For the Defense - Vol. 8, Issue 4 - 11

(2) the defendant did not receive an adjustment under
§3A1.4 (Terrorism); (3) the defendant did not use violence
or credible threats of violence in connection with the
offense; (4) the offense did not result in death or serious
bodily injury; (5) the instant offense of conviction is not
a sex offense; (6) the defendant did not personally cause
substantial financial hardship; (7) the defendant did
not possess, receive, purchase, transport, transfer, sell,
or otherwise dispose of a firearm or other dangerous
weapon (or induce another participant to do so) in
connection with the offense; (8) the instant offense of
conviction is not covered by §2H1.1 (Offenses Involving
Individual Rights); (9) the defendant did not receive an
adjustment under §3A1.1 (Hate Crime Motivation or
Vulnerable Victim) or §3A1.5 (Serious Human Rights
Offense); and (10) the defendant did not receive an
adjustment under §3B1.1 (Aggravating Role) and was not
engaged in a continuing criminal enterprise, as defined
in 21 U.S.C. § 848.9
The Third Circuit applied this subjective approach to individual
victims in United States v. Poulson.15
There, the defendant engaged
in a multi-million-dollar Ponzi scheme by tricking homeowners
facing foreclosure into selling him their homes. The district court
found that he caused " substantial financial hardship " to more than
twenty-five victims.16
On the defendant's appeal, the Third Circuit
reviewed the district court's determination as to eight of these
victims.17
The defendant raised objections before the district court
to the finding of substantial financial hardship for only two of
the eight victims-accordingly, the Third Circuit exercised plenary
review over the district court's findings of " substantial financial
hardship " for those two victims, but reviewed the findings for
the other six victims for plain error.18
It is not clear why counsel
made specific arguments for only two of the eight victims, but
practitioners should consider raising the argument as to every
victim to enjoy the more favorable standard of review on appeal.
The Third Circuit upheld the district court's determinations of
" substantial financial hardship " for all eight victims.19
For the two
The Most Important Exclusions for White Collar Defendants
As non-violent offenders, white collar defendants may be some
of the best candidates for receiving the two-level reduction.
However, two exceptions are particularly applicable to white
collar defendants which could bar them from qualifying for the
reduction: the exclusion for defendants who caused " substantial
financial hardship " and the exclusion for crimes committed against
" vulnerable victims. " 10
a. The Substantial Financial Hardship Exception
Defendants are not eligible for the two-point reduction if they
personally caused " substantial financial hardship. " 11
In determining
whether a defendant's acts or omissions caused substantial financial
hardship, Section 4C1.1 instructs courts to consider, " among other
things, " the non-exhaustive list of factors found in Application
note 4(F) to Section 2B1.1 of the Guidelines, which concerns theft,
property destruction, and fraud.12
That list is:
[W]hether the offense resulted in the victim-(i) becoming
insolvent; (ii) filing for bankruptcy under the Bankruptcy
Code (Title 11, United States Code); (iii) suffering substantial
loss of a retirement, education, or other savings or
investment fund; (iv) making substantial changes to his or
her employment, such as postponing his or her retirement
plans; (v) making substantial changes to his or her living
arrangements, such as relocating to a less expensive home;
and (vi) suffering substantial harm to his or her ability to
obtain credit.13
Importantly, courts have a large amount of discretion in
determining whether a defendant caused " substantial financial
hardship. " The Third Circuit applies a subjective analysis when
determining whether a defendant caused " substantial financial
hardship " and has explained that the concept of substantial
financial hardship " exists on a sliding scale and must be interpreted
subjectively for each victim, not according to some fixed amount. " 14
Since this subjective approach takes into account the specific
details of each individual victim, defense attorneys must be aware
that a financial crime against one individual might not constitute
substantial financial hardship, but the same crime against a
different, less affluent individual could constitute substantial
financial hardship.
victims over which the Third Circuit exercised plenary review, the
district court found " substantial financial hardship " because one
defendant lost $60,000 in retirement savings and was " forced to
file a civil lawsuit " to recover the money he lost, and the other
defendant lost $70,661 in a retirement and savings fund and
would be required to " work longer to make up for the money. " 20
In upholding the district court's decisions for these two victims,
the Third Circuit emphasized the fact that the list of factors in
Application Note 4(F) is not exhaustive.21
For the other six victims, the district court based its findings on
them losing various amounts of money in investment accounts,
retirement accounts, or other financial accounts, as well as the
effect each loss had on each victim.22
For example, one victim lost
$9,500 in a joint investment account with his wife and the victim
told the court the loss " impacted [their] savings substantially and
altered [his] wife's retirement plans. " 23
In upholding the district
court's findings for these victims, the Third Circuit stated that it
was " not persuaded that the [Sentencing] Commission intended
the enhancement to be as limited, or as difficult to satisfy " as
the defendant urged and noted that " the other courts that have
reviewed §2B1.1 have all emphasized the sentencing court's
considerable discretion in determining where on the 'wide range'
between 'a minimal loss or hardship . . . and a devastating loss'
a particular victim's loss might fall. " 24
Practitioners should keep in
mind that the threshold for " substantial financial hardship " varies
by victim and take care to amass every available argument to
counter that possible conclusion.
Other Third Circuit decisions provide additional examples of
harm that constitutes " substantial financial hardship. " 25
b. The Vulnerable Victim Exception
Defendants are not eligible for the two-level reduction if they
Defendants receive an
received an adjustment under Sentencing Guidelines Section 3A1.1
for a crime against a vulnerable victim.26
upward adjustment under Section 3A1.1 for a crime against a
vulnerable victim if they " knew or should have known that a victim
of the offense was a vulnerable victim. " 27
The Guidelines define
" vulnerable victim " as a victim " who is unusually vulnerable due to
age, physical or mental condition, or who is otherwise particularly
susceptible to the criminal conduct. " 28
Vol. 8, Issue 4 l For The Defense 11
For the Defense - Vol. 8, Issue 4

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