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Wednesday, January 30, 2013

Intended Loss Not Necessarily Potential Loss in Credit Card Fraud

In United States v. Diallo, ___ F.3d ____, 2013 WL 150125 (3d Cir., Jan. 15, 2013), the defendant pled guilty to possessing over 15 counterfeit credit cards. The government calculated an actual loss amount of $160,000. However, at sentencing, the government argued that the defendant should receive a 16-level enhancement, pursuant to U.S.S.G. § 2B1.1(b)(1), based upon the intended loss. Specifically, the government asserted that the counterfeit credit cards provided the defendant with access to a combined credit limit of $1.6 million. However, there was no evidence presented that the defendant actually knew the credit limits of the counterfeit cards. Nonetheless, the district court accepted the government’s argument and sentenced the defendant to 70 months, at the bottom of the 70-87 month guideline range. However, the Third Circuit refused to endorse a blanket rule that the intended loss amount should be the cards’s credit limit in every credit card fraud case. Citing United States v. Geevers, 226 F.3d 186 (3d Cir. 2000) and United States v. Titchell, 261 F.3d 348 (3d Cir. 2001), the court reiterated the general rule that the potential loss is not necessarily the intended loss in all fraud cases. Therefore, it would be error for the district court to presume that the aggregate credit limit alone is sufficient to constitute a prima facie case of intended loss in a credit card fraud case. Instead, the district court must conduct a "deeper analysis" to determine whether it is proper to equate potential loss with intended loss. After reviewing the district court’s analysis, the Third Circuit ruled that it was not sufficiently "deeper." The Third Circuit concluded that, based upon the district court’s limited analysis, it appeared that the district court simply equated potential loss with intended loss, which it had instructed against in Geevers and Titchell. The Third Circuit ultimately vacated the sentence and remanded the case for resentencing.

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