Loss-Amount Reversal
Brian Alfaro was convicted of seven counts of mail fraud under 18 U.S.C. 1341 after an eight-day trial. He had offered investors to own shares in various oil and gas prospects. According to the indictment, he or his employees made material, false representations to the investors in order to induce them into buying “working interests” and then fraudulently misused their funds.
The probation officer determined that based on the total amount of investment ($13,781,150.87) minus the calculated tax benefits that the investors could have claimed on their tax returns ($3,858,722.24), the total amount of loss was $9,922,428.63. The officer also determined the victims were owed that same amount in restitution.
The Government conceded the PSR’s total loss amount should be reduced by $325,540.35 that Alfaro’s company had paid in royalties and $167,288.55 distributed to investors in bankruptcy proceedings. These reductions resulted in a total loss of $9,429,599.73. This adjustment would also lead to a lower advisory Guidelines Imprisonment Range.
The district court, however, held that the PSR’s loss calculations were correct and adopted its proposed loss finding of $9,922,428.63. The court ultimately sentenced Alfaro to 121 months’ imprisonment.
Alfaro appealed, among other things, the district court’s loss calculation. He made several arguments which the Fifth Circuit rejected, except one that asserted that the district court erred by not accepting the Government’s concession as to the total loss amount. Specific evidence supported the Government’s concession that the total loss was $9,429,599.73 after accounting for proper offsets, and the district court should have accepted it. It’s failure to accept the Government’s concession resulted in an erroneous Guidelines range calculation. Because the record did not convincingly demonstrate that the sentence the court imposed was not influenced in any way by the erroneous Guideline calculation, a remand was appropriate. The district court’s restitution award was also vacated because it was based upon the errant total loss amount.