U.S. v. Klisser, Docket No. 98-1642

• Decision Date: 01 August 1998
• Docket Number: Docket No. 98-1642
• Citation: 190 F.3d 34
• Parties: (2nd Cir. 1999) UNITED STATES OF AMERICA, Appellee, v. CHARLES HENRY KLISSER, Defendant-Appellant
• Court: U.S. Court of Appeals — Second Circuit

Page 34

190 F.3d 34 (2nd Cir. 1999)

UNITED STATES OF AMERICA, Appellee, v. CHARLES HENRY KLISSER, Defendant-Appellant.

Docket No. 98-1642

August Term, 1998

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Argued: August 13, 1999

Decided: August 24, 1999

Appeal from a judgment of the United States District Court for the Eastern District of New York (Reena Raggi, Judge) convicting appellant of wire fraud and sentencing him principally to 24 months of imprisonment, three years of supervised release, and a $7,500 fine. Appellant argues, inter alia, that in calculating his offense level under United States Sentencing Guidelines §2F1.1, the District Court erred by using an intended loss figure even though no actual loss was possible because he was caught in an undercover sting operation.

Judgment affirmed.

JAMES H. PASTO, San Diego, CA, for Defendant-Appellant.

BRIDGET ROHDE, Assistant United States Attorney for the Eastern District of New York (Zachary W. Carter, United States Attorney, and David C. James and David Hennessy, Assistant United States Attorneys, of counsel), for Appellee.

Before: CALABRESI, CABRANES, and SOTOMAYOR, Circuit Judges.

PER CURIAM:

This appeal presents the question of whether the offense-level calculation under United States Sentencing Guidelines §2F1.1 ¹ may be based on intended loss even if no actual loss was possible because the defendant was caught in an undercover sting operation. Appellant Charles Henry Klisser urges us to adopt the interpretation of the United States Court of Appeals for the Tenth Circuit, which held in United States v. Galbraith, 20 F.3d 1054 (10th Cir. 1994), that a zero loss figure must be used in such circumstances. Id.at 1059. We join the several other courts of appeals that have rejected Galbraith and hold that impossibility of actual loss does not require use of a zero loss figure. Accordingly, we affirm the sentence imposed by the United States District Court for the Eastern District of New York (Reena Raggi, Judge) .

I

Klisser was convicted of wire fraud, in violation of 18 U.S.C. §1343 (1994). The evidence at trial showed that Klisser offered an investment opportunity to an acquaintance who, unbeknownst to Klisser, was cooperating with the government. The acquaintance then introduced an undercover agent to Klisser, who was told that the agent was a pension fund accountant. Klisser was led to believe that the "accountant" planned to misappropriate ten million dollars from the pension fund, make a short-term investment, and then return the ten million dollars to the fund while retaining the profits from the investment. Under the government's theory of the case, the investment opportunity proposed by Klisser was a sham, through which he intended to defraud the fictitious pension fund accountant (and, ultimately, the fictitious pension fund) of the entire ten-million-dollar "investment."

At sentencing, the Guidelines offense level was calculated pursuant to U.S.S.G. §2F1.1, which applies to offenses involving fraud or deceit, and which prescribes offense level enhancements based on, inter alia, the amount of "the loss." Id. §2F1.1(b)(1). Klisser urged the District Court to use a zero loss figure on the ground that, because this had been a sting operation with a fictitious victim, no loss had ever been possible. The court determined that neither a zero loss figure nor a ten-million-dollar loss figure would accurately reflect Klisser's degree of culpability. In reaching this conclusion, the court stated that Klisser "was certainly prepared to take the money as quickly as anyone could put it into his hands," but the court also "recognize[d] that in these undercover dealings the Government does have some control over what it offers." Ultimately, the court applied a 12-level enhancement, which corresponded to a loss of more than $1,500,000. See id. §2F1.1(b)(1)(M). The court explained that, from the evidence of Klisser's conversations with the cooperating witness and undercover agents, "it was apparent ...that Mr. Klisser was attempting to deal in several million dollars."

Based on this offense level increase and other Guidelines calculations, the District Court determined that the applicable sentencing range was 33 to 41 months of imprisonment. After concluding that a downward departure based on family circumstances was warranted, the court sentenced Klisser principally to 24 months of imprisonment, three years of supervised release, and a $7,500 fine. Judgment was entered accordingly, and this appeal followed.

II

On appeal, Klisser does not challenge the specific amount of loss which the District Court found that he intended fraudulently to cause. Instead, Klisser challenges his sentence only on the ground that the court erred in refusing to use a zero loss figure based on the impossibility of actual loss.² Klisser relies primarily on Galbraith, in which the Tenth Circuit concluded:

Because this was an undercover sting operation which was structured to sell stock to a pension fund that did not exist, defendant could not...