White-collar Defendant Obtains Remand for Resentencing on Acceptance, Loss Calculation

U.S. v. Evans, 2014 WL 929164 (3/11/14) (Col.) (Published) - A couple of wins for a white-collar guy. The government's refusal to move for a one-level USSG § 3E1.1(b) reduction was not rationally related to resource allocation and so Mr. Evans was entitled to the reduction. The government claimed Mr. Evans didn't truly accept responsibility because he contested the loss calculations, denying he was responsible for any losses to investors. But the government promised to move for the reduction and acknowledged in the plea agreement that Mr. Evans could challenge the loss amount. Mr. Evans had prevailed on most of his loss argument. Mr. Evans started off his real estate investment scheme on the up and up. But when cash flow problems arose he started lying about income, expenses, etc. to hide how bad things were going for the scheme. The district court was wrong to add up all the investor losses for the entire time of the scheme without regard for losses that had nothing to do with Mr. Evans' fraud. The court should have determined what loss the investors would have suffered if Mr. Evans had been truthful about the status of the securities and the underlying properties. The correct starting point was when the fraud began and the calculation should exclude lost value due to the unsustainable business model of the enterprise. The court also should have considered the effect and foreseeability of non-fraud factors, e.g. extrinsic forces such as the financial crisis. The 10th did reject Mr. Evans' claim that his infusion of 4.5 million dollars into the business should be subtracted from the loss amount. That money did not benefit the investors. It only helped to cover up the business losses.