriving at his Guidelines sentence. We affirm.

In early 1989, after a major employer in Randolph, Wisconsin, left the area, Brach entered into negotiations with representatives of Randolph to move a knitting mill there from Brooklyn, New York. During the negotiations, Brach requested a $250,000 loan from Randolph as a "financial incentive." Randolph officials were agreeable but first requested a personal financial statement from Brach, who had misrepresented that he was a primary owner of the mill. After receiving a statement that falsely reported a net worth of $4,349,135, Randolph made the loan.

Thereafter, Village officials learned that several of Brach's checks to local contractors had bounced and that he was suspected of defrauding two Canadian companies. Becoming concerned, they requested the return of the $250,000. Brach sent a check in that amount, writing on it that it could be deposited only after his agreement to lease the proposed mill building was cancelled. The Village sent him the release he requested and, apparently alerted by the history of bouncing checks, gave him two days in which to remit the $250,000 by wire. Upon his failure to do so, the Village contacted the FBI, which filed a criminal complaint against Brach two days later. Brach then repaid the $250,000. He thereafter waived grand jury indictment and was charged by a felony information.

The complaint against Brach alleged crimes involving two Canadian companies as well as Randolph. It detailed activities by which Brach obtained $198,259 from Union Carbide of Canada and $125,000 from Lecofilms, a division of Tecsyn Canada, Ltd., through a scheme in which Brach fraudulently represented that he had exclusive patent rights to a toilet seat with a self-replacing plastic film. Pursuant to a plea agreement, Brach pled guilty to wire fraud in connection with the Randolph scheme and agreed to repay the Canadian companies the amounts he had received from them. The Government in turn agreed not to prosecute Brach further for the crimes alleged in the complaint.

In arriving at Brach's sentence, the district court started with the Sentencing Guidelines' base level for Fraud and Deceit of six (§ 2F1.1(a)), added eight points because the loss involved was greater than $200,000 (§ 2F1.1(b)), added two more because the offense involved more than minimal planning (§ 2F1.1(b)(2)(A)), and two more because Brach attempted to obstruct the administration of justice (§ 3C1.1). The court then reduced the total of these calculations by two points because of Brach's acceptance of responsibility (§ 3E1.1(a)). The total offense level of sixteen thus arrived at calls for an imprisonment range of twenty-one to twenty-seven months. The district court sentenced Brach to twenty-seven months' imprisonment and a three-year term of supervised release and imposed a fine of $10,000.

Brach challenges these adjustments on several grounds. He contends at the outset that the district court erred in basing the "loss" on the face value of the loan rather than on the value of the temporary use of the $250,000. We disagree. Application Note 7 under section 2F1.1 refers to the commentaries under section 2B1.1 for a discussion of loss valuation. Section 2B1.1 deals with Larceny, Embezzlement, and Other Forms of Theft. Application Note 2 under section 2B1.1 defines "loss" as "the value of the property taken." Application Note 7 under section 2F1.1 states that, "if a probable or intended loss that the defendant was attempting to inflict can be determined, that figure would be used if it was larger than the actual loss."

In cases involving embezzlement or theft, we have interpreted Application Note 2 literally and affirmed sentencing adjustments based on the value of what was taken, not on the ultimate harm suffered by the victim. See United States v. Cea, 925 F.2d 56, 57 (2d Cir.1991); United States v. Parker, 903 F.2d 91, 104-05 (2d Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 196, 112 L.Ed.2d 158 (1990). We see no reason to follow a different course where, as in the instant case, the loss was caused by fraud and deceit.

Brach's contention that he intended to repay the loan, assuming it to be true, does not change the picture. Brach's crime was complete once he transmitted the false financial statement and obtained the loan. Thereafter, he wrongfully was in possession of $250,000. Under the Guidelines, "loss" includes the value of all property taken, even though all or part of it was returned. United States v. Cockerham, 919 F.2d 286, 289 (5th Cir.1990); United States v. Johnson, 908 F.2d 396, 398 (8th Cir.1990). It is not restricted to the harm that a defendant intended to inflict but instead may consist of the "probable" loss resulting from the fraud. United States v. Haddon, 927 F.2d 942, 951-52 (7th Cir.1991); United States v. Davis, 922 F.2d 1385, 1392-93 (9th Cir.1991). For sentencing purposes, it is enough to recognize that Brach put Randolph at risk for the full amount of $250,000. The district court correctly determined the loss to be $250,000.

Brach's challenge to the district court's minimal planning adjustment is two-pronged. He first contends generally that the district court violated Fed.R.Crim.P. 32(c)(3)(D) by failing to make any findings concerning Brach's activities with the two Canadian companies after Brach contested allegations in the presentence report that he was defrauding those companies. He then makes the specific contention that the district court violated section 1B1.3(a)(1) by considering his Canadian activities in arriving at the adjustment for more than minimal planning.

Rule 32(c)(3)(D) provides in substance that, if a defendant alleges any factual inaccuracy in the presentence report, the court shall make a finding as to the allegation or a determination that no such finding is necessary because the matter controverted will not be considered in sentencing. Contrary to Brach's contention, the record is clear that the district court adopted the findings of the presentence report as to Brach's Canadian activities. The district judge stated, "I accept the findings and the proposed application in the presentence report," and continued:

I have considered the activities with respect to the other entities, Union Carbide and Leco Films [sic] in picking a point within the guideline range. Those activities have indicated to me, up to this point, Mr. Brach, you have been engaged in a way of life which involves deceiving and defrauding people on quite a sophisticated level, and in my judgment it is quite appropriate to consider those matters...