[Federal Register Volume 63, Number 3 (Tuesday, January 6, 1998)]
[Notices]
[Pages 602-635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-91]



[[Page 601]]

_______________________________________________________________________

Part II





United States Sentencing Commission





_______________________________________________________________________



Sentencing Guidelines for United States Courts; Notice

  Federal Register / Vol. 63, No. 3 / Tuesday, January 6, 1998 / 
Notices  

[[Page 602]]



UNITED STATES SENTENCING COMMISSION


Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of proposed amendments to sentencing guidelines, policy 
statements, and commentary. Request for public comment. Notice of 
public hearing.

-----------------------------------------------------------------------

SUMMARY: Pursuant to section 994(a), (o), and (p) of title 28, United 
States Code, and other provisions of law, the Commission is considering 
promulgating certain amendments to the sentencing guidelines, policy 
statements, and commentary. This notice sets forth the proposed 
amendments and, for each proposed amendment, a synopsis of the issues 
addressed by that amendment. The Commission seeks comment on the 
proposed amendments, alternative proposed amendments, and any other 
aspect of the sentencing guidelines, policy statements, and commentary. 
The Commission may submit amendments to the Congress not later than May 
1, 1998.
    The proposed amendments are presented in this notice in one of two 
formats. First, some of the amendments are proposed as specific 
revisions to a guideline or commentary. Bracketed text within a 
proposed amendment indicates alternative proposals and that the 
Commission invites comment and suggestions for appropriate policy 
choices; for example, a proposed enhancement of [3-5] levels means a 
proposed enhancement of either three, four, or five levels. Similarly, 
a proposed enhancement of [4] levels indicates that the Commission is 
considering, and invites comment on, alternative policy choices. 
Second, the Commission has highlighted certain issues for comment and 
invites suggestions for specific guideline language.

DATES: Written public comment should be received by the Commission not 
later than March 12, 1998, in order to be considered by the Commission 
in the promulgation of amendments and in the possible submission of 
those amendments to the Congress by May 1, 1998.
    The Commission has scheduled a public hearing on the proposed 
amendments for March 12, 1998, at the Thurgood Marshall Federal 
Judiciary Building, One Columbus Circle, N.E., Washington, D.C. 20002-
8002. An additional public hearing focusing primarily on proposed 
amendments to the theft, fraud, and tax guidelines is scheduled for 
March 5, 1998, at the Parc Fifty-Five Hotel in San Francisco, CA, in 
conjunction with the American Bar Association's 1998 National Institute 
on White Collar Crime.
    A person who desires to testify at the public hearing in 
Washington, D.C., should notify Michael Courlander, Public Information 
Specialist, at (202) 273-4590, not later than February 26, 1998. 
Written testimony for that hearing must be received by the Commission 
not later than March 5, 1998. Timely submission of written testimony is 
a requirement for testifying at the public hearing.
    A person who desires to testify at the public hearing in San 
Francisco, CA, should notify Michael Courlander, Public Information 
Specialist, at (202) 273-4590, not later than February 19, 1998. 
Written testimony for that hearing must be received by the Commission 
not later than February 26, 1998. Timely submission of written 
testimony is a requirement for testifying at the public hearing.

ADDRESSES: Public comment should be sent to: United States Sentencing 
Commission, One Columbus Circle, N.E., Suite 2-500, Washington, D.C. 
20002-8002, Attention: Public Information.

FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Information 
Specialist, Telephone: (202) 273-4590.

SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is 
an independent agency in the judicial branch of the United States 
Government. The Commission promulgates sentencing guidelines and policy 
statements for federal sentencing courts pursuant to 28 U.S.C. 994(a). 
The Commission also periodically reviews and revises previously 
promulgated guidelines pursuant to 28 U.S.C. 994(o) and submits 
guideline amendments to the Congress not later than the first day of 
May each year pursuant to 28 U.S.C. Sec. 994(p).

    Authority: 28 U.S.C. 994(a), (o), (p), (x); Pub. L. 105-101, 2, 
Nov. 19, 1997, 111 Stat. 2202; Pub. L. 105-147, Sec. 2(g), 111 Stat 
2678, Dec. 16, 1997.
Richard P. Conaboy,
Chairman.

Fraud, Theft, Tax, and Related Offenses

Chapter Two

1. Synopsis of Proposed Amendment

    During the 1997-98 amendment cycle, the Sentencing Commission has 
identified as a priority issue for consideration the definition of 
``loss'' and the weight it is given in the theft, fraud, and tax 
guidelines. The following are two proposed options for revising the 
loss tables for the theft, fraud, and tax guidelines. The purpose of 
both options is to raise penalties for economic offenses that have 
medium to high dollar losses in order to achieve better proportionality 
with the guideline penalties for other offenses of comparable 
seriousness. With the exception of the proposed tax tables at low 
dollar losses, each of the proposed tables uses two-level incremental 
increases in offense levels.
Option 1
    (A) Sec. 2B1.1 (Theft): The proposed loss table incorporates the 
two-level ``more than minimal planning'' (MMP) enhancement currently 
treated as a separate specific offense characteristic in the theft 
guideline. The first level from that enhancement is built in at amounts 
exceeding $10,000; the second level from that enhancement is built in 
at amounts exceeding $20,000. In addition, beginning at amounts 
exceeding $40,000, the severity of the offense levels in the proposed 
theft loss table is greater than the severity of the offense levels in 
the current theft loss table, plus an enhancement for MMP.
    (B) Sec. 2F1.1 (Fraud): The proposed change provides for an initial 
increase in the loss table from a base offense level of 6 to an offense 
level of 8 at more than $5,000, whereas the initial increase in the 
current fraud loss table is an increase from a base offense level of 6 
to an offense level of 7 at more than $2,000. The proposed loss table 
incorporates the MMP enhancement currently treated as a separate 
specific offense characteristic in the fraud guideline. The first level 
of that enhancement is built in at amounts exceeding $10,000; the 
second level from that enhancement is built in at amounts exceeding 
$20,000. In addition, beginning at $40,000, the severity of the offense 
levels in the proposed fraud loss table is greater than the severity of 
the offense levels in the current fraud loss table, plus an enhancement 
for MMP.
    (C) Sec. 2T4.1 (Tax): For tax losses of $40,000 or less, the 
offense levels of the proposed tax loss table are the same as the 
current tax loss table. For losses of more than $40,000, the proposed 
increases in offense levels are the same as the increases in offense 
levels in the proposed theft and fraud loss tables for like monetary 
amounts.
Option 2
    (A) Sec. 2B1.1 (Theft): The proposed loss table incorporates the 
two-level MMP enhancement currently treated as a

[[Page 603]]

separate specific offense characteristic in the theft guideline. The 
first level from that enhancement is built in at amounts exceeding 
$2,000; the second level from that enhancement is built in at amounts 
exceeding $5,000. (Because the proposed table also changes a ``cutting 
point'' from $10,000 to $12,500, only one level for more than MMP is 
built in for amounts between $10,000 and $12,500.) In addition, 
beginning at amounts exceeding $12,500, the severity of the offense 
levels in the proposed theft loss table is greater than the severity of 
the offense levels in the current theft loss table, plus an enhancement 
for MMP.
    (B) Sec. 2F1.1 (Fraud): The proposed loss table provides for an 
initial increase from a base offense level of 6 to an offense level of 
8 at more than $2,000, whereas the initial increase under the current 
fraud loss table increases the base offense level of 6 to an offense 
level of 7 at more than $2,000. The proposed loss table incorporates 
the MMP enhancement currently treated as a separate specific offense 
characteristic in the fraud guideline. The first level of that 
enhancement is built in at amounts exceeding $2,000; the second level 
from that enhancement is built in at amounts exceeding $5,000. (Because 
the proposed table also changes a ``cutting point'' from $10,000 to 
$12,500, only one level for MMP is built in for amounts between $10,000 
and $12,500.) In addition, beginning at $12,500, the severity of the 
offense levels in the proposed fraud loss table is greater than the 
severity of the offense levels in the current fraud loss table, plus an 
enhancement for MMP.
    (C) Sec. 2T4.1 (Tax): The proposed increases in offense levels are 
the same as the increases in offense levels in the proposed fraud loss 
tables for like monetary amounts.

Proposed Amendment:

[Option 1
    [Section 2B1.1(b)(1) is amended by striking:

------------------------------------------------------------------------
       ``Loss (Apply the Greatest)               Increase in Level      
------------------------------------------------------------------------
(A) $100 or less.........................  no increase                  
(B) More than $100.......................  add 1                        
(C) More than $1,000.....................  add 2                        
(D) More than $2,000.....................  add 3                        
(E) More than $5,000.....................  add 4                        
(F) More than $10,000....................  add 5                        
(G) More than $20,000....................  add 6                        
(H) More than $40,000....................  add 7                        
(I) More than $70,000....................  add 8                        
(J) More than $120,000...................  add 9                        
(K) More than $200,000...................  add 10                       
(L) More than $350,000...................  add 11                       
(M) More than $500,000...................  add 12                       
(N) More than $800,000...................  add 13                       
(O) More than $1,500,000.................  add 14                       
(P) More than $2,500,000.................  add 15                       
(Q) More than $5,000,000.................  add 16                       
(R) More than $10,000,000................  add 17                       
(S) More than $20,000,000................  add 18                       
(T) More than $40,000,000................  add 19                       
(U) More than $80,000,000................  add 20.'',                   
-------------------------------------------------------------------

and inserting:

------------------------------------------------------------------------
    ``Loss Amount (Apply the Greatest)         Offense Level Increase   
------------------------------------------------------------------------
(A) $2,000 or less.......................  no increase                  
(B) More than $2,000.....................  add 2                        
(C) More than $5,000.....................  add 4                        
(D) More than $10,000....................  add 6                        
(E) More than $20,000....................  add 8                        
(F) More than $40,000....................  add 10                       
(G) More than $80,000....................  add 12                       
(H) More than $200,000...................  add 14                       
(I) More than $500,000...................  add 16                       
(J) More than $1,200,000.................  add 18                       
(K) More than $2,000,000.................  add 20                       
(L) More than $7,500,000.................  add 22                       
(M) More than $20,000,000................  add 24                       
(N) More than $50,000,000................  add 26                       
(O) More than $100,000,000...............  add 28.''.                   
------------------------------------------------------------------------

    Section 2F1.1(b)(1) is amended by striking:

------------------------------------------------------------------------
       ``Loss (Apply the Greatest)               Increase in Level      
------------------------------------------------------------------------
(A) $2,000 or less.......................  no increase                  
(B) More than $2,000.....................  add 1                        
(C) More than $5,000.....................  add 2                        
(D) More than $10,000....................  add 3                        
(E) More than $20,000....................  add 4                        
(F) More than $40,000....................  add 5                        
(G) More than $70,000....................  add 6                        
(H) More than $120,000...................  add 7                        
(I) More than $200,000...................  add 8                        
(J) More than $350,000...................  add 9                        
(K) More than $500,000...................  add 10                       
(L) More than $800,000...................  add 11                       
(M) More than $1,500,000.................  add 12                       
(N) More than $2,500,000.................  add 13                       
(O) More than $5,000,000.................  add 14                       
(P) More than $10,000,000................  add 15                       
(Q) More than $20,000,000................  add 16                       
(R) More than $40,000,000................  add 17                       
(S) More than $80,000,000................  add 18.''.                   
------------------------------------------------------------------------

and inserting:

------------------------------------------------------------------------
    ``Loss Amount (Apply the Greatest)         Offense Level Increase   
------------------------------------------------------------------------
(A) $5,000 or less.......................  no increase                  
(B) More than $5,000.....................  add 2                        
(C) More than $10,000....................  add 4                        
(D) More than $20,000....................  add 6                        
(E) More than $40,000....................  add 8                        
(F) More than $80,000....................  add 10                       
(G) More than $200,000...................  add 12                       
(H) More than $500,000...................  add 14                       
(I) More than $1,200,000.................  add 16                       
(J) More than $2,500,000.................  add 18                       
(K) More than $7,500,000.................  add 20                       
(L) More than $20,000,000................  add 22                       
(M) More than $50,000,000................  add 24                       
(N) More than $100,000,000...............  add 26.''.                   
------------------------------------------------------------------------

Section 2T4.1 is amended by striking:

------------------------------------------------------------------------
     ``Tax Loss (Apply the Greatest)               Offense Level        
------------------------------------------------------------------------
(A) $1,700 or less.......................  6                            
(B) More than $1,700.....................  7                            
(C) More than $3,000.....................  8                            
(D) More than $5,000.....................  9                            
(E) More than $8,000.....................  10                           
(F) More than $13,500....................  11                           
(G) More than $23,500....................  12                           
(H) More than $40,000....................  13                           
(I) More than $70,000....................  14                           
(J) More than $120,000...................  15                           
(K) More than $200,000...................  16                           
(L) More than $325,000...................  17                           
(M) More than $550,000...................  18                           
(N) More than $950,000...................  19                           
(O) More than $1,500,000.................  20                           
(P) More than $2,500,000.................  21                           
(Q) More than $5,000,000.................  22                           
(R) More than $10,000,000................  23                           
(S) More than $20,000,000................  24                           
(T) More than $40,000,000................  25                           
(U) More than $80,000,000................  26.'',                       
------------------------------------------------------------------------

 and inserting:

------------------------------------------------------------------------
    ``Loss Amount (Apply the Greatest)         Offense Level Increase   
------------------------------------------------------------------------
(A) $1,700 or less.......................  no increase                  
(B) More than $1,700.....................  add 1                        
(C) More than $3,000.....................  add 2                        
(D) More than $5,000.....................  add 3                        
(E) More than $8,000.....................  add 4                        
(F) More than $13,500....................  add 5                        
(G) More than $23,500....................  add 6                        
(H) More than $40,000....................  add 8                        
(I) More than $80,000....................  add 10                       
(J) More than $200,000...................  add 12                       
(K) More than $500,000...................  add 14                       
(L) More than $1,200,000.................  add 16                       
(M) More than $2,500,000.................  add 18                       
(N) More than $7,500,000.................  add 20                       
(O) More than $20,000,000................  add 22                       
(P) More than $50,000,000................  add 24                       
(Q) More than $100,000,000...............  add 26.''.]                  
------------------------------------------------------------------------

[Option 2:
[Section 2B1.1(b)(1) is amended by striking:

------------------------------------------------------------------------
       ``Loss (Apply the Greatest)               Increase in Level      
------------------------------------------------------------------------
(A) $100 or less.........................  no increase                  
(B) More than $100.......................  add 1                        
(C) More than $1,000.....................  add 2                        
(D) More than $2,000.....................  add 3                        
(E) More than $5,000.....................  add 4                        
(F) More than $10,000....................  add 5                        
(G) More than $20,000....................  add 6                        
(H) More than $40,000....................  add 7                        

[[Page 604]]

                                                                        
(I) More than $70,000....................  add 8                        
(J) More than $120,000...................  add 9                        
(K) More than $200,000...................  add 10                       
(L) More than $350,000...................  add 11                       
(M) More than $500,000...................  add 12                       
(N) More than $800,000...................  add 13                       
(O) More than $1,500,000.................  add 14                       
(P) More than $2,500,000.................  add 15                       
(Q) More than $5,000,000.................  add 16                       
(R) More than $10,000,000................  add 17                       
(S) More than $20,000,000................  add 18                       
(T) More than $40,000,000................  add 19                       
(U) More than $80,000,000................  add 20.'',                   
------------------------------------------------------------------------

and inserting:

------------------------------------------------------------------------
    ``Loss Amount (Apply the Greatest)         Offense Level Increase   
------------------------------------------------------------------------
(A) $100 or less.........................  no increase                  
(A) More than $100.......................  add 1                        
(C) More than $1,000.....................  add 2                        
(D) More than $2,000.....................  add 4                        
(E) More than $5,000.....................  add 6                        
(F) More than $12,500....................  add 8                        
(G) More than $30,000....................  add 10                       
(H) More than $70,000....................  add 12                       
(I) More than $150,000...................  add 14                       
(J) More than $350,000...................  add 16                       
(K) More than $800,000...................  add 18                       
(L) More than $2,500,000.................  add 20                       
(M) More than $7,500,000.................  add 22                       
(N) More than $20,000,000................  add 24                       
(O) More than $50,000,000................  add 26                       
(P) More than $100,000,000...............  add 28.''.                   
------------------------------------------------------------------------

Section 2F1.1(b)(1) is amended by striking.

------------------------------------------------------------------------
       ''Loss (Apply the Greatest)               Increase in Level      
------------------------------------------------------------------------
(A) $2,000 or less.......................  no increase                  
(B) More than $2,000.....................  add 1                        
(C) More than $5,000.....................  add 2                        
(D) More than $10,000....................  add 3                        
(E) More than $20,000....................  add 4                        
(F) More than $40,000....................  add 5                        
(G) More than $70,000....................  add 6                        
(H) More than $120,000...................  add 7                        
(I) More than $200,000...................  add 8                        
(J) More than $350,000...................  add 9                        
(K) More than $500,000...................  add 10                       
(L) More than $800,000...................  add 11                       
(M) More than $1,500,000.................  add 12                       
(N) More than $2,500,000.................  add 13                       
(O) More than $5,000,000.................  add 14                       
(P) More than $10,000,000................  add 15                       
(Q) More than $20,000,000................  add 16                       
(R) More than $40,000,000................  add 17                       
(S) More than $80,000,000................  add 18.''.                   
------------------------------------------------------------------------

and inserting:

------------------------------------------------------------------------
    ``Loss Amount (Apply the Greatest)         Offense Level Increase   
------------------------------------------------------------------------
(A) $2,000 or less.......................  no increase                  
(B) More than $2,000.....................  add 2                        
(C) More than $5,000.....................  add 4                        
(D) More than $12,500....................  add 6                        
(E) More than $30,000....................  add 8                        
(F) More than $70,000....................  add 10                       
(G) More than $150,000...................  add 12                       
(H) More than $350,000...................  add 14                       
(I) More than $800,000...................  add 16                       
(J) More than $2,500,000.................  add 18                       
(K) More than $7,500,000.................  add 20                       
(L) More than $20,000,000................  add 22                       
(M) More than $50,000,000................  add 24                       
(N) More than $100,000,000...............  add 26.''.                   
------------------------------------------------------------------------

Section 2T4.1 is amended by striking:

------------------------------------------------------------------------
     ``Tax Loss (Apply the Greatest)               Offense Level        
------------------------------------------------------------------------
(A) $1,700 or less.......................  6                            
(B) More than $1,700.....................  7                            
(C) More than $3,000.....................  8                            
(D) More than $5,000.....................  9                            
(E) More than $8,000.....................  10                           
(F) More than $13,500....................  11                           
(G) More than $23,500....................  12                           
(H) More than $40,000....................  13                           
(I) More than $70,000....................  14                           
(J) More than $120,000...................  15                           
(K) More than $200,000...................  16                           
(L) More than $325,000...................  17                           
(M) More than $550,000...................  18                           
(N) More than $950,000...................  19                           
(O) More than $1,500,000.................  20                           
(P) More than $2,500,000.................  21                           
(Q) More than $5,000,000.................  22                           
(R) More than $10,000,000................  23                           
(S) More than $20,000,000................  24                           
(T) More than $40,000,000................  25                           
(U) More than $80,000,000................  26.'',                       
------------------------------------------------------------------------

and inserting:

------------------------------------------------------------------------
    ``Loss Amount (Apply the Greatest)         Offense Level Increase   
------------------------------------------------------------------------
(A) $2,000 or less.......................  no increase                  
(B) More than $2,000.....................  add 2                        
(C) More than $5,000.....................  add 4                        
(D) More than $12,500....................  add 6                        
(E) More than $30,000....................  add 8                        
(F) More than $70,000....................  add 10                       
(G) More than $150,000...................  add 12                       
(H) More than $350,000...................  add 14                       
(I) More than $800,000...................  add 16                       
(J) More than $2,500,000.................  add 18                       
(K) More than $7,500,000.................  add 20                       
(L) More than $20,000,000................  add 22                       
(M) More than $50,000,000................  add 24                       
(N) More than $100,000,000...............  add 26.''.]                  
------------------------------------------------------------------------

Issues for Comment

    (A) The Commission invites comment on suggested constructions of 
the loss tables for the theft, property damage and destruction, and 
fraud guidelines other than the options proposed by this amendment. 
Specifically, the Commission invites commentators to suggest 
alternative loss tables that contain different rates of increases and 
different increments from those set forth in the options proposed by 
this amendment.
    (B) The Commission invites comment on whether, in conjunction with 
the above proposed amendments to build into the loss tables ``more than 
minimal planning,'' it should add an application note in Secs. 2B1.1 
(Theft), 2B1.3 (Property Damage and Destruction), and 2F1.1 (Fraud) 
that would prohibit a downward departure if the offense involved only 
minimal planning and prohibit an upward departure if the offense 
involved ``more than minimal planning.'' For a related proposal to 
address cases in which there is limited or insignificant planning, see 
Amendment 5(B), infra.

Guidelines that Refer to Theft/Fraud Loss Tables

Chapter Two

2. Synopsis of Proposed Amendment

    The following proposed amendments indicate the changes that might 
be called for in several guidelines that refer to the loss tables in 
either Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft) or 
Sec. 2F1.1 (Fraud and Deceit) if the Commission were to adopt one of 
the proposed new loss tables (set forth in proposed Amendment 1, 
supra.) as well as an alternative monetary table that does not 
incorporate ``more than minimal planning'' (MMP).
    The amendments are divided into Parts (A) through (G). Part (A) 
proposes an alternative monetary table that does not incorporate MMP. 
The amendments to the referring guidelines are presented in Parts (B) 
through (G) as follows:
    (B) Those guidelines that arguably incorporate the concept of MMP 
into the base offense level or a specific offense characteristic.
    (C) Certain pornography and obscenity guidelines.
    (D) Certain copyright infringement and structuring guidelines, for 
which use of the proposed loss tables for fraud is also presented as an 
option.
    (E) Trespass, for which use of the proposed theft and fraud loss 
tables starting at $2,000 is also presented as an option, as well as an 
issue for comment.
    (F) Property destruction, which is proposed to be consolidated with 
the theft guideline (thereby mitigating the necessity for reference to 
the alternative monetary table).
    (G) Bank gratuity, which is proposed to be consolidated with the 
principal gratuity guideline.

(A) The Reference Monetary Table

Synopsis of Proposed Amendment
    This amendment proposes to add to the guidelines an alternative 
monetary

[[Page 605]]

table for guidelines, other than those for theft and fraud, that 
currently refer to either the theft or fraud loss table and arguably 
incorporate a MMP type feature in either the base offense level or a 
specific offense characteristic. The proposed alternative monetary 
table does not build in MMP, but does incorporate the enhanced severity 
increases of the proposed fraud/theft tables (see Amendment 1, supra.) 
for amounts exceeding $40,000.
    The use of the proposed monetary table for these guidelines in lieu 
of the proposed theft/fraud tables generally would (1) maintain 
proportionality with the proposed fraud/theft loss tables, across the 
range of monetary values, (2) achieve increases in severity for larger-
scale referring guideline offenses, and (3) eliminate the need for a 2-
level reduction in these referring guidelines to account for the fact 
that MMP has been incorporated into the proposed theft/fraud tables. 
The two options are presented to coordinate with the two loss table 
options in proposed Amendment 1, supra. (i.e., Option 1 presented below 
coordinates with Option 1 in Amendment 1, and Option 2 presented below 
coordinates with Option 2 in Amendment 1).

Proposed Amendment

    [Option 1: Chapter Two, Part X is amended by adding at the end the 
following new subpart:
``6. REFERENCE MONETARY TABLE
Sec. 2X6.1. Reference Monetary Table

------------------------------------------------------------------------
       Amount (Apply the Greatest)               Increase in Level      
------------------------------------------------------------------------
[(A) $2, 000 or less] or.................  [no increase]                
[(A) More than $2,000]or.................  [add 1]                      
[(A) $5,000 or less].....................  [no increase]                
(B) More than $5,000.....................  add 2                        
(C) More than $10,000....................  add 3                        
(D) More than $20,000....................  add 4                        
(E) More than $40,000....................  add 6                        
(F) More than $80,000....................  add 8                        
(G) More than $200,000...................  add 10                       
(H) More than $500,000...................  add 12                       
(I) More than $1,200,000.................  add 14                       
(J) More than $2,500,000.................  add 16                       
(K) More than $7,500,000.................  add 18                       
(L) More than $20,000,000................  add 20                       
(M) More than $50,000,000................  add 22                       
(N) More than $100,000,000...............  add 24.''.]                  
------------------------------------------------------------------------

    [Option 2: Chapter Two, Part X is amended by adding at the end the 
following new subpart:
``6. REFERENCE MONETARY TABLE
Sec. 2X6.1. Reference Monetary Table

------------------------------------------------------------------------
       Amount (Apply the Greatest)               Increase in Level      
------------------------------------------------------------------------
(A) $2, 000 or less......................  no increase                  
(B) More than $2,000.....................  add 1                        
(C) More than $5,000.....................  add 2                        
(D) More than $12,500....................  add 4                        
(E) More than $30,000....................  add 6                        
(F) More than $70,000....................  add 8                        
(G) More than $150,000...................  add 10                       
(H) More than $350,000...................  add 12                       
(I) More than $800,000...................  add 14                       
(J) More than $2,500,000.................  add 16                       
(K) More than $7,500,000.................  add 18                       
(L) More than $20,000,000................  add 20                       
(M) More than $50,000,000................  add 22                       
(N) More than $100,000,000...............  add 24.''.]                  
------------------------------------------------------------------------

(B) Guidelines with MMP Built into the Base Offense Level or a Specific 
Offense Characteristic

Synopsis of Proposed Amendment
    With respect to these guidelines, there are two issues: (1) the 
loss table to be referenced, and (2) whether the initial offense level 
increase from the referenced table should occur at $2,000 (the current 
status) or at $5,000. To be precise, the ``cutting points'' in the 
monetary tables occur when the monetary amount is ``more than $2,000'' 
or ``more than $5,000'', etc. For simplicity, this discussion generally 
will omit the ``more than'' modifier.
    To avoid concerns about a MMP overlap, the Reference Monetary Table 
is used for all of these guidelines. Option 1 shows how the guideline 
might be amended if the Commission were to reference a monetary table 
for which the starting point is $5,000.
    Alternatively, Option 1A shows how, even with a reference table 
starting at $5,000, the individual guideline might be amended to 
provide a 1-level increase for cases in which the loss is more than 
$2,000 but not more than $5,000.
    Option 2 shows how the guideline might be amended if the Commission 
were to adopt a reference monetary table for which the starting point 
is $2,000. To cover the possibility that the Commission might elect, 
for one or more of these guidelines, to reference the new fraud loss 
table in spite of an arguable MMP overlap, an issue for comment is 
added at the end of the amendments.

Proposed Amendment:

    Section 2B5.1(b) is amended by striking:
    ``(1) If the face value of the counterfeit items exceeded $2,000, 
increase by the corresponding number of levels from the table at 
Sec. 2F1.1 (Fraud and Deceit).'',
and inserting:
    ``(1) If the face value of the counterfeit items exceeded [Option 
1: $5,000][Option 2: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2B5.1(b) is amended by striking:
    ``(1) If the face value of the counterfeit items exceeded $2,000, 
increase by the corresponding number of levels from the table at 
Sec. 2F1.1 (Fraud and Deceit).'',

and inserting:

    ``(1) If the face value of the counterfeit items (A) exceeded 
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded 
$5,000, increase by the corresponding number of levels from the table 
in Sec. 2X6.1 (Reference Monetary Table).''.]
    Section 2B6.1(b) is amended by striking:
    ``(1) If the retail value of the motor vehicles or parts involved 
exceeded $2,000, increase the offense level by the corresponding number 
of levels from the table in Sec. 2F1.1 (Fraud and Deceit).'',

and inserting:

    ``(1) If the retail value of the motor vehicles or parts involved 
exceeded [Option 1: $5,000] [Option 2: $2,000], increase by the 
corresponding number of levels from the table in Sec. 2X6.1 (Reference 
Monetary Table).''.
[Option 1A
    Section 2B6.1(b) is amended by striking:
    ``(1) If the retail value of the motor vehicles or parts involved 
exceeded $2,000, increase the offense level by the corresponding number 
of levels from the table in Sec. 2F1.1 (Fraud and Deceit).'',

and inserting:

    ``(1) If the retail value of the motor vehicles or parts (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the corresponding number of levels from 
the table in Sec. 2X6.1 (Reference Monetary Table).''.]
    Section 2F1.2(b) is amended by striking:
    ``(1) Increase by the number of levels from the table in Sec. 2F1.1 
corresponding to the gain resulting from the offense.'',

and inserting:

    ``(1) If the gain resulting from the offense exceeded [Option 1: 
$5,000][Option 2: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2F1.2(b) is amended by striking:

[[Page 606]]

    ``(1) Increase by the number of levels from the table in Sec. 2F1.1 
corresponding to the gain resulting from the offense.'',

and inserting:

    ``(1) If the gain resulting from the offense (A) exceeded $2,000 
but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, 
increase by the corresponding number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table).''.]
    Section 2B4.1(b) is amended by striking:
    ``(1) If the greater of the value of the bribe or the improper 
benefit to be conferred exceeded $2,000, increase the offense level by 
the corresponding number of levels from the table in Sec. 2F1.1.'',

and inserting:

    ``(1) If the greater of the value of the bribe or the improper 
benefit to be conferred exceeded [Option 1: $5,000] [Option 2: $2,000], 
increase by the corresponding number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2B4.1(b) is amended by striking:
    ``(1) If the greater of the value of the bribe or the improper 
benefit to be conferred exceeded $2,000, increase the offense level by 
the corresponding number of levels from the table in Sec. 2F1.1.'',

and inserting:

    ``(1) If the greater of the value of the bribe or the improper 
benefit to be conferred (A) exceeded $2,000 but did not exceed $5,000, 
increase by 1 level; or (B) exceeded $5,000, increase by the 
corresponding number of levels from the table in Sec. 2X6.1 (Reference 
Monetary Table).''.]
    Section 2B3.3(b) is amended by striking:
    ``(1) If the greater of the amount obtained or demanded exceeded 
$2,000, increase by the corresponding number of levels from the table 
in Sec. 2F1.1.'',

and inserting:

    ``(1) If the greater of the amount obtained or demanded exceeded 
[Option 1: $5,000] [Option 2: $2,000], increase by the corresponding 
number of levels from the table in Sec. 2X6.1 (Reference Monetary 
Table).''.
[Option 1A
    Section 2B3.3(b) is amended by striking:
    ``(1) If the greater of the amount obtained or demanded exceeded 
$2,000, increase by the corresponding number of levels from the table 
in Sec. 2F1.1.'',

and inserting:

    ``(1) If the greater of the amount obtained or demanded (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the corresponding number of levels from 
the table in Sec. 2X6.1 (Reference Monetary Table).''.]
    Section 2Q2.1(b)(3) is amended by striking:
    ``(A) If the market value of the fish, wildlife, or plants exceeded 
$2,000, increase the offense level by the corresponding number of 
levels from the table in Sec. 2F1.1. (Fraud and Deceit); or'',

and inserting:

    ``(A) If the market value of the fish, wildlife, or plants exceeded 
[Option1: $5,000] [Option 2: $2,000], increase by the corresponding 
number of levels from the table in Sec. 2X6.1 (Reference Monetary 
Table), [but in no event more than [18] levels]; or''.
[Option 1A
    Section 2Q2.1(b)(3) is amended by striking:
    ``(A) If the market value of the fish, wildlife, or plants exceeded 
$2,000, increase the offense level by the corresponding number of 
levels from the table in Sec. 2F1.1 (Fraud and Deceit); or'',

and inserting:

    ``(A) If the market value of the fish, wildlife, or plants (i) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) 
exceeded $5,000, increase by the corresponding number of levels from 
the table in Sec. 2X6.1 (Reference Monetary Table), [but in no event 
more than [18] levels]; or''.]
    Section 2C1.1(b)(2) is amended by striking:
    ``(A) If the value of the payment, the benefit received or to be 
received in return for the payment, or the loss to the government from 
the offense, whichever is greatest, exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit).'',

and inserting:

    ``(A) If the value of the payment, the benefit received or to be 
received in return for the payment, or the loss to the government from 
the offense, whichever is greatest, exceeded [Option 1: $5,000] [Option 
2: $2,000], increase by the corresponding number of levels from the 
table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2C1.1(b)(2) is amended by striking:
    ``(A) If the value of the payment, the benefit received or to be 
received in return for the payment, or the loss to the government from 
the offense, whichever is greatest, exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit).'',

 and inserting:

    ``(A) If the value of the payment, the benefit received or to be 
received in return for the payment, or the loss to the government from 
the offense, whichever is greatest, (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the corresponding number of levels from the table in Sec. 2X6.1 
(Reference Monetary Table).''.]
    Section 2C1.2(b)(2) is amended by striking:
    ``(A) If the value of the gratuity exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit).'',

and inserting:

    ``(A) If the value of the gratuity exceeded [Option 1: 
$5,000][Option 2: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2C1.2(b)(2) is amended by striking:
    ``(A) If the value of the gratuity exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit).'',

 and inserting:

    ``(A) If the value of the gratuity (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the corresponding number of levels from the table in Sec. 2X6.1 
(Reference Monetary Table).''.]
    Section 2C1.7(b)(1) is amended by striking:
    ``(A) If the loss to the government, or the value of anything 
obtained or to be obtained by a public official or others acting with a 
public official, whichever is greater, exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit); or'',

and inserting:

    ``(A) If the loss to the government, or the value of anything 
obtained or to be obtained by a public official or others acting with a 
public official, whichever is greater, exceeded [Option 1: 
$5,000][Option 2: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.

[[Page 607]]

[Option 1A
    Section 2C1.7(b)(1) is amended by striking:
    ``(A) If the loss to the government, or the value of anything 
obtained or to be obtained by a public official or others acting with a 
public official, whichever is greater, exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit); or'',

and inserting:

    ``(A) If the loss to the government, or the value of anything 
obtained or to be obtained by a public official or others acting with a 
public official, whichever is greater, (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the corresponding number of levels from the table in Sec. 2X6.1 
(Reference Monetary Table).''.]
    Section 2E5.1(b) is amended by striking:
    ``(2) Increase by the number of levels from the table in Sec. 2F1.1 
(Fraud and Deceit) corresponding to the value of the prohibited payment 
or the value of the improper benefit to the payer, whichever is 
greater.'',

 and inserting:

    ``(2) If the value of the prohibited payment or the value of the 
improper benefit to the payer, whichever is greater, exceeded [Option 
1: $5,000][Option 2: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2E5.1(b) is amended by striking:
    ``(2) Increase by the number of levels from the table in Sec. 2F1.1 
(Fraud and Deceit) corresponding to the value of the prohibited payment 
or the value of the improper benefit to the payer, whichever is 
greater.'',

and inserting:

    ``(2) If the value of the prohibited payment or the value of the 
improper benefit to the payer, whichever is greater (A) exceeded $2,000 
but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, 
increase by the corresponding number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table).''.]

(C) Pornography and Obscenity

Synopsis of Proposed Amendment
    Option 1 for the following pornography and obscenity guidelines 
references the guidelines to the alternative monetary reference table. 
Option 2 references the new fraud loss table. Option 3 deletes the 
reference to a monetary table altogether and adds invited upward 
departure language for large-scale commercial endeavors.
    Note that, with respect to Secs. 2G2.2 and 2G3.1, the floor (i.e., 
an increase of not less than [5] levels) for the amount of the material 
has been maintained. However, two effects of maintaining the floor 
should be mentioned: (1) The issue of the starting point for any of the 
proposed tables is no longer relevant (because the starting point 
simply does not come into play at such levels). (2) Under the current 
fraud loss table, the 5-level floor presupposes a retail value of at 
least $40,000; however, those values change depending on the particular 
table proposed to be used. For that reason, the 5-level enhancement is 
bracketed in the following options.

Proposed Amendment:

[Option 1
    Section 2G2.2(b) is amended by striking:
    ``(2) If the offense involved distribution, increase by the number 
of levels from the table in Sec. 2F1.1 corresponding to the retail 
value of the material, but in no event by less than 5 levels.'',

and inserting:

    ``(2) If the offense involved distribution, increase by the number 
of levels from the table in Sec. 2X6.1 (Reference Monetary Table) 
corresponding to the retail value of the material, but in no event by 
less than [5] levels.''.]
[Option 2
    Section 2G2.2 (b)(2) is amended by striking ``corresponding to the 
retail value of the material, but in no event less than 5 levels'' and 
inserting ``(Fraud and Deceit) corresponding to the retail value of the 
material, but in no event less than [5] levels''.]
[Option 3
    Section 2G2.2 (b)(2) is amended by striking ``the number of levels 
from the table in Sec. 2F1.1 corresponding to the retail value of the 
material, but in no event by less than 5 levels'' and inserting ``[5] 
levels''.
    The Commentary to Sec. 2G2.2 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``4. Subsection (b)(2) provides a five-level enhancement if the 
offense involved distribution. If the offense involved distribution by 
a large-scale commercial enterprise [(i.e., a commercial enterprise 
distributing material having a retail value that is more than 
[$40,000])], an upward departure may be warranted.''.]
[Option 1
    Section 2G3.1(b) is amended by striking:
    ``(1) If the offense involved an act related to distribution for 
pecuniary gain, increase by the number of levels from the table in 
Sec. 2F1.1 corresponding to the retail value of the material, but in no 
event by less than 5 levels.'',

and inserting:

    ``(1) If the offense involved an act related to distribution for 
pecuniary gain, increase by the number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table) corresponding to the retail value 
of the material, but in no event by less than [5] levels.''.]
[Option 2
    Section 2G3.1(b)(1) is amended by striking ``corresponding to the 
retail value of the material, but in no event less than 5 levels'', and 
inserting ``(Fraud and Deceit) corresponding to the retail value of the 
material, but in no event less than [5] levels''.]
[Option 3
    Section 2G3.1(b)(1) is amended by striking ``the number of levels 
from the table in Sec. 2F1.1 corresponding to the retail value of the 
material, but in no event by less than 5 levels'' following ``increase 
by'', and inserting ``[5] levels''.
    The Commentary to Sec. 2G3.1 captioned ``Application Note'' is 
amended by adding at the end the following new note:
    ``2. Subsection (b)(1) provides a five-level enhancement if the 
offense involved an act related to distribution for pecuniary gain. If 
the offense involved distribution by a large-scale commercial 
enterprise [(i.e., a commercial enterprise distributing material having 
a retail value that is more than [$40,000])], an upward departure may 
be warranted.'';

and in the caption by striking ``Note'' and inserting ``Notes''.]
[Option 1
    Section 2G3.2(b) is amended by striking:
    ``(2) If 6 plus the offense level from the table at 2F1.1(b)(1) 
corresponding to the volume of commerce attributable to the defendant 
is greater than the offense level determined above, increase to that 
offense level.'',

and inserting:

    ``(2) If 6 plus the number of levels from the table in Sec. 2X6.1 
(Reference Monetary Table) corresponding to the

[[Page 608]]

volume of commerce attributable to the defendant results in a greater 
offense level than the offense level determined above, increase to the 
greater offense level.''.]

[Option 2
    Section 2G3.2(b) is amended by striking:
    ``(2) If 6 plus the offense level from the table at 2F1.1(b)(1) 
corresponding to the volume of commerce attributable to the defendant 
is greater than the offense level determined above, increase to that 
offense level.'',

and inserting:

    ``(2) If 6 plus the number of levels from the table in Sec. 2F1.1 
(Fraud and Deceit) corresponding to the volume of commerce attributable 
to the defendant results in a greater offense level than the offense 
level determined above, increase to the greater offense level.''.]
[Option 3
    The Commentary to Sec. 2G3.2 is amended by striking subsection 
(b)(2); and by strking:
    ``Background: Subsection (b)(1) provides an enhancement where an 
obscene telephonic communication was received by a minor less than 18 
years of age or where a broadcast was made during a time when such 
minors were likely to receive it. Subsection (b)(2) provides an 
enhancement for large-scale `dial-a-porn' or obscene broadcasting 
operations that results in an offense level comparable to the offense 
level for such operations under Sec. 2G3.1 (Importing, Mailing, or 
Transporting Obscene Matter). The extent to which the obscene material 
was distributed is approximated by the volume of commerce attributable 
to the defendant.'';

and by inserting:

    ``Application Notes:
    1. Subsection (b)(1) provides an enhancement where an obscene 
telephonic communication was received by a minor less than 18 years of 
age or where a broadcast was made during a time when such minors were 
likely to receive it.
    2. If the offense involved communications or broadcasting 
operations by a large-scale commercial enterprise [(i.e., a commercial 
enterprise engaging in a volume of commerce having a value that is more 
than [$40,000])], an upward departure may be warranted.''.]

(D) Copyright Infringement and Structuring Transactions

Synopsis of Proposed Amendment
    With respect to these guidelines, four options are presented. 
Option 1 shows how the guideline might be amended if the Commission 
were to reference an alternative monetary table for which the starting 
point is $5,000. Alternatively, Option 1A shows how, even with a 
reference table starting at $5,000, the individual guideline might be 
amended to provide a 1-level increase for cases in which the monetary 
amount is more than $2,000 but not more than $5,000. Option 2 shows how 
the guideline might be amended if the Commission were to adopt an 
alternative reference monetary table for which the starting point is 
$2,000.
    Option 3 shows how the guideline might be amended if the Commission 
were to reference a fraud loss table for which the starting point is 
$5,000. Alternatively, Option 3A shows how, even with a reference table 
starting at $5,000, the individual guideline might be amended to 
provide a 1-level increase for cases in which the monetary amount is 
more than $2,000 but not more than $5,000. Option 4 shows how the 
guideline might be amended if the Commission were to adopt a fraud loss 
table for which the starting point is $2,000.

Proposed Amendment

    Section 2B5.3(b) is amended by striking:
    ``(1) If the retail value of the infringing items exceeded $2,000, 
increase by the corresponding number of levels from the table in 
Sec. 2F1.1 (Fraud and Deceit).'',

and inserting:

    ``(1) If the retail value of the infringing items exceeded [Option 
1: $5,000][Option 2: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2B5.3(b) is amended by striking:
    ``(1) If the retail value of the infringing items exceeded $2,000, 
increase by the corresponding number of levels from the table in 
Sec. 2F1.1 (Fraud and Deceit).'',

and inserting:

    ``(1) If the retail value of the infringing items (A) exceeded 
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded 
$5,000, increase by the corresponding number of levels from the table 
in Sec. 2X6.1 (Reference Monetary Table).''.]
    Section 2B5.3(b) is amended by striking:
    ``(1) If the retail value of the infringing items exceeded $2,000, 
increase by the corresponding number of levels from the table in 
Sec. 2F1.1 (Fraud and Deceit).'',

and inserting:

    ``(1) If the retail value of the infringing items exceeded [Option 
3: $5,000][Option 4: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2F1.1 (Fraud and Deceit).''.]
[Option 3A
    Section 2B5.3(b) is amended by striking:
    ``(1) If the retail value of the infringing items exceeded $2,000, 
increase by the corresponding number of levels from the table in 
Sec. 2F1.1 (Fraud and Deceit).'',

and inserting:

    ``(1) If the retail value of the infringing items (A) exceeded 
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded 
$5,000, increase by the corresponding number of levels from the table 
in Sec. 2F1.1 (Fraud and Deceit).''.]
    Section 2S1.3 is amended by striking:
    ``(a) Base Offense Level: 6 plus the number of offense levels from 
the table in Sec. 2F1.1 (Fraud and Deceit) corresponding to the value 
of the funds.'',

and inserting:

    ``(a) Base Offense Level: 6 plus the corresponding number of levels 
from the table in Sec. 2X6.1 (Reference Monetary Table), if the value 
of the funds exceeded [Option 1: $5,000][Option 2: $2,000].''.
[Option 1A
    Section 2S1.3 is amended by striking:
    ``(a) Base Offense Level: 6 plus the number of offense levels from 
the table in Sec. 2F1.1 (Fraud and Deceit) corresponding to the value 
of the funds.'',

and inserting:

    ``(a) Base Offense Level: 6 plus (1) 1 level, if the value of the 
funds exceeded $2,000 but did not exceed $5,000; or (2) the 
corresponding number of levels from the table in Sec. 2X6.1 (Reference 
Monetary Table), if the value of the funds exceeded $5,000.''.]
    Section 2S1.3 is amended by striking:
    ``(a) Base Offense Level: 6 plus the number of offense levels from 
the table in Sec. 2F1.1 (Fraud and Deceit) corresponding to the value 
of the funds.'',

and inserting:

    ``(a) Base Offense Level: 6 plus the corresponding number of levels 
from the table in Sec. 2F1.1 (Fraud and Deceit), if the value of the 
funds exceeded [Option 3: $5,000][Option 4: $2,000].''.]

[[Page 609]]

[Option 3A
    Section 2S1.3 is amended by striking: ``(a) Base Offense Level: 6 
plus the number of offense levels from the table in Sec. 2F1.1 (Fraud 
and Deceit) corresponding to the value of the funds.'',

and inserting:

    ``(a) Base Offense Level: 6 plus (1) 1 level, if the value of the 
funds exceeded $2,000 but did not exceed $5,000; or (2) the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit), if the value of the funds exceeded $5,000.''.]

(E) Trespass

Synopsis of Proposed Amendment
    By virtue of an amendment effective November 1, 1997, the trespass 
guideline contains a reference to the fraud loss table to cover losses 
resulting from the invasion of a protected government computer. The 
fraud table, rather than the theft table, was chosen because it better 
fits with a guideline structure that provides an initial increase in 
offense level at $2,000. Under the proposed loss tables and 
accompanying reference monetary tables, a range of as many as six 
options are potentially viable. Those considered more likely are set 
forth below.
    Among the issues specific to this guideline to be decided are: (1) 
Should the Commission maintain the $2,000 threshold for an initial 
increase in offense level? (2) Should the Commission treat these 
offenses comparably to computer offenses sentenced under the theft or 
fraud guidelines (which, under the proposed amendments, will be subject 
to a phased-in MMP enhancement)?
    Options 1 and 1A assume that the Commission may elect to use the 
Reference Monetary Table because these computer trespass offenses may 
be simpler in nature than computer offenses referenced to the theft and 
fraud guidelines (and, thus, the additional MMP enhancement built into 
the theft and fraud loss tables would not be warranted). Option 1 shows 
how the guideline might be amended if the Commission were to refer to a 
Reference Monetary Table that provides an initial increase in offense 
level at $2,000. Alternatively, Option 1A shows how, even with a 
reference table starting at $5,000, the trespass guideline might be 
amended to provide a 1-level increase for cases in which the loss is 
more than $2,000 but not more than $5,000.
    Options 2 and 3 assume that the Commission will (1) maintain the 
current $2,000 starting point for the referenced loss table, and (2) 
elect to use a loss table that incorporates the phased-in MMP 
enhancement. Option 2 references the proposed fraud loss table and 
assumes a Commission decision to use a loss table structure illustrated 
by the Option 2 loss tables. (Under this assumed choice, the fraud loss 
table, rather than theft, is referenced because the former starts at 
$2,000.) Option 3 references the proposed theft loss table and assumes 
a Commission decision to use a theft table that provides an initial 
increase at $2,000, as in the Option 1 theft loss table.

Proposed Amendment:

[Option 1
    Section 2B2.3(b) is amended by striking:
    ``(3) If the offense involved invasion of a protected computer 
resulting in a loss exceeding $2000, increase the offense level by the 
number of levels from the table in Sec. 2F1.1 corresponding to the 
loss.'',

and inserting:

    ``(3) If (A) the offense involved invasion of a protected computer, 
and (B) the loss resulting from the invasion exceeded $2,000, increase 
by the corresponding number of levels from the table in Sec. 2X6.1 
(Reference Monetary Table).''.]
[Option 1A
    Section 2B2.3(b) is amended by striking:
    ``(3) If the offense involved invasion of a protected computer 
resulting in a loss exceeding $2000, increase the offense level by the 
number of levels from the table in Sec. 2F1.1 corresponding to the 
loss.'',

and inserting:

    ``(3) If (A) the offense involved invasion of a protected computer, 
and (B) the loss resulting from the invasion (i) exceeded $2,000 but 
did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, 
increase by the corresponding number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table).''.]
[Option 2
    Section 2B2.3(b) is amended by striking:
    ``(3) If the offense involved invasion of a protected computer 
resulting in a loss exceeding $2000, increase the offense level by the 
number of levels from the table in Sec. 2F1.1 corresponding to the 
loss.'',

and inserting:

    ``(3) If (A) the offense involved invasion of a protected computer, 
and (B) the loss resulting from the invasion exceeded $2,000, increase 
by the corresponding number of levels from the table in Sec. 2F1.1 
(Fraud and Deceit).''.]
[Option 3
    Section 2B2.3(b) is amended by striking:
    ``(3) If the offense involved invasion of a protected computer 
resulting in a loss exceeding $2000, increase the offense level by the 
number of levels from the table in Sec. 2F1.1 corresponding to the 
loss.'',

and inserting:

    ``(3) If (A) the offense involved invasion of a protected computer, 
and (B) the loss resulting from the invasion exceeded $2,000, increase 
by the corresponding number of levels from the table in Sec. 2B1.1 
(Larceny, Embezzlement, and Other Forms of Theft).''.]
    Issue for Comment: The Commission invites comment on the 
appropriate starting point for a loss table applicable to offenses 
sentenced under Sec. 2B2.3 (Trespass) that involve the invasion of a 
protected computer described in 18 U.S.C. 1030(e)(2) (A) or (B). 
Specifically, should the Commission adopt a table for these offenses 
that starts at an amount that is lower or higher than $2,000? Since the 
current fraud loss table at Sec. 2F1.1 (Fraud and Deceit) applicable to 
these offenses starts at $2,000, should the Commission account for any 
difference in offense levels that might occur between a lower or higher 
starting amount under a new loss table and the $2,000 starting amount 
under the current fraud loss table?

(F) Consolidation of Property Destruction and Theft Guidelines

Synopsis of Proposed Amendment
    This amendment proposes to consolidate the property destruction 
guideline Sec. 2B1.3 with the theft guideline, thereby mitigating the 
necessity for reference to the proposed alternative monetary table. 
(For a proposed amendment that consolidates the property destruction, 
theft, and fraud guidelines, see Amendment 3, infra.)

Proposed Amendment

    Section 2B1.1 is amended in the title by adding at the end ``; 
Property Damage or Destruction''.
    Section 2B1.1(b)(3) is amended by striking ``taken, or'' and 
inserting ``taken or destroyed, (B)''; by striking ``of such item'' and 
inserting ``or destruction of undelivered United States mail''; and by 
striking ``(B)'' and inserting ``(C)''.

[[Page 610]]

    Section 2B1.1(c) is amended by adding at the end the following new 
subdivision:
    ``(2) If the offense involved arson or property destruction by use 
of explosives, apply Sec. 2K1.4 (Arson; Property Destruction by Use of 
Explosives) if the resulting offense level is greater than that 
determined above.''.
    Section 2B1.1(c) is amended by striking ``Reference'' and inserting 
``References''.
    The Commentary to Sec. 2B1.1 captioned ``Statutory Provisions'' is 
amended by inserting ``1361, 1363,'' following ``664,''; by inserting 
``1703,'' following ``1702,''; and by inserting ``, 2321'' following 
``2317''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``17. In some cases, the monetary value of the property damaged or 
destroyed may not adequately reflect the extent of the harm caused. For 
example, the destruction of a $500 telephone line may cause an 
interruption in service to thousands of people for several hours. In 
such instances, an upward departure may be warranted.''.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended in 
the first paragraph by inserting before the first sentence the 
following:
    ``This guideline covers offenses involving theft, stolen property, 
and property damage or destruction.''.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended in 
the third paragraph by striking ``Consistent with statutory 
distinctions, an'' and inserting ``An''; by inserting ``or 
destruction'' following ``for the theft''; and by inserting ``or 
destruction'' following ``Theft''.
    Strike Sec. 2B1.3 in its entirety.

(G) Consolidation of Bank Gratuity and Principal Gratuity Guidelines

Synopsis of Proposed Amendment
    This amendment proposes to consolidate the bank gratuity guideline, 
Sec. 2C1.6 with the principal gratuity guideline Sec. 2C1.2, thereby 
mitigating the necessity for reference to the proposed alternative 
monetary table.

Proposed Amendment

    Section 2C1.2(b)(2) is amended by striking:
    ``(A) If the value of the gratuity exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit).'',

and inserting:

    ``(A) If the value of the unlawful payment exceeded [Option 1: 
$5,000][Option 2: $2,000], increase by the corresponding number of 
levels from the table in Sec. 2X6.1 (Reference Monetary Table).''.
[Option 1A
    Section 2C1.2(b)(2) is amended by striking:
    ``(A) If the value of the gratuity exceeded $2,000, increase by the 
corresponding number of levels from the table in Sec. 2F1.1 (Fraud and 
Deceit).'',

and inserting:

    ``(A) If the value of the unlawful payment (i) exceeded $2,000 but 
did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, 
increase by the corresponding number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table).''.]
    Section 2C1.2(b)(2)(B) is amended by striking ``gratuity'' and 
inserting ``unlawful payment''.
    The Commentary to Sec. 2C1.2 captioned ``Statutory Provision'' is 
amended by striking ``Provision'' and inserting ``Provisions''; by 
inserting ``Sec. '' following ``U.S.C. Sec. ''; and by inserting ``, 
212-214, 217'' following ``(1)''.
    The Commentary to Sec. 2C1.2 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``5. An unlawful payment may be anything of value; it need not be a 
monetary payment.''.
    The Commentary to Sec. 2C1.2 captioned ``Background'' is amended by 
striking the second and third sentences as follows:
    ``A corrupt purpose is not an element of this offense. An 
adjustment is provided where the value of the gratuity exceeded $2,000, 
or where the public official was an elected official or held a high-
level decision-making or sensitive position.'',

and inserting:

    ``It also applies to the offer to, or acceptance by, a bank 
examiner of any unlawful payment; the offer or receipt of anything of 
value for procuring a loan or discount of commercial paper from a 
Federal Reserve Bank; and the acceptance of a fee or other 
consideration by a federal employee for adjusting or cancelling a farm 
debt.''.
    Strike Sec. 2C1.6 in its entirety.
    Issues for Comment: (A) The Commission invites comment on whether 
any of the above guidelines proposed to be referenced to the Reference 
Monetary Table (Sec. 2X6.1) instead should be referenced to the loss 
table in Sec. 2F1.1, as such table is proposed to be amended under 
Option 1 or Option 2 (see Amendment 1, supra.). Such an approach might 
be justified by an assessment that the higher penalties of this 
approach are warranted for a particular guideline/type of offense and/
or by a determination that there is no substantial overlap in the 
incorporation of more-than-minimal planning into the structure of the 
guideline and the revised loss table.
    (B) The Commission invites comment on whether, for any of the above 
guidelines, the increase in offense level resulting from reference to a 
particular monetary table should be capped at a certain number of 
levels. For example, in Sec. 2Q2.1 (Offenses Involving Fish, Wildlife, 
and Plants), should the maximum increase in offense level resulting 
from use of the table in Sec. 2X6.1 (Reference Monetary Table) to 
measure the market value of the fish, wildlife, or plants be limited to 
[18] levels? Capping the increase in offense level for any particular 
guideline might be justified in order to maintain proportionality in 
sentencing among various offenses and/or be required in order to 
maintain consistency with prevailing statutory maximum sentences for 
offenses covered by the guideline.
    (C) The Commission invites comment on whether, for any of the above 
guidelines that are currently referenced to the fraud loss table in 
Sec. 2F1.1, the Commission should continue to refer the guideline to 
the current fraud table if the Commission adopts one of the proposed 
loss tables for fraud offenses under Sec. 2F1.1. Similar to the issue 
of capping increases in offense levels for certain guidelines (see 
issue for comment (B), supra.), such an approach might be justified in 
order to maintain proportionality in sentencing among various offenses 
and/or be required in order to maintain consistency with prevailing 
statutory maximum sentences for offenses covered by the guideline.

Sections 2B1.1 (Theft), 2B1.3 (Property Destruction), and 2F1.1 (Fraud)

3. Synopsis of Proposed Amendment
    This amendment consolidates the three guidelines covering theft 
(Sec. 2B1.1), property destruction (Sec. 2B1.3), and fraud 
(Sec. 2F1.1). Consolidation of these guidelines is proposed in response 
to concerns raised at an October 15, 1997 Commission hearing on 
difficulties posed by having different commentary in the theft and 
fraud guidelines applicable to the calculation and definition of loss 
and related issues. Commentators have also noted that theft and fraud 
offenses are conceptually similar and that prosecutors' charging 
selection, rather than offense conduct, may determine which of the 
theft or

[[Page 611]]

fraud guideline will apply in any given case. For these and other 
reasons the Commission is considering and invites comment on the 
consolidation proposal set forth below. There are several important 
points to note with respect to the proposal:
    (A) A base offense level of level 6 has been bracketed to indicate 
that the Commission invites comment on alternative proposals. The 
current base offense level for theft and property destruction offenses 
is level 4, while for fraud it is level 6. The proposal provides, in 
subsection (b)(2), for a two-level decrease for theft and property 
destruction offenses in which the loss is less than $2,000.
    (B) The floor of level 6 for the theft of undelivered United States 
mail in subsection (b)(6) will need to be deleted if the Commission 
decides on a base offense level of level 6 but does not include a 
decrease for small-scale theft and property destruction offenses.
    (C) The document presents two options for the current enhancement 
on the violation of a judicial order, a factor that relates to a 
circuit conflict under consideration by the Commission. Option 1 
retains the enhancement in subsection (b)(7)(B). Option 2 deletes the 
enhancement and substitutes an encouraged upward departure provision in 
Application Note 11 (in lieu of an enhancement). The encouraged upward 
departure is provided as an option because of the infrequency with 
which the current enhancement applies. In fiscal year 1996, the 
charitable organization enhancement and the violation of a judicial 
order enhancement, combined, applied in only 153 cases (3% of all fraud 
cases in that fiscal year).
    (D) Place holders have been noted for the loss table, the loss 
definition, and a sophisticated concealment enhancement, all of which 
are dependent on other policy choices.
    (E) The current application note in Sec. 2B1.1 dealing with theft 
and embezzlement from unions and employee benefit or pension plans has 
been moved to Sec. 3B1.3 (Abuse of Position of Trust or Use of Special 
Skill) where it appears to more appropriately fit.
    (F) An additional cross reference to the bribery and gratuity 
guidelines has been added to address situations in which a fraud 
statute may be used (perhaps for jurisdictional reasons) to prosecute 
conduct the essence of which involves bribery. An issue for comment 
also has been included to serve as a placeholder, and invite comment 
on, the concept of a more generally applicable cross reference that 
would apply whenever a broadly applicable fraud statute (e.g., 18 
U.S.C. Sec. 1001) is used to reach conduct that is more specifically 
addressed in another Chapter Two guideline.
    (G) The enhancement in subsection (b)(9) involving conscious or 
reckless risk of serious bodily injury contains two proposed 
substantive changes. First, it proposes to insert the bracketed 
language ``of death'' prior to the term ``serious bodily injury'' 
because, as a practical matter, a risk of serious bodily injury is 
likely to also entail a risk of death. Second, an increase in the 
``floor'' offense level is proposed.
    (H) The enhancement in subsection (b)(10), relating to ``chop 
shops,'' contains two options. Option 1 would add a two-level 
enhancement for this conduct, in addition to the existing ``floor'' 
offense level of level 14. Option 2 would retain the current policy 
(i.e., minimum offense level of 14).
    It should also be noted that the order in which the enhancements 
under the consolidation are placed may affect the ultimate offense 
level in any given case, because of the multiple offense level 
``floors'' that are involved (e.g., the enhancements in subsections 
(b)(3) through (5) may not have an additive effect in cases affected by 
one of the enhancements in (b)(7) through (12), that imposes a minimum 
or ``floor'' offense level).
    In addition to combining the theft and fraud guidelines and the 
above-mentioned substantive changes, this amendment also reorganizes 
and updates the applicable commentary. Definitions of terms, other than 
the definition of loss, are collected under application note 1 and are 
presented in alphabetical order. Otherwise, application notes generally 
appear in the same sequential order as the relevant enhancements appear 
in the guideline.
    Finally, this amendment makes a number of stylistic and grammatical 
changes in the language of the current affected guidelines to enhance 
clarity and consistency (e.g., in subsection (b)(3), the language is 
changed from ``if the theft was from the person of another'' to ``if 
the offense involved theft from the person of another''. These changes 
are intended to be non-substantive, but it is always possible that the 
change will produce an unintended substantive effect.

Proposed Amendment

    Chapter Two, Part B is amended in the title by inserting 
``Economic'' before ``Offenses''; and by striking ``Property'' and 
inserting ``Theft, Property Destruction, or Fraud''.
    Chapter Two, Part B, Subpart 1 is amended in the title by striking 
``AND''; and by inserting at the end ``, AND FRAUD''.
    The Commentary to Chapter Two, Part B captioned ``Introductory 
Commentary'' is amended by striking ``the most''; and by inserting 
``fraud, forgery, counterfeiting (other than offenses involving altered 
or counterfeit bearer obligations of the United States),'' following 
``embezzlement,''.
    Chapter Two is amended by striking sections 2B1.1, 2B1.3 and 2F1.1 
and inserting:
    ``Sec. 2B1.1. Larceny, Embezzlement, and Other Forms of Theft; 
Receiving, Transporting, Transferring, Transmitting, or Possessing 
Stolen Property; Property Damage or Destruction; Fraud and Deceit; 
Offenses Involving Altered or Counterfeit Instruments Other than 
Counterfeit Bearer Obligations of the United States
    (a) Base Offense Level: [6]
    (b) Specific Offense Characteristics
    (1) LOSS TABLE--TO BE INSERTED]
    [(2) If (A) the offense involved theft, embezzlement, transactions 
in stolen property, or property damage or destruction; and (B) the 
total amount of the [loss] involved in the offense was less than 
[$2,000], decrease by 2 levels.]
    (3) If the offense involved theft from the person of another, 
increase by 2 levels.
    (4) If the offense involved receiving stolen property, and the 
defendant was a person in the business of receiving and selling stolen 
property, increase by 2 levels.
    (5) If the offense involved misappropriation of a trade secret and 
the defendant knew or intended that the offense would benefit a foreign 
government, foreign instrumentality, or foreign agent, increase by 2 
levels.
    [(6) If (A)(i) undelivered United States mail was taken or 
destroyed, or the taking or destruction of such item was an object of 
the offense; or (ii) the property stolen, destroyed, received, 
transported, transferred, transmitted, or possessed was undelivered 
United States mail; and (B) the offense level as determined above is 
less than level 6, increase to level 6.]
[Option 1 for judicial process
    (7) If the offense involved (A) a misrepresentation that the 
defendant was acting on behalf of a charitable, educational, religious, 
or political organization, or a government agency; or (B) a violation 
of any judicial or administrative order, injunction, decree, or process 
not addressed elsewhere in the guidelines, increase by 2 levels. If

[[Page 612]]

the resulting offense level is less than 10, increase to level 10.]
[Option 2 for judicial process
    (7) If the offense involved a misrepresentation that the defendant 
was acting on behalf of a charitable, educational, religious, or 
political organization, or a government agency, increase by 2 levels. 
If the resulting offense level is less than 10, increase to level 10.]
    [(8) PLACE HOLDER FOR SOPHISTICATED CONCEALMENT ENHANCEMENT TO 
REPLACE FRAUD SOC ON USE OF FOREIGN BANK ACCOUNTS OR TRANSACTIONS]
    (9) If the offense involved (A) the conscious or reckless risk [of 
death] or serious bodily injury; or (B) possession of a dangerous 
weapon (including a firearm), increase by 2 levels. If the resulting 
offense level is less than level [13][14], increase to level [13][14].
    (10) If (A) the offense involved an organized scheme to steal 
vehicles or vehicle parts, or to receive stolen vehicles or vehicle 
parts, [Option 1: increase by 2 levels. If the resulting offense level 
as determined above is less than level 14, increase to level 14.] 
[Option 2: and (B) the offense level as determined above is less than 
level 14, increase to level 14.]
    (11) If the offense substantially jeopardized the safety and 
soundness of a financial institution, increase by 4 levels. If the 
resulting offense level is less than level 24, increase to level 24.
    (12) If (A) the defendant derived more than $1,000,000 in gross 
receipts from one or more financial institutions as a result of the 
offense; and (B) the offense level as determined above is less than 
level 24, increase to level 24.
    (c) Cross References
    (1) If (A) a firearm, destructive device, explosive material, or 
controlled substance was taken, or the taking of such item was an 
object of the offense; or (B) the stolen property received, 
transported, transferred, transmitted, or possessed was a firearm, 
destructive device, explosive material, or controlled substance, apply 
Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking; Attempt or Conspiracy), Sec. 2D2.1 (Unlawful Possession; 
Attempt or Conspiracy), Sec. 2K1.3 (Unlawful Receipt, Possession, or 
Transportation of Explosive Materials; Prohibited Transactions 
Involving Explosive Materials), or Sec. 2K2.1 (Unlawful Receipt, 
Possession, or Transportation of Firearms or Ammunition; Prohibited 
Transactions Involving Firearms or Ammunition), as appropriate, if the 
resulting offense level is greater than that determined above.
    (2) If the offense involved arson or property destruction by use of 
explosives, apply Sec. 2K1.4 (Arson: Property Destruction by Use of 
Explosives), if the resulting offense level is greater than that 
determined above.
    [(3) If the offense involved (A) commercial bribery, or (B) 
bribery, gratuity, or a related offense involving a public official, 
apply Sec. 2B4.1 (Bribery in Procurement of Bank Loan and Other 
Commercial Bribery) or a guideline from Chapter Two, part C (Offenses 
Involving Public Officials), as appropriate, if the resulting offense 
level is greater than that determined above.]
    (d) Special Instruction
    (1) If the defendant is convicted under 18 U.S.C. Sec. 1030(a)(4) 
or (5), the minimum guideline sentence, notwithstanding any other 
adjustment, shall be six months' imprisonment.

Commentary

    Statutory Provisions: 7 U.S.C. Secs. 6, 6b, 6c, 6h, 6o, 13, 23; 15 
U.S.C. Secs. 50, 77e, 77q, 77x, 78j, 78ff, 80b-6, 1644, 1983-1988, 
1990c; 18 U.S.C. Secs. 225, 285-289, 471-473, 500, 510, 511, 553(a)(1), 
(2), 641, 656, 657, 659, 662, 664, 1001-1008, 1010-1014, 1016-1022, 
1025-1028, 1029, 1030(a)(5), 1031, 1341-1344, 1361, 1363, 1702, 1703, 
1708, 1831, 1832, 2113(b), 2312-2317, 2321; 29 U.S.C. Secs. 439, 461, 
501(c), 1131. For additional statutory provision(s), see Appendix A 
(Statutory Index).
Application Notes
    1. For purposes of this guideline--
    `Financial institution' means (A) any institution described in 18 
U.S.C. Secs. 20, 656, 657, 1005-1007, and 1014; (B) any state or 
foreign bank, trust company, credit union, insurance company, 
investment company, mutual fund, savings (building and loan) 
association, union or employee pension fund; (C) any health, medical or 
hospital insurance association; (D) brokers and dealers registered, or 
required to be registered, with the Securities and Exchange Commission; 
(E) futures commodity merchants and commodity pool operators 
registered, or required to be registered, with the Commodity Futures 
Trading Commission; and (F) any similar entity, whether or not insured 
by the federal government. `Union or employee pension fund' and 
`health, medical, or hospital insurance association,' primarily include 
large pension funds that serve many individuals (e.g., pension funds of 
large national and international organizations, unions, and 
corporations doing substantial interstate business), and associations 
that undertake to provide pension, disability, or other benefits (e.g., 
medical or hospitalization insurance) to large numbers of persons.
    `Firearm,' and `destructive device' are defined in the Commentary 
to Sec. 1B1.1 (Application Instructions).
    `Foreign instrumentality,' `foreign agent,' and `trade secret' have 
the meaning given those terms in 18 U.S.C. 1839 (1), (2), and (3), 
respectively.
    `Gross receipts' means any moneys, funds, credits, assets, 
securities, or other real or personal property, whether tangible or 
intangible, owned by, or under the custody or control of, a financial 
institution, that are obtained directly or indirectly as a result of 
the offense. See 18 U.S.C. 982(a)(4), 1344.
    `Theft from the person of another' means the taking, without the 
use of force, of property that was being held by another person or was 
within arms' reach. Examples include pick-pocketing or non-forcible 
purse-snatching, such as the theft of a purse from a shopping cart.
    [`Undelivered United States mail' means mail, including mail that 
is in the addressee's mailbox, that has not been received by the 
addressee or the addressee's agent.]
    [2. DISCUSSION OF LOSS [including downstream damages discussion 
from property destruction guideline]--TO BE INSERTED]
    3. Subsection (b)(7)(A) applies in the case of a misrepresentation 
that the defendant was an employee or authorized agents of a 
charitable, educational, religious or political organization, or a 
government agency. Examples of conduct to which this factor applies 
include (A) the mail solicitation by a group of defendants of 
contributions to a non-existent famine relief organization; (B) the 
diversion by a defendant of donations given for a religiously 
affiliated school as a result of telephone solicitations to church 
members in which the defendant falsely claims to be a fund-raiser for 
the school; and (C) the posing by a defendant as a federal collection 
agent in order to collect a delinquent student loan.
    4. For purposes of subsection (b)(10), a [Option 1: two-level 
enhancement and a] minimum measure of loss [are/is] provided in the 
case of an ongoing, sophisticated operation (such as an auto theft ring 
or `chop shop') to steal vehicles or vehicle parts or to receive stolen 
vehicles or vehicle parts. `Vehicles' refers to all forms of vehicles, 
including aircraft and watercraft.
    5. For purposes of subsection (b)(11), an offense shall be 
considered to have substantially jeopardized the safety and soundness 
of a financial institution if, as a consequence of the offense, the 
institution (A) became insolvent; (B) substantially reduced benefits to 
pensioners or insureds; (C) was unable on demand to refund fully any 
deposit,

[[Page 613]]

payment, or investment; (D) was so depleted of its assets as to be 
forced to merge with another institution in order to continue active 
operations; or (E) was placed in substantial jeopardy of experiencing 
any of the conditions described in subdivisions (A) through (D) of this 
note.
    6. For purposes of subsection (b)(12), the defendant shall be 
considered to have derived more than $1,000,000 in gross receipts if 
the gross receipts to the defendant individually, rather than to all 
participants, exceeded $1,000,000.
    7. Subsection (b)(7)(A) applies in the case of a misrepresentation 
that the defendant was an employee or authorized agents of a 
charitable, educational, religious or political organization, or a 
government agency. Examples of conduct to which this factor applies 
include (A) the mail solicitation by a group of defendants of 
contributions to a non-existent famine relief organization; (B) the 
diversion by a defendant of donations given for a religiously 
affiliated school as a result of telephone solicitations to church 
members in which the defendant falsely claims to be a fund-raiser for 
the school; and (C) the posing by a defendant as a federal collection 
agent in order to collect a delinquent student loan.
    8. [Option 1 for judicial process: The enhancements in subsection 
(b)(7) are alternative rather than cumulative; however, if both of the 
enumerated factors apply in a particular case, an upward departure may 
be warranted.]
    9. In the case of a partially completed offense (e.g., an offense 
involving a completed fraud that is part of a larger, attempted fraud), 
the offense level is to be determined in accordance with the provisions 
of Sec. 2X1.1 (Attempt, Solicitation, or Conspiracy), whether the 
conviction is for the substantive offense, the inchoate offense 
(attempt, solicitation, or conspiracy), or both. See Application Note 4 
in the Commentary to Sec. 2X1.1.
    10. Sometimes offenses involving fraudulent statements are 
prosecuted under 18 U.S.C. 1001, or a similarly general statute, 
although the offense is also covered by a more specific statute. 
Examples include false entries regarding currency transactions, for 
which Sec. 2S1.3 would be more apt, and false statements to a customs 
officer, for which Sec. 2T3.1 likely would be more apt. In certain 
other cases, the mail or wire fraud statutes, or other relatively broad 
statutes, are used primarily as jurisdictional bases for the 
prosecution of other offenses. For example, a state arson offense in 
which a fraudulent insurance claim was mailed might be prosecuted as 
mail fraud. [In certain other cases, an offense involving fraudulent 
statements or documents, or failure to maintain required records, may 
be committed in furtherance of the commission or concealment of another 
offense, such as embezzlement or bribery.]
    Offenses involving fraudulent identification documents and access 
devices, in violation of 18 U.S.C. 1028 and 1029, are also covered by 
this guideline. If the primary purpose of the offense involved the 
unlawful production, transfer, possession, or use of identification 
documents for the purpose of violating, or assisting another to 
violate, the laws relating to naturalization, citizenship, or legal 
resident status, apply Sec. 2L2.1 or Sec. 2L2.2, as appropriate, rather 
than this guideline. [In the case of an offense involving false 
identification documents or access devices, an upward departure may be 
warranted if the actual loss does not adequately reflect the 
seriousness of the conduct.]
    If the indictment or information setting forth the count of 
conviction (or a stipulation as described in Sec. 1B1.2(a)) establishes 
an offense more aptly covered by another guideline, apply that 
guideline rather than this guideline. Otherwise, in such cases, this 
guideline is to be applied, but a departure may be warranted.
    11. If the defendant is convicted under 18 U.S.C. 225 (relating to 
a continuing financial crimes enterprise), the offense level is that 
applicable to the underlying series of offenses comprising the 
continuing financial crimes enterprise.
[Option 2 for judicial process
    12. If the offense involved a violation of any judicial or 
administrative order, injunction, decree, or process not addressed 
elsewhere in the guidelines, an upward departure may be warranted. If 
it is established that an entity the defendant controlled was a party 
to the prior proceeding, and the defendant had knowledge of the prior 
decree or order, an upward departure pursuant to this note may be 
warranted, even if the defendant was not a specifically named party in 
that prior case. For example, an upward departure may be warranted in 
the case of a defendant whose business was previously enjoined from 
selling a dangerous product, but who nonetheless engaged in fraudulent 
conduct to sell the product. However, an upward departure based on 
conduct addressed elsewhere in the guidelines (e.g., a violation of a 
condition of release, addressed in Sec. 2J1.7 (Offense Committed While 
on Release), or a violation of probation, addressed in Sec. 4A1.1 
(Criminal History Category)) is not authorized under this note.]
    13. In cases involving theft of information from a `protected 
computer', as defined in 18 U.S.C. Sec. 1030(e)(2) (A) or (B), an 
upward departure may be warranted if the defendant sought the stolen 
property to further a broader criminal purpose.

Background

    This guideline covers offenses involving theft, stolen property, 
property damage or destruction, fraud, forgery, and counterfeiting 
(other than offenses involving altered or counterfeit bearer 
obligations of the United States). It also covers offenses involving 
altering or removing motor vehicle identification numbers, trafficking 
in automobiles or automobile parts with altered or obliterated 
identification numbers, odometer laws and regulations, obstructing 
correspondence, the falsification of documents or records relating to a 
benefit plan covered by the Employment Retirement Income Security Act, 
and the failure to maintain, or falsification of, documents required by 
the Labor Management Reporting and Disclosure Act.
    Because federal fraud statutes often are broadly written, a single 
pattern of offense conduct usually can be prosecuted under several code 
sections, as a result of which the offense of conviction may be 
somewhat arbitrary. Furthermore, most fraud statutes cover a broad 
range of conduct with extreme variation in severity. The specific 
offense characteristics [and cross references] contained in this 
guideline are designed with these considerations in mind.

    [Note: Depending on decisions made with respect to `loss', 
background commentary on loss can be added.]

    Consistent with statutory distinctions, an increased minimum 
offense level is provided for the theft of undelivered mail. Theft of 
undelivered mail interferes with a governmental function, and the scope 
of the theft may be difficult to ascertain.
    Theft from the person of another, such as pickpocketing or non-
forcible purse-snatching, receives an enhanced sentence because of the 
increased risk of physical injury. This guideline does not include an 
enhancement for thefts from the person by means of force or fear; such 
crimes are robberies and are covered under Sec. 2B3.1 (Robbery).
    A minimum offense level of 14 is provided for offenses involving an 
organized scheme to steal vehicles or vehicle parts. Typically, the 
scope of such activity is substantial, but the

[[Page 614]]

value of the property may be particularly difficult to ascertain in 
individual cases because the stolen property is rapidly resold or 
otherwise disposed of in the course of the offense. Therefore, the 
specific offense characteristic of ``organized scheme'' is used as an 
alternative to `loss' in setting a minimum offense level.
    Use of false pretenses involving charitable causes and government 
agencies enhances the sentences of defendants who take advantage of 
victims' trust in government or law enforcement agencies or the 
generosity and charitable motives of victims. Taking advantage of a 
victim's self-interest does not mitigate the seriousness of fraudulent 
conduct; rather, defendants who exploit victims' charitable impulses or 
trust in government create particular social harm. In a similar vein, a 
defendant who has been subject to civil or administrative proceedings 
for the same or similar fraudulent conduct demonstrates aggravated 
criminal intent and is deserving of additional punishment for not 
conforming with the requirements of judicial process or orders issued 
by federal, state, or local administrative agencies.
    Subsection (b)(9)(B) implements, in a broader form, the instruction 
to the Commission in section 110512 of Public Law 103-322. Subsection 
(b)(11) implements, in a broader form, the instruction to the 
Commission in section 961(m) of Public Law 101-73. Subsection (b)(12) 
implements the instruction to the Commission in section 2507 of Public 
Law 101-647. Subsection (d)(2) implements the instruction to the 
Commission in section 805(c) of Public Law 104-132.''.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 1(f) by striking the second paragraph as follows:
    `` `More than minimal planning' is deemed present in any case 
involving repeated acts over a period of time, unless it is clear that 
each instance was purely opportune. Consequently, this adjustment will 
apply especially frequently in property offenses.'';

by striking the fifth and sixth paragraphs as follows:

    ``In a theft, going to a secluded area of a store to conceal the 
stolen item in one's pocket would not alone constitute more than 
minimal planning. However, repeated instances of such thefts on several 
occasions would constitute more than minimal planning. Similarly, 
fashioning a special device to conceal the property, or obtaining 
information on delivery dates so that an especially valuable item could 
be obtained, would constitute more than minimal planning.
    In an embezzlement, a single taking accomplished by a false book 
entry would constitute only minimal planning. On the other hand, 
creating purchase orders to, and invoices from, a dummy corporation for 
merchandise that was never delivered would constitute more than minimal 
planning, as would several instances of taking money, each accompanied 
by false entries.''.
    Section 2K1.4(a)(4) is amended by striking ``Sec. 2B1.3 (Property 
Damage or Destruction)'' and inserting:
    ``Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft; 
Receiving, Transporting, Transferring, Transmitting, or Possessing 
Stolen Property; Property Damage or Destruction; Fraud and Deceit; 
Offenses Involving Altered or Counterfeit Instruments Other than 
Counterfeit Bearer Obligations of the United States)''.
    The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``3. The following additional illustrations of an abuse of a 
position of trust pertain to theft or embezzlement from employee 
pension or welfare benefit plans or labor unions:
    (A) If the offense involved theft or embezzlement from an employee 
pension or welfare benefit plan and the defendant was a fiduciary of 
the benefit plan, an adjustment under this section for abuse of a 
position of trust will apply. `Fiduciary of the benefit plan' is 
defined in 29 U.S.C. 1002(21)(A) to mean a person who exercises any 
discretionary authority or control in respect to the management of such 
plan or exercises authority or control in respect to management or 
disposition of its assets, or who renders investment advice for a fee 
or other direct or indirect compensation with respect to any moneys or 
other property of such plan, or has any authority or responsibility to 
do so, or who has any discretionary authority or responsibility in the 
administration of such plan.
    (B) If the offense involved theft or embezzlement from a labor 
union and the defendant was a union officer or occupied a position of 
trust in the union (as set forth in 29 U.S.C. 501(a)), an adjustment 
under this section for an abuse of a position of trust will apply.''.

Issues for Comment

    (A) The Commission invites comment on whether Application Note 10 
in the proposed amendment should be alternatively stated in the 
guideline as an explicit cross reference to apply the most applicable 
guideline, if the resulting offense level is greater than the offense 
level obtained under the proposed guideline.
    (B) The Commission invites comment on whether any of the specific 
offense characteristics in this proposed consolidated guideline should 
be eliminated because of infrequency of use or other good reason. If 
any such factor should be eliminated, should it be replaced with 
commentary encouraging departure?

Secs. 2B1.1 (Theft) and 2F1.1 (Fraud)

4. Synopsis of Proposed Amendment
    The Sentencing Commission has identified the definition of loss in 
fraud and theft offenses as an issue for consideration during the 1997-
98 amendment cycle. The genesis of Commission interest in many of the 
issues raised about the definition of loss is summarized in the Loss 
Issues Working Paper (10-14-97) that is part of the Commission meeting 
materials generated in connection with the October 15, 1997 public 
hearing on clarifying the definition of loss. This paper and the 
transcript of the public hearing on the definition of loss are 
available on the Commission's website (http://www.ussc.gov/) or from 
the Commission. Following are two proposed options for revising the 
definition of loss for fraud and theft offenses. Both options envision 
one definition of loss for both fraud and theft offenses.
    Option 1 provides a dramatically simplified and shortened 
definition of loss that has the same core principles as those found in 
Option 2, but without the additional rules and guidance found in Option 
2. The formulation in Option 1 arguably provides maximum discretion to 
sentencing judges and minimal guidance as to what should be included 
in, or excluded from, actual loss. Option 2 attempts to provide more 
guidance to courts on how to resolve issues that have arisen in the 
case law and elsewhere about the current definition of loss.
    Both options propose adoption of a general definition that loss is 
the greater of the actual or intended loss, and that actual loss is 
defined to include ``reasonably foreseeable harm resulting from the 
conduct for which the defendant is accountable under Sec. 1B1.3 
(Relevant Conduct).'' Adoption of this provision would provide an 
explicit causation standard for the determination of actual loss. 
Option 2 raises the possibility of limiting the

[[Page 615]]

relevant harm (both actual and intended) to ``economic'' harm.
    Both options provide that intended loss is the ``harm intended to 
be caused by the defendant and other persons for whose conduct the 
defendant is accountable under Sec. 1B1.3 (Relevant Conduct)'', with 
Option 2 raising the issue as to whether intended loss should be 
limited to those consequences ``that realistically could have 
occurred.''
    The balance of the language proposed in Option 1 also appears in 
Option 2 but, again, without additional rules or guidance. Language is 
proposed to be added to the background commentary that provides an 
operating principle for the use of the amount of loss, namely, that it 
``serves as a measure of the seriousness of the offense and the 
defendant's relative culpability.'' Additional language is proposed for 
the commentary in both options that emphasizes the fact-based nature of 
the determination of loss and the importance of giving appropriate 
deference to the sentencing court's determinations, and that invites 
departure where loss ``substantially understates or overstates the 
seriousness of the offense or the culpability of the defendant.''
    In addition to the provisions summarized above, Option 2 provides 
added specificity in a number of areas: (A) Departures; (B) estimation 
of loss; (C) time of measuring loss and credits against loss; (D) 
interest; (E) special rules.
(A) Departures
    In addition to the general language inviting departure where loss 
``substantially understates or overstates the seriousness of the 
offense or the culpability of the defendant'', Option 2 lists a number 
of grounds for invited departures, most of which can be found in the 
current commentary. Option 2 also provides an option for including 
selected non-economic factors as specific offense characteristics 
instead of only as possible departure grounds.
(B) Estimation of Loss
    Option 2 provides a nonexclusive listing of factors (most of which 
are in the current commentary) that a court may use in estimating loss. 
Two options are provided for how gain might be fashioned as such a 
factor: either provide for the use of gain as any other factor, or 
provide that it may be used if gain exceeds loss or the loss is 
difficult or impossible to calculate.
(C) Time of Measuring Loss and Credits Against Loss
    This provision raises the issue of whether there needs to be an 
applicable or limiting time frame on what is to be included in loss 
(such as, ``at the time the offense is detected''). This provision 
provides, in effect, that loss is a ``net'' concept, for both fraud and 
theft offenses, in contrast to the current rule that expressly uses 
such a concept only for certain fraud-type offenses. The determination 
of loss is a ``net'' concept under this proposed rule in the sense that 
the loss amount shall be reduced by the value of certain items, 
including money, property, or other economic benefit pledged, returned, 
or otherwise transferred to the victim before detection of the offense, 
valued as of the time of pledging or transfer (unless the defendant 
causes the reduction in the value of the collateral after pledging or 
the increase in the loss, after detection). Valuation as of the time of 
detection would eliminate the effect of most fluctuations in value of 
collateral from affecting the offense level.
(D) Interest
    Option 2 provides two options for dealing with interest. One would 
respond to the circuit court decisions that allow use of, for example, 
bargained-for interest, and explicitly exclude interest from the 
determination of loss, except as a possible departure ground. The other 
would continue the exclusion of opportunity-cost interest but provide 
for inclusion of interest if it ``was bargained for by a victim as part 
of a transaction which is the subject of the criminal case'' or if the 
victim ``transferred the funds lost as a result of the offense from an 
investment account on which interest or dividends were regularly 
earned.''
(E) Special Rules
    This provision provides rules for special cases, including 
retaining the current rules for stolen credit cards, diversion of 
government program benefits (proposed for modification or elimination), 
and Davis-Bacon Act cases. This provision proposes adding rules on 
sting operations (to respond to case law that excludes from intended 
loss amounts that were unlikely or impossible because informants or 
government agents were the only ``victims'') and Ponzi schemes (to 
choose from divergent precedent a rule that provides that loss in such 
cases shall be based on ``the net loss to losing victims, i.e., the sum 
of the net losses to each victim who lost all or part of this principal 
investment as a result of the fraudulent scheme'').

Proposed Amendment

[Option One
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by striking the first through fourth paragraphs of Note 2 and 
inserting the following:
    ``2. `Loss' is the greater of the actual loss or the intended loss. 
`Actual loss' means the reasonably foreseeable harm resulting from the 
conduct for which the defendant is accountable under Sec. 1B1.3 
(Relevant Conduct). `Intended loss' means the harm intended to be 
caused by the defendant and other persons for whose conduct the 
defendant is accountable under Sec. 1B1.3. Loss need not be determined 
precisely but may be based on a reasonable estimate.
    Because of the fact-based nature of the determinations, the 
sentencing judge is in a unique position to assess the evidence and 
estimate the loss based upon that evidence. Accordingly, the district 
court's determinations in this regard are entitled to appropriate 
deference. See 18 U.S.C. 3742(e) and (f).
    There may be cases in which the loss substantially understates or 
overstates the seriousness of the offense or the culpability of the 
defendant. In such cases, a departure may be warranted.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by striking Notes 3, 4, 5, and 15; and by redesignating Notes 
6, 7, 8, 9, 10, 11, 12, 13, 14, and 16 as Notes 3, 4, 5, 6, 7, 8, 9, 
10, 11, and 12, respectively.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by 
inserting after the first paragraph the following additional paragraph:
    ``Along with other relevant factors under the guidelines, loss 
serves as a measure of the seriousness of the offense and the 
defendant's relative culpability.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by striking Note 7 and inserting the following:
    ``7. `Loss' is the greater of the actual loss or the intended loss. 
`Actual loss' means the reasonably foreseeable harm resulting from the 
conduct for which the defendant is accountable under Sec. 1B1.3 
(Relevant Conduct). `Intended loss' means the harm intended to be 
caused by the defendant and other persons for whose conduct the 
defendant is accountable under Sec. 1B1.3. Loss need not be determined 
precisely but may be based on a reasonable estimate.
    Because of the fact-based nature of the determinations, the 
sentencing judge is

[[Page 616]]

in a unique position to assess the evidence and estimate the loss based 
upon that evidence. Accordingly, the district court's determinations in 
this regard are entitled to appropriate deference. See 18 U.S.C. 
3742(e) and (f).
    There may be cases in which the loss substantially understates or 
overstates the seriousness of the offense or the culpability of the 
defendant. In such cases, a departure may be warranted.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by striking Notes 8 and 10; and by redesignating Notes 9, 11, 
12, 13, 14, 15, 16, 17, and 18 as Notes 8, 9, 10, 11, 12, 13, 14, 15, 
and 16, respectively.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by 
inserting after the first paragraph the following additional paragraph:
    ``Along with other relevant factors under the guidelines, loss 
serves as a measure of the seriousness of the offense and the 
defendant's relative culpability.''.]
[Option Two
    [Non-economic Factors, Option A:
    Section 2B1.1(b) is amended by adding at the end the following new 
subdivision:
    [``(8) If the offense involved one of the following aggravating 
factors: (A) the primary objective of the offense was non-monetary; (B) 
the offense caused or risked substantial non-monetary harm; (C) the 
offense was committed for the purpose of facilitating another felony 
offense, other than an offense covered by this guideline; (D) 
reasonably foreseeable (i) bodily injury, or (ii) psychological harm or 
emotional trauma that is substantial and severe; or (E) a reasonably 
foreseeable risk of substantial loss in addition to the loss that 
actually occurred, increase by [2] levels. If the offense involved more 
than one of these aggravating factors, increase by [4] levels.''.]
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by striking the first through the fourth paragraphs of Note 2 
and inserting the following:
    ``2. `Loss' is the greater of the actual loss or the intended loss. 
`Actual loss' means the reasonably foreseeable [economic] harm 
resulting from the conduct for which the defendant is accountable under 
Sec. 1B1.3 (Relevant Conduct). `Intended loss' means the [economic] 
harm intended to be caused by the defendant and other persons for whose 
conduct the defendant is accountable under Sec. 1B1.3 [and that 
realistically could have occurred].
    (A) Estimation of Loss. For the purposes of subsection (b)(1), the 
loss need not be determined precisely. The court need only make a 
reasonable estimate of the loss, given the available information and 
considering, as appropriate under the circumstances, measuring factors 
such as the following:
    (1) the fair market value of the property, or other thing of value, 
taken or otherwise unlawfully acquired, misapplied, misappropriated, 
damaged, or destroyed;
    (2) the cost to the victim of replacing property taken, damaged, or 
destroyed;
    (3) the cost of repairs, not to exceed the replacement cost had the 
property been destroyed;
    (4) the approximate number of victims and an estimate of the 
average loss to each victim;
    (5) the scope and duration of the offense, or revenues generated by 
similar operations;
[Gain, Option A
    [(6) the gain to criminally responsible participants from 
committing the offense.]
[Gain, Option B
    [(6) if the gain exceeds the loss or if the loss is difficult or 
impossible to calculate, the gain to criminally responsible 
participants from committing the offense.]
    (B) [Time of Measuring Loss,] Credits Against Loss. [In general, 
loss is to be measured at the time the offense is detected (i.e., when 
either a victim or law enforcement first develops a reasonable 
suspicion that an offense has occurred, or is occurring).]
    Money, property, or other economic benefit pledged, returned, or 
otherwise transferred to the victim(s) (including services performed) 
before detection of the offense shall be valued at the time of 
pledging, return, transfer, or performance, as the case may be, and 
shall be credited in determining the amount of loss.
    Payments, property transfers, pledges of collateral, or services 
performed after detection of the offense shall not be credited. Amounts 
recovered, or readily recoverable, through civil processes after 
detection of the offense also shall not be credited.
    However, if acts or omissions for which the defendant is 
accountable diminish the value of pledged assets after pledging, or 
otherwise increase the economic harm after detection of the offense, 
the loss shall reflect that increased net harm.
[Interest, Option A
    [(C) Interest Not Included. For the purposes of subsection (b)(1), 
loss does not include interest of any kind; however, in an appropriate 
case (e.g., if interest was bargained for as part of a transaction that 
is the subject of the criminal case), an upward departure may be 
warranted based upon the loss of interest.]
[Interest, Option B
    [(C) Interest. Loss shall not include interest the victim could 
have earned had the offense not occurred (i.e., `opportunity-cost 
interest'). Interest shall be included if: [(i)] interest was bargained 
for by a victim as part of a transaction which is the subject of the 
criminal case[, or (ii) the victim transferred the funds lost as a 
result of the offense from an investment account on which interest or 
dividends were regularly earned.]
    (D) Special Rules. The following special rules are to be used in 
determining loss in the situations indicated:
    (1) Sting Operations
    In cases involving the participation of an informant or undercover 
government agent, intended loss includes economic harms the defendant 
intended, even if accomplishment of the defendant's goals would have 
been unlikely or impossible because of the participation of an 
informant or undercover government agent.
    (2) Ponzi Schemes
    In a Ponzi-type scheme, loss is the net loss to losing victims, 
i.e., the sum of the net losses to each victim who lost all or part of 
his principal investment as a result of the fraudulent scheme.
    (3) Stolen Credit Cards, Access Devices
    In cases involving stolen credit cards or access devices, the loss 
includes any unauthorized charges made with the stolen credit cards (or 
purloined numbers), but in no event less than $100 per card.
    (4) Diversion of Government Program Benefits
[Option A
    [In a case involving diversion of government program benefits, loss 
is the value of the benefits derived from intended recipients or uses.]
[Option B
    [In a case involving diversion of government program benefits, use 
the gain to the criminally responsible participants as the loss. In the 
case of a grant, the loss is the amount of the grant. In the case of a 
loan, the minimum loss is the savings in interest over the life of the 
loan compared with alternative loan terms for which the defendant would 
have qualified.]
    (5) Davis-Bacon Act Cases

[[Page 617]]

    In a case involving a Davis-Bacon Act violation (a violation of 40 
U.S.C. Sec. 276a, criminally prosecuted under 18 U.S.C. Sec. 1001), the 
loss is the difference between the legally required and actual wages 
paid.
[Non-Economic Factors, Option A
    [(E) Departure Considerations. There may be cases in which the loss 
substantially understates or overstates the seriousness of the offense 
or the culpability of the defendant. In such cases, a departure may be 
warranted. The following is a non-exhaustive list of types of 
circumstances which the court may consider in determining whether a 
departure may be warranted:
    (1) the offense endangered national security or military readiness;
    (2) the offense caused a loss of confidence in an important 
institution;
    (3) the offense endangered the solvency or financial security of 
one or more victims;
    (4) the defendant's gain from the offense substantially exceeded 
the aggregate loss to the victim(s);
    (5) but for the exclusion above, the loss would have included a 
substantial amount of interest that was bargained for by a victim as 
part of a transaction which is the subject of the criminal case;
    (6) the offense involved [ten or more victims][a large number of 
victims;]
    (7) the loss significantly exceeds the greater of the defendant's 
actual and intended personal gain;
    (8) the loss intended by the defendant significantly exceeded the 
amount that realistically could have occurred.]
[Non-Economic Factors, Option B
    [(E) Departure Considerations. There may be cases in which the loss 
substantially understates or overstates the seriousness of the offense 
or the culpability of the defendant. In such cases, a departure may be 
warranted. The following is a non-exhaustive list of types of 
circumstances which the court may consider in determining whether a 
departure may be warranted:
    (1) a primary objective of the offense was non-monetary;
    (2) the offense caused or risked substantial non-monetary harm;
    (3) false statements were made for the purpose of facilitating some 
other crime;
    (4) the offense caused physical or psychological harm or severe 
emotional trauma;
    (5) the offense endangered national security or military readiness;
    (6) the offense caused a loss of confidence in an important 
institution;
    (7) the offense endangered the solvency or financial security of 
one or more victims;
    (8) the defendant's gain from the offense substantially exceeded 
the aggregate loss to the victim(s);
    (9) the offense created a serious risk of substantially greater 
economic harm than the loss that actually occurred;
    (10) but for the exclusion above, the loss would have included a 
substantial amount of interest that was bargained for by a victim as 
part of a transaction which is the subject of the criminal case;
    (11) the offense involved [ten or more victims][a large number of 
victims;]
    (12) the loss significantly exceeds the greater of the defendant's 
actual and intended personal gain;
    (13) the loss intended by the defendant significantly exceeded the 
amount that realistically could have occurred.]
    (F) Appropriate Deference. Because of the fact-based nature of the 
determinations, the sentencing judge is in a unique position to assess 
the evidence and approximate the loss based upon that evidence. 
Accordingly, the district court's determinations in this regard are 
entitled to appropriate deference. See 18 U.S.C. 3742 (e) and (f).''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by striking Notes 3, 4, 5, and 15; and by redesignating Notes 
6, 7, 8, 9, 10, 11, 12, 13, 14, and 16 as Notes 3, 4, 5, 6, 7, 8, 9, 
10, 11, and 12, respectively.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new notes:
[Non-Economic Factors, Option A
    [``17. If the defendant received an enhancement under subsection 
(b)(7) but that enhancement does not adequately reflect the extent or 
seriousness of the conduct involved, an upward departure may be 
warranted.]
    [18. Under subsection (b)(7)(D)(ii), psychological harm or 
emotional trauma shall be considered to be substantial and severe if it 
is of prolonged duration and, as a result of such harm, the victim 
received medical treatment or other professional assistance.
    Under subsection (b)(7)(E), a risk of additional loss shall be 
considered `substantial' if the court determines that the additional 
risked loss would have increased the actual loss, as determined under 
subsection (b)(1), by at least 4 levels, had the risked loss actually 
occurred. If the risk of loss was greater than 4 levels, an upward 
departure may be warranted.''.]
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by 
inserting after the first paragraph the following additional paragraph:
    ``Along with other relevant factors under the guidelines, loss 
serves as a measure of the seriousness of the offense and the 
defendant's relative culpability.''.
[Non-economic Factors, Option A
    Section 2F1.1(b) is amended by adding at the end the following new 
subdivision:
    [``(7) If the offense involved one of the following aggravating 
factors: (A) the primary objective of the offense was non-monetary; (B) 
the offense caused or risked substantial non-monetary harm; (C) the 
offense was committed for the purpose of facilitating another felony 
offense, other than an offense covered by this guideline; (D) 
reasonably foreseeable (i) bodily injury, or (ii) psychological harm or 
emotional trauma that is substantial and severe; or (E) a reasonably 
foreseeable risk of substantial loss in addition to the loss that 
actually occurred, increase by [2] levels. If the offense involved more 
than one of these aggravating factors, increase by [4] levels.''.] The 
Commentary to Sec. 2F1.1 captioned ``Application Notes'' is amended by 
striking Note 7 and inserting the following:
    ``7. `Loss' is the greater of the actual loss or the intended loss. 
`Actual loss' means the reasonably foreseeable [economic] harm 
resulting from the conduct for which the defendant is accountable under 
Sec. 1B1.3 (Relevant Conduct). `Intended loss' means the [economic] 
harm intended to be caused by the defendant and other persons for whose 
conduct the defendant is accountable under Sec. 1B1.3 [and that 
realistically could have occurred].
    (A) Estimation of Loss. For the purposes of subsection (b)(1), the 
loss need not be determined precisely. The court need only make a 
reasonable estimate of the loss, given the available information and 
considering, as appropriate under the circumstances, measuring factors 
such as the following:
    (1) the fair market value of the property, or other thing of value, 
taken or otherwise unlawfully acquired, misapplied, misappropriated, 
damaged, or destroyed;
    (2) the cost to the victim of replacing property taken, damaged, or 
destroyed;
    (3) the cost of repairs, not to exceed the replacement cost had the 
property been destroyed;
    (4) the approximate number of victims and an estimate of the 
average loss to each victim;
    (5) the scope and duration of the offense, or revenues generated by 
similar operations;

[[Page 618]]

[Gain, Option A
    [(6) the gain to criminally responsible participants from 
committing the offense.]
[Gain, Option B
    [(6) if the gain exceeds the loss or if the loss is difficult or 
impossible to calculate, the gain to criminally responsible 
participants from committing the offense.]
    (B) [Time of Measuring Loss,] Credits Against Loss. [In general, 
loss is to be measured at the time the offense is detected (i.e., when 
either a victim or law enforcement first develops a reasonable 
suspicion that an offense has occurred, or is occurring).]
    Money, property, or other economic benefit pledged, returned, or 
otherwise transferred to the victim(s) (including services performed) 
before detection of the offense shall be valued at the time of 
pledging, return, transfer, or performance, as the case may be, and 
shall be credited in determining the amount of loss.
    Payments, property transfers, pledges of collateral, or services 
performed after detection of the offense shall not be credited. Amounts 
recovered, or readily recoverable, through civil processes after 
detection of the offense also shall not be credited.
    However, if acts or omissions for which the defendant is 
accountable diminish the value of pledged assets after pledging, or 
otherwise increase the economic harm after detection of the offense, 
the loss shall reflect that increased net harm.
[Interest, Option A
     [(C) Interest Not Included. For the purposes of subsection (b)(1), 
loss does not include interest of any kind; however, in an appropriate 
case (e.g., if interest was bargained for as part of a transaction that 
is the subject of the criminal case), an upward departure may be 
warranted based upon the loss of interest.]
[Interest, Option B
    [(C) Interest. Loss shall not include interest the victim could 
have earned had the offense not occurred (i.e., `opportunity-cost 
interest'). Interest shall be included if: [(i)] interest was bargained 
for by a victim as part of a transaction which is the subject of the 
criminal case[, or (ii) the victim transferred the funds lost as a 
result of the offense from an investment account on which interest or 
dividends were regularly earned.]
    (D) Special Rules. The following special rules are to be used in 
determining loss in the situations indicated:
    (1) Sting Operations
    In cases involving the participation of an informant or undercover 
government agent, intended loss includes economic harms the defendant 
intended, even if accomplishment of the defendant's goals would have 
been unlikely or impossible because of the participation of an 
informant or undercover government agent.
    (2) Ponzi Schemes
    In a Ponzi-type scheme, loss is the net loss to losing victims, 
i.e., the sum of the net losses to each victim who lost all or part of 
his principal investment as a result of the fraudulent scheme.
    (3) Stolen Credit Cards, Access Devices
    In cases involving stolen credit cards or access devices, the loss 
includes any unauthorized charges made with the stolen credit cards (or 
purloined numbers), but in no event less than $100 per card.
    (4) Diversion of Government Program Benefits
[Option A
    [In a case involving diversion of government program benefits, loss 
is the value of the benefits derived from intended recipients or uses.]
[Option B
    [In a case involving diversion of government program benefits, use 
the gain to the criminally responsible participants as the loss. In the 
case of a grant, the loss is the amount of the grant. In the case of a 
loan, the minimum loss is the savings in interest over the life of the 
loan compared with alternative loan terms for which the defendant would 
have qualified.]
    (5) Davis-Bacon Act Cases
    In a case involving a Davis-Bacon Act violation (a violation of 40 
U.S.C. 276a, criminally prosecuted under 18 U.S.C. 1001), the loss is 
the difference between the legally required and actual wages paid.
[Non-Economic Factors, Option A
    [(E) Departure Considerations. There may be cases in which the loss 
substantially understates or overstates the seriousness of the offense 
or the culpability of the defendant. In such cases, a departure may be 
warranted. The following is a non-exhaustive list of types of 
circumstances which the court may consider in determining whether a 
departure may be warranted:
    (1) the offense endangered national security or military readiness;
    (2) the offense caused a loss of confidence in an important 
institution;
    (3) the offense endangered the solvency or financial security of 
one or more victims;
    (4) the defendant's gain from the offense substantially exceeded 
the aggregate loss to the victim(s);
    (5) but for the exclusion above, the loss would have included a 
substantial amount of interest that was bargained for by a victim as 
part of a transaction which is the subject of the criminal case;
    (6) the offense involved [ten or more victims][a large number of 
victims;]
    (7) the loss significantly exceeds the greater of the defendant's 
actual and intended personal gain;
    (8) the loss intended by the defendant significantly exceeded the 
amount that realistically could have occurred.]
[Non-Economic Factors, Option B
    [(E) Departure Considerations. There may be cases in which the loss 
substantially understates or overstates the seriousness of the offense 
or the culpability of the defendant. In such cases, a departure may be 
warranted. The following is a non-exhaustive list of types of 
circumstances which the court may consider in determining whether a 
departure may be warranted:
    (1) A primary objective of the offense was non-monetary;
    (2) The offense caused or risked substantial non-monetary harm;
    (3) False statements were made for the purpose of facilitating some 
other crime;
    (4) The offense caused physical or psychological harm or severe 
emotional trauma;
    (5) The offense endangered national security or military readiness;
    (6) The offense caused a loss of confidence in an important 
institution;
    (7) The offense endangered the solvency or financial security of 
one or more victims;
    (8) The defendant's gain from the offense substantially exceeded 
the aggregate loss to the victim(s);
    (9) The offense created a serious risk of substantially greater 
economic harm than the loss that actually occurred;
    (10) But for the exclusion above, the loss would have included a 
substantial amount of interest that was bargained for by a victim as 
part of a transaction which is the subject of the criminal case;
    (11) The offense involved [ten or more victims][a large number of 
victims];
    (12) The loss significantly exceeds the greater of the defendant's 
actual and intended personal gain;
    (13) The loss intended by the defendant significantly exceeded the 
amount that realistically could have occurred.]

[[Page 619]]

    (F) Appropriate Deference. Because of the fact-based nature of the 
determinations, the sentencing judge is in a unique position to assess 
the evidence and approximate the loss based upon that evidence. 
Accordingly, the district court's determinations in this regard are 
entitled to appropriate deference. See 18 U.S.C. 3742(e) and (f).''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by striking Notes 8 and 10; and by redesignating Notes 9, 11, 
12, 13, 14, 15, 16, 17, and 18 as Notes 8, 9, 10, 11, 12, 13, 14, 15, 
and 16, respectively.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new notes:
[Non-Economic Factors, Option A
    [``19. If the defendant received an enhancement under subsection 
(b)(7) but that enhancement does not adequately reflect the extent or 
seriousness of the conduct involved, an upward departure may be 
warranted.]
    [20. Under subsection (b)(7)(D)(ii), psychological harm or 
emotional trauma shall be considered to be substantial and severe if it 
is of prolonged duration and, as a result of such harm, the victim 
received medical treatment or other professional assistance.
    Under subsection (b)(7)(E), a risk of additional loss shall be 
considered `substantial' if the court determines that the additional 
risked loss would have increased the actual loss, as determined under 
subsection (b)(1), by at least 4 levels, had the risked loss actually 
occurred. If the risk of loss was greater than 4 levels, an upward 
departure may be warranted.''.]
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by 
inserting after the first paragraph the following additional paragraph:
    ``Along with other relevant factors under the guidelines, loss 
serves as a measure of the seriousness of the offense and the 
defendant's relative culpability.''.

Issues for Comment

    The following issues for comment solicit input on possible changes 
to the definition of loss in Secs. 2B1.1 and 2F1.1 to clarify the 
Commission's intent, resolve issues raised by case law, and aid in 
consistency of application.
(A) Standard of Causation
    The current definition of loss in Secs. 2B1.1 and 2F1.1 does not 
specify any standard governing the causal relationship between the 
offense conduct and the harm caused. The proposed definition does 
include such a standard, using the concept of ``reasonable 
foreseeability'' as the touchstone. The Commission invites comment on 
whether such a standard is needed and, if so, whether the proposed 
``reasonable foreseeability'' standard is preferable to other 
alternatives, such as a ``but-for'' causation or ``proximate cause'' 
standard.
    The Commission also invites comment on what, if any, limitations 
should be placed on loss amounts that are included using the new 
causation standard, such as whether to limit the inclusion of 
``consequential damages.'' The current loss definition provides for 
inclusion of such damages only in contract procurement, product 
substitution, and certain computer crime cases. Would the creation of a 
causation standard obviate the need for commentary governing 
consequential damages? If not, in what cases, if any, should 
consequential damages be included, and how should they be defined and 
determined? For example, should language be added that specifies 
whether loss includes or excludes the costs of investigation and 
prosecution?
(B) Fair Market Value
    The current definition of loss in theft and fraud uses the concept 
of fair market value as an important factor in determining loss. The 
Commission invites comment on whether this concept should be clarified 
to specify, for example, whether retail, wholesale, or black market 
value is intended, depending on the nature of the offense. In addition, 
the Commission invites comment on what value should be used when the 
black market price is different from the price on the legitimate 
market. See, e.g., United States v. Ellerbee, 73 F.3d 105, 108-09 (6th 
Cir. 1996) (using retail price of stolen compact disks instead of lower 
price for which thief acquired and sold them); United States v. Mount, 
966 F.2d 262, 265-67 (7th Cir. 1992) (using black market price of 
stolen postseason baseball tickets instead of lower face value).
(C) Interest
    Although the definition of loss in the theft and fraud guidelines 
excludes interest ``that could have been earned had the funds not been 
stolen,'' some courts have interpreted the definition of loss to permit 
inclusion in loss of the interest that the defendant agreed to pay in 
connection with the offense. Compare United States v. Hoyle, 33 F.3d 
415, 419 (4th Cir. 1994) (``[I]nterest shall not be included to 
determine loss for sentencing purposes.''), cert. denied, 513 U.S. 1133 
(1995), with United States v. Gilberg, 75 F.3d 15, 18-19 (1st Cir. 
1996) (including in loss interest on fraudulently procured mortgage 
loan) and United States v. Henderson, 19 F.3d 917, 928-29 (5th Cir.) 
(``Interest should be included if, as here, the victim had a reasonable 
expectation of receiving interest from the transaction.''), cert. 
denied, 513 U.S. 877 (1994). The Commission invites comment on whether 
the definition of loss should be clarified to (1) exclude all forms of 
interest in all cases, (2) permit inclusion of bargained-for interest 
and/or interest that was lost because the victim(s) removed money from 
an investment vehicle or instrument to provide funds to the defendant, 
or (3) allow consideration of interest either in all loss calculations 
or as a departure factor. If lost opportunity cost interest should be 
included, how should such interest be calculated?
(D) Credits Against Loss--Benefit Received By Victims
    The current loss definition instructs the courts to reduce the loss 
figure by the value of payments made and collateral pledged in 
fraudulent loan cases, and by the value of substituted products in 
product substitution cases. Some courts have extended this concept to 
other types of cases. See, e.g., United States v. Maurello, 76 F.3d 
1304, 1311-12 (3d Cir. 1996) (calculating loss by subtracting value of 
satisfactory legal services from amount of fees paid to bogus lawyer); 
United States v. Reddeck, 22 F.3d 1504, 1513 (10th Cir. 1994) (reducing 
loss by value of education received from bogus university). The 
Commission invites comment on what credits should be applied in 
determining an appropriate loss figure where the victim was given 
something of value in connection with the offense, and how such a 
crediting principle might be articulated. For example, what payments, 
if any, made by a defendant should be credited against loss? The 
Commission further invites comment on whether the crediting principle 
should be used and similarly applied in both theft and fraud offenses.
    Furthermore, the current commentary also credits only those 
payments on a loan that have been made ``at the time the offense is 
discovered.'' The Commission invites comment on whether this is the 
most appropriate ``cutoff point'' for crediting such payments. Should 
the commentary include a definition of ``at the time the offense is 
discovered'' that would specify, for example, discovery ``by whom'' 
(such as by the victim or law enforcement)?

[[Page 620]]

    The Commission invites comment on whether there should be an 
adjustment or an invited departure for situations in which a defendant 
demonstrated the intent to make additional payments but was apprehended 
before he could do so.
    The Commission also invites comment on whether funds that a 
defendant has ``misapplied'' to an account but not withdrawn should 
count as loss. Compare United States v. Johnson, 993 F.2d 1358, 1358-59 
(8th Cir. 1993) (no), with United States v. Strozier, 981 F.2d 281, 
283-85 (7th Cir. 1992) (yes).
    The current loss definition calculates the value of collateral 
based on the net proceeds of the sale of the collateral, or if the sale 
has not been accomplished prior to sentencing, based on the market 
value of the collateral reduced by the expected cost of the sale. The 
Commission invites comment on whether fluctuations in the value of 
collateral after it is pledged should affect the loss figure, as is the 
case with the current rule, or whether the Commission should change the 
rule to value collateral as of the time of pledging, so changes in the 
value of collateral do not affect the loss determination. See, e.g., 
United States v. Barrett, 51 F.3d 86, 90-91 (7th Cir. 1995) (including 
in loss the drop in value of property securing fraudulently obtained 
loans).
    The Commission also invites comment on whether special rules are 
necessary to govern loss calculation for Ponzi schemes, and, if so, 
what those rules should be.

(Note: a Ponzi scheme is defined as ``a fraudulent investment scheme 
in which money placed by later investors pays artificially high 
dividends to the original investors, thereby attracting even larger 
investments.'' Bryan A. Garner, A Dictionary of Modern Legal Usage 
671 (2d ed. 1995)).

See, e.g., United States v. Holiusa, 13 F.3d 1043, 1048 (7th Cir. 1994) 
(holding that loss does not include ``amounts that [the defendant] both 
intended to and indeed did return to investors''). Compare United 
States v. Orton, 73 F.3d 331, 334 (11th Cir. 1996) (holding defendant 
accountable only for ``the net losses of all victims who lost all or 
part of the money they invested'') with United States v. Carrozzella, 
105 F. 3d 796, 805 (2d Cir. 1997) (holding that defendant should not be 
credited with amounts repaid to victims of a Ponzi scheme ``as part of 
a meretricious effort to maintain [the victims'] confidences.''
(E) Diversion of Government Benefits
    The Commission invites comment on how loss should be determined in 
fraud cases involving the diversion or misuse of government program 
benefits and kickbacks. For example, what is the loss in a case in 
which a doctor acquires a patient by paying a kickback in return for a 
referral, provides necessary medical care, and is then paid for his 
services using Medicare funds? Does the current or proposed commentary 
adequately cover such cases?
(F) Gain
    Courts have disagreed about when the current loss definition allows 
an offender's gain to be used in lieu of loss. Compare United States v. 
Kopp, 951 F.2d 521, 530 (3d Cir. 1991) (holding that gain cannot be 
used if loss is measurable even if loss is zero), with United States v. 
Haddock, 12 F.3d 950, 960 (10th Cir. 1993) (allowing gain to be used as 
alternative at all times). The Commission invites comment on whether 
and in what circumstances gain should be used in lieu of loss, whether 
gain should play a part in the loss calculation, and whether there 
should be some adjustment or departure if gain differs significantly 
from the loss figure. The Commission also invites comment on how gain 
might be calculated; e.g., should there be a ``net gain'' concept, or a 
distinction between a defendant's personal gain and the gain resulting 
from all offense conduct?
    (G) Intended loss: Under the current loss definition, intended loss 
is used when it is greater than actual loss. The proposed definition 
extends this concept to theft cases as well. The Commission invites 
comment on whether the current rules should be changed to provide that 
loss is to be based on actual loss, with intended loss available only 
as a possible ground for departure, or whether some downward adjustment 
for defendants whose actual loss is greater than their intended loss is 
warranted.
    Furthermore, courts have disagreed over whether intended loss 
should be limited by concepts of ``economic reality'' or impossibility. 
Compare United States v. Moored, 38 F.3d 1419, 1425 (6th Cir. 1994) 
(focusing on loss that defendant ``realistically intended''), with 
United States v. Lorenzo, 995 F.2d 1448, 1460 (9th Cir.) (``[T]he 
amount of [intended] loss * * * does not have to be realistic.''), 
cert. denied, 510 U.S. 881 (1993). The Commission invites comment on 
whether, if the substance of the current rule is to be retained, 
intended loss should be limited by concepts of ``economic reality'' or 
impossibility, such as in a government sting operation where there can 
be no loss, or in a false insurance claims case in which the defendant 
submits a claim for an amount in excess of the fair market value of the 
item.
(H) Risk of Loss
    Under the current loss definition, a defendant might obtain a loan 
by fraudulent means but be accountable for zero loss because of pledged 
collateral and payments made prior to discovery. A defendant in an 
investment scam might likewise be accountable for zero loss because the 
risky investments he made were fortuitously profitable. The Commission 
invites comment on whether the definition of loss should be revised to 
include the concept of risk of loss, or, alternatively, whether the 
guideline should be amended to provide a higher minimum offense level 
(e.g., a floor offense level of [12 to 16]) or an added enhancement 
(e.g., an enhancement of [2-4] levels), so as to ensure higher 
punishment levels for defendants who expose their victims to the 
possibility of a loss, although their offenses may result in low actual 
loss figures. If any such amendments are warranted, what role should 
risk of loss play in determining the offense level? See Sec. 2F1.1, 
comment. (n. 7(b)).
    (I) Loss Amounts That Over- or Understate the Significance of the 
Offense
    The Commission invites comment on whether to provide guidance for 
applying the current provision allowing departure where the loss amount 
over-or understates the significance of the offense. See Sec. 2F1.1, 
comment. (n. 10). More specifically, the Commission invites comment on 
whether to specify that where the loss amount included through 
Sec. 1B1.3 (Relevant Conduct) is far in excess of the benefit 
personally derived (or intended) by the defendant, the court might 
depart down to an offense level corresponding to the loss amount that 
more appropriately measures the defendant's culpability. Alternatively, 
the Commission invites comment on whether to provide a specific offense 
characteristic (e.g., calling for a reduction of [2-4] levels) or 
special rule in the definition of loss to reduce the offense level in 
such cases.
(J) Additional Special Rules
    The Commission invites comment on whether there is any unique 
category of cases, other than those mentioned above, for which a 
special rule for determining loss is necessary or desirable. For 
example, the current loss definition in Sec. 2F1.1 has a special rule 
for Davis-Bacon Act cases. Should that rule be maintained, and, 
similarly, are there other types of cases for which a special loss 
determination is warranted?

[[Page 621]]

Theft, Fraud and Tax Related Issues

5. Synopsis of Proposed Amendment
    The following amendments (described in Parts (A) through (D)) 
address issues related and subsidiary to the revisions of the theft, 
fraud, and tax loss tables that increase penalties and build in the 
more-than-minimal planning (MMP) enhancement.
(A) Deletion of More-than-Minimal-Planning (MMP) Enhancement

Synopsis of Proposed Amendment

    Deletion of the MMP enhancement involves the following issues and 
guideline modifications:
    i. Removal from Sec. 1B1.1 (Application Instructions) of certain 
commentary describing features of MMP that are no longer applicable in 
view of the proposed amendments to the theft and fraud loss tables.
    The language to be deleted is principally that which describes the 
``repeated acts'' and ``concealment'' prongs of MMP. The definitional 
commentary for the ``planning'' prong of MMP needs to be retained 
because a MMP enhancement will continue to be a specific offense 
characteristic under the Aggravated Assault and Burglary guidelines. 
The example in the last sentence of Application Note 4, which currently 
refers to the cumulative application of the MMP adjustment from the 
fraud guideline and an aggravating role adjustment, could be replaced 
with a similar illustration from, e.g., the Burglary guideline, or the 
sentence could be deleted entirely. The amendment language shown below 
deletes the sentence.
    ii. Removal of the MMP enhancement from the Theft and Property 
Destruction guidelines, with conforming commentary changes.
    The two-level MMP enhancement exists in the Theft guideline 
(Sec. 2B1.1) as an alternative to a four-level enhancement for being in 
the business of receiving and selling stolen property. The latter 
enhancement is assumed to incorporate MMP. Hence, when the two-level 
MMP factor is deleted (and incorporated into the loss table), the 
remaining enhancement for fencing stolen property needs to be adjusted 
from a four-level to a two-level enhancement. This particular specific 
offense characteristic (SOC) was applied in 57 (1.8%) of the 1996 theft 
cases and 40 (1.2%) of the 1995 theft cases.
    iii. Removal of the MMP enhancement from the Fraud guideline, with 
conforming commentary changes in Sec. 2F1.1 and the Multiple Count 
guidelines.
    The MMP enhancement in the Fraud guideline currently exists as an 
alternative to a comparable, two-level enhancement for ``a scheme to 
defraud more than one victim.'' In carrying through the decision to 
delete a separate MMP enhancement and fold it into the loss table, the 
Commission conceivably could elect to retain the enhancement for 
multiple victims. According to the Commission's Intensive Study Sample 
(ISS) assessment, an estimated 10 percent of all fraud cases involve 
more than one victim. However, because victim information currently is 
not well identified in the sentencing documents the Commission 
customarily receives, it is likely that the actual number of multiple 
victim cases is substantially higher. Thus, retention of the multiple 
victim enhancement may effectively retain the MMP enhancement in a 
substantial number of cases.
    The background commentary also is modified to reflect the view that 
loss is a better measure of offense seriousness than whether the 
offense involved minimal or greater planning.
    Proposed Amendment: The Commentary to Sec. 1B1.1 captioned 
``Application Notes'' is amended in Note 1(f) in the first paragraph by 
striking the last sentence as follows:
    `` `More than minimal planning' also exists if significant 
affirmative steps were taken to conceal the offense, other than conduct 
to which Sec. 3C1.1 (Obstructing or Impeding the Administration of 
Justice) applies.''.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 1(f) by striking the second paragraph as follows:
    `` `More than minimal planning' is deemed present in any case 
involving repeated acts over a period of time, unless it is clear that 
each instance was purely opportune. Consequently, this adjustment will 
apply especially frequently in property offenses.''
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 1(f) by striking the last two paragraphs as follows:
    ``In a theft, going to a secluded area of a store to conceal the 
stolen item in one's pocket would not alone constitute more than 
minimal planning. However, repeated instances of such thefts on several 
occasions would constitute more than minimal planning. Similarly, 
fashioning a special device to conceal the property, or obtaining 
information on delivery dates so that an especially valuable item could 
be obtained, would constitute more than minimal planning.
    In an embezzlement, a single taking accomplished by a false book 
entry would constitute only minimal planning. On the other hand, 
creating purchase orders to, and invoices from, a dummy corporation for 
merchandise that was never delivered would constitute more than minimal 
planning, as would several instances of taking money, each accompanied 
by false entries.''.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 4 in the second paragraph by striking the last sentence 
as follows:
    ``For example, the adjustments from Sec. 2F1.1(b)(2) (more than 
minimal planning) and Sec. 3B1.1 (Aggravating Role) are applied 
cumulatively.''.
    Section 2B1.1(b)(4) is amended by striking subdivision (A) as 
follows:
    ``(A) If the offense involved more than minimal planning, increase 
by 2 levels; or''.
    Section 2B1.1(b)(4)(B) is amended by striking ``(B)''; and by 
striking ``4'' and inserting ``2''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended in Note 1 by striking `` `More than minimal planning,'' '; and 
by striking `` `firearm''' and inserting `` `Firearm' ''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by striking Note 13 as follows:
    ``13. If subsection (b)(6) (A) or (B) applies, there shall be a 
rebuttable presumption that the offense involved `more than minimal 
planning.'' '.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by redesignating Notes 14, 15, and 16 as Notes 13, 14, and 15, 
respectively.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended in 
the first paragraph by striking the last sentence as follows:
    ``Because of the structure of the Sentencing Table (Chapter 5, Part 
A), subsection (b)(1) results in an overlapping range of enhancements 
based on the loss.''.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by 
striking the second paragraph as follows:
    ``The guidelines provide an enhancement for more than minimal 
planning, which includes most offense behavior involving affirmative 
acts on multiple occasions. Planning and repeated acts are indicative 
of an intention and potential to do considerable harm. Also, planning 
is often related to increased difficulties of detection and proof.''.
    Section 2B1.3(b) is amended by striking subdivision (3) as follows:
    ``(3) If the offense involved more than minimal planning, increase 
by 2 levels.''.
    The Commentary to Sec. 2B1.3 captioned ``Application Notes'' is 
amended by striking Note 1 as follows:

[[Page 622]]

    ``1. `More than minimal planning' is defined in the Commentary to 
Sec. 1B1.1 (Application Instructions).'';

and by redesignating Notes 2 through 4 as Notes 1 through 3, 
respectively.
    Section 2F1.1(b) is amended by striking subdivision (2) as follows:
    ``(2) If the offense involved (A) more than minimal planning, or 
(B) a scheme to defraud more than one victim, increase by 2 levels.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by striking Notes 2 and 3 as follows:
    ``2. `More than minimal planning' (subsection (b)(2)(A)) is defined 
in the Commentary to Sec. 1B1.1 (Application Instructions).
    3. `Scheme to defraud more than one victim,' as used in subsection 
(b)(2)(B), refers to a design or plan to obtain something of value from 
more than one person. In this context, `victim' refers to the person or 
entity from which the funds are to come directly. Thus, a wire fraud in 
which a single telephone call was made to three distinct individuals to 
get each of them to invest in a pyramid scheme would involve a scheme 
to defraud more than one victim, but passing a fraudulently endorsed 
check would not, even though the maker, payee and/or payor all might be 
considered victims for other purposes, such as restitution.'';

by striking Note 18 as follows:

    ``18. If subsection (b)(6)(A) or (B) applies, there shall be a 
rebuttable presumption that the offense involved `more than minimal 
planning.' '';

and by redesignating Notes 4 through 17 as Notes 2 through 15, 
respectively.

    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by 
striking the second and third paragraphs as follows:
    ``Empirical analyses of pre-guidelines practice showed that the 
most important factors that determined sentence length were the amount 
of loss and whether the offense was an isolated crime of opportunity or 
was sophisticated or repeated. Accordingly, although they are 
imperfect, these are the primary factors upon which the guideline has 
been based.
    The extent to which an offense is planned or sophisticated is 
important in assessing its potential harmfulness and the dangerousness 
of the offender, independent of the actual harm. A complex scheme or 
repeated incidents of fraud are indicative of an intention and 
potential to do considerable harm. In pre-guidelines practice, this 
factor had a significant impact, especially in frauds involving small 
losses. Accordingly, the guideline specifies a 2-level enhancement when 
this factor is present.'',

and inserting:

    ``The Commission has determined that, ordinarily, the sentences of 
defendants convicted of fraud offenses should reflect the nature and 
magnitude of the economic harm caused by their crimes. Accordingly, the 
amount of loss caused by an offense is a principal factor in 
determining the offense level under this guideline.''.
    The Commentary to Sec. 3D1.3 captioned ``Application Notes'' is 
amended in Note 3 by striking the last sentence as follows:
    ``In addition, the adjustment for `more than minimal planning' 
frequently will apply to multiple count convictions for property 
offenses.''.
    The ``Illustrations of the Operation of the Multiple-Count Rules'' 
after guideline 3D1.5 is amended in illustration 2 by striking 
``$2,000'' wherever it appears and inserting ``$3,000''; and in the 
fourth sentence by striking ``$4,800'' and inserting ``$5,800''.
    The ``Illustrations of the Operation of the Multiple-Count Rules'' 
after guideline 3D1.5 is amended in illustration 2 by striking in the 
sixth sentence by striking ``; 1 level is'' and inserting ``[Option 1: 
and 2 levels are]; [Option 2: and 4 levels are]''; and by striking ``; 
and 2 levels are added because the conduct involved repeated acts with 
some planning (Sec. 2F1.1(b)(2)(A))''.
    The ``Illustrations of the Operation of the Multiple-Count Rules'' 
after guideline 3D1.5 is amended in illustration 2 in the last sentence 
by striking ``9'' and inserting ``[Option 1: 8]; [Option 2: 10]''.
(B) Reduction for Cases Involving Limited or Insignificant Planning

Synopsis of Proposed Amendment

    The Commission's Practitioners' Advisory Group has suggested the 
following 2-level reduction in the theft and fraud guideline for cases 
that involve only limited or insignificant planning in the event that 
the more than minimal planning enhancement is built into the theft and 
fraud loss tables. For a related proposal, see Amendment 1(C), supra.
    Proposed Amendment: Section 2B1.1(b) is amended by adding at the 
end the following new subdivision:
    ``(8) If the offense involved (A) limited or insignificant 
planning, or (B) simple efforts at concealment, reduce by 2 levels.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``17. The term `limited or insignificant planning' means planning 
that is necessary for commission of the offense in a simple form.''.
    Section 2F1.1(b) is amended by adding at the end the following new 
subdivision:
    ``(7) If the offense involved (A) limited or insignificant 
planning, or (B) simple efforts at concealment, reduce by 2 levels.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``19. The term `limited or insignificant planning' means planning 
that is necessary for commission of the offense in a simple form.''.
    (C) Sophisticated Concealment Enhancement.

Synopsis of Proposed Amendment

    This amendment adds an enhancement in the fraud and theft 
guidelines similar to the existing ``sophisticated means'' enhancement 
in the tax guidelines. This amendment also entails some modification of 
the existing sophisticated means enhancement in the tax guidelines and 
the addition of a ``floor'' offense level of 12 to both the new and 
existing enhancements.
    i. Addition of ``Sophisticated Concealment'' enhancement to Theft 
and Fraud guidelines.
    Two options are proposed to add an enhancement for sophisticated 
concealment to the theft and fraud guidelines. Option 1 treats 
``committing the offense from outside the United States'' as a separate 
and alternative enhancement to other forms of sophisticated 
concealment. Option 2 treats ``committing the offense from outside the 
United States'' as one form of sophisticated concealment.
    ii. Modification of ``Sophisticated Means'' enhancement in tax 
guidelines.
    This amendment modifies the tax guidelines' sophisticated means 
SOC. In April, 1997, the Commission considered modifications that were 
designed to provide a floor offense level of 12, enhance the precision 
of the language, and address a circuit conflict. The conflict involved 
the issue of whether the sophisticated means enhancement applies based 
on the personal conduct of the defendant (see United States v. Kraig, 
99 F.3d 1361 (6th Cir. 1996)), or the overall offense conduct for which 
the defendant is accountable (see United States v. Lewis, 93 F.3d 1075 
(2d Cir. 1996)). The modifications take into account the latter view 
because that

[[Page 623]]

view appears more consistent with the usual relevant conduct 
attribution rules.
    The sophisticated means enhancement was applied in 103 (16.6%) tax 
evasion (Sec. 2T1.1) cases sentenced in FY 1996 and 82 (16.1%) of such 
cases sentenced in FY 1995. The identical enhancement in the other two 
tax guidelines (Secs. 2T1.4, 2T3.1) was not applied in FY 1995 or FY 
1996.
    Two options are presented. Option 1 is substantially similar to the 
modifications considered by the Commission in April, 1997, with minor, 
non-substantive modifications in the commentary. Option 2 eliminates 
the element of ``greater planning than a routine tax-evasion case'' and 
generally conforms the SOC to the ``sophisticated concealment'' 
language prepared for the theft and fraud guidelines. However, the 
definition of ``sophisticated concealment'' does not include 
``committing the offense from outside the United States'' because it 
seems unlikely that a tax offense would be perpetrated from outside the 
United States to avoid detection or prosecution. Under this option, the 
planning concept is deleted because that element arguably would be 
built into the offense level if the Commission adopts one of the 
proposed loss table amendments, both of which propose using a tax loss 
table that is the same as, or substantially similar to, the fraud loss 
table that is amended to phase in more than minimal planning. Without 
the planning element, the ``harm'' that is sought to be captured is the 
complex scheme designed to make the offense difficult to detect. 
Finally, Option 2 retains the floor offense level of 12.
    Proposed Amendment: Section 2B1.1(b) is amended by redesignating 
subdivisions (5) through (7) as subdivisions (6) through (8); and by 
inserting the following new Note 5:
    ``(5) If the offense involved sophisticated concealment, increase 
by 2 levels. If the resulting offense level is less than level 12, 
increase to level 12.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``17. For purposes of subsection (b)(5), `sophisticated 
concealment' means complex or intricate offense conduct that is 
designed to prevent discovery of the offense or its extent. This 
enhancement applies to conduct in which deliberate steps are taken to 
hide assets or transactions, or both, or otherwise make the offense, or 
its extent, difficult to detect. Thus, the use of corporate shells, 
fictitious entities, foreign bank accounts, or similarly sophisticated 
actions ordinarily indicate `sophisticated concealment.' ''.
[Option 1
    Section 2F1.1(b)(5) is amended by striking:
    ``If the offense involved the use of foreign bank accounts or 
transactions to conceal the true nature or extent of the fraudulent 
conduct, and the offense level as determined above is less than level 
12, increase to level 12.'',

and inserting:

    ``If (A) any part of the offense was committed from outside the 
United States, or (B) the offense otherwise involved sophisticated 
concealment, increase by 2 levels. If the resulting offense level is 
less than level 12, increase to level 12.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    19. For purposes of subsection (b)(5)(A), United States'' means 
each of the 50 states, the District of Columbia, the Commonwealth of 
Puerto Rico, the United States Virgin Islands, Guam, the Northern 
Mariana Islands, and American Samoa.
    ``For purposes of subsection (b)(5)(B), `sophisticated concealment' 
means complex or intricate offense conduct that is designed to prevent 
discovery of the offense or its extent. This enhancement applies to 
conduct in which deliberate steps are taken to hide assets or 
transactions, or both, or otherwise make the offense, or its extent, 
difficult to detect. Thus, the use of corporate shells, fictitious 
entities, foreign bank accounts, or similarly sophisticated actions 
ordinarily indicate `sophisticated concealment.' ''.]
[Option 2
    Section 2F1.1(b)(5) is amended by striking:
    ``If the offense involved the use of foreign bank accounts or 
transactions to conceal the true nature or extent of the fraudulent 
conduct, and the offense level as determined above is less than level 
12, increase to level 12.'',

and inserting:

    ``If the offense involved sophisticated concealment, increase by 2 
levels. If the resulting offense level is less than level 12, increase 
to level 12.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``19. For purposes of subsection (b)(5), `sophisticated 
concealment' means complex or intricate offense conduct that is 
designed to prevent discovery of the offense or its extent. This 
enhancement applies to conduct in which deliberate steps are taken to 
hide assets or transactions, or both, or otherwise make the offense, or 
its extent, difficult to detect. Thus, commission of the offense from 
outside the United States, or the use of corporate shells, fictitious 
entities, foreign bank accounts, or similarly sophisticated actions 
ordinarily indicate `sophisticated concealment.' ''.]
[Option 1
    Section 2T1.1(b)(2) is amended by striking ``existence'' and 
inserting ``offense''; by inserting ``its'' following ``or''; by 
striking ``of the offense''; and by adding at the end the following new 
sentence:
    ``If the resulting offense level is less than level 12, increase to 
level 12.''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended in Note 4 by striking ``An'' and inserting ``The''; by striking 
``be applied'' and inserting ``apply''; by striking ``where the 
defendant used offshore'' and inserting ``if the offense involved the 
use of foreign''; by inserting ``or foreign transactions'' following 
``accounts''; and by inserting ``, to conceal the offense or its 
extent'' following ``entities''.
    Section 2T1.4(b)(2) is amended by striking ``existence'' and 
inserting ``offense''; by inserting ``its'' following ``or''; by 
striking ``of the offense'' following ``extent''; and by adding at the 
end the following new sentence:
    ``If the resulting offense level is less than level 12, increase to 
level 12.''.
    The Commentary to Sec. 2T1.4 captioned ``Application Notes is 
amended in Note 3 by striking ``Sec. 2T1.4(b)(2)'' and inserting 
``subsection (b)(2)''; by striking ``An'' and inserting ``The''; by 
striking ``be applied'' and inserting ``apply''; by striking ``where 
the defendant used offshore'' and inserting ``if the offense involved 
the use of foreign''; by inserting ``or foreign transactions'' 
following ``accounts''; and by inserting ``, to conceal the offense or 
its extent'' following ``entities''.
    Section 2T3.1(b)(1) is amended by striking ``nature or existence of 
the offense'' and inserting ``offense or its extent''; and by adding at 
the end the following new sentence:
    ``If the resulting offense level is less than level 12, increase to 
level 12.''.
    The Commentary to Sec. 2T3.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``3. `Sophisticated means,' as used in subsection (b)(1), includes 
conduct that is more complex or demonstrates greater intricacy or 
planning than a routine

[[Page 624]]

duty-evasion case. The enhancement would apply, for example, if the 
offense involved the use of foreign bank accounts or foreign 
transactions, or transactions through corporate shells or fictitious 
entities, to conceal the offense or its extent.''.]
[Option 2
    Section 2T1.1(b)(2) is amended by striking ``If sophisticated means 
were used to impede discovery of the existence or extent of the 
offense, increase by 2 levels.'',

and inserting:

    ``If the offense involved sophisticated concealment, increase by 2 
levels. If the resulting offense level is less than level 12, increase 
to level 12.''
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended by striking Note 4 as follows:
    ``4. `Sophisticated means,' as used in subsection (b)(2), includes 
conduct that is more complex or demonstrates greater intricacy or 
planning than a routine tax-evasion case. An enhancement would be 
applied, for example, where the defendant used offshore bank accounts, 
or transactions through corporate shells or fictitious entities.'',

and inserting:

    ``4. For purposes of subsection (b)(2), `sophisticated concealment' 
means complex or intricate offense conduct that is designed to prevent 
discovery of the offense or its extent. This enhancement applies to 
conduct in which deliberate steps are taken to hide assets or 
transactions, or both, or otherwise make the offense, or its extent, 
difficult to detect. Thus, the use of corporate shells, fictitious 
entities, foreign bank accounts, or similarly sophisticated actions 
ordinarily indicate `sophisticated concealment.' ''.
    Section 2T1.4(b)(2) is amended by striking ``If sophisticated means 
were used to impede discovery of the existence or extent of the 
offense, increase by 2 levels.'',

and inserting:

    ``If the offense involved sophisticated concealment, increase by 2 
levels. If the resulting offense level is less than level 12, increase 
to level 12.''.
    The Commentary to Sec. 2T1.4 captioned ``Application Notes'' is 
amended by striking Note 3 as follows:
    ``3. `Sophisticated means,' as used in Sec. 2T1.4(b)(2), includes 
conduct that is more complex or demonstrates greater intricacy or 
planning than a routine tax-evasion case. An enhancement would be 
applied, for example, where the defendant used offshore bank accounts, 
or transactions through corporate shells or fictitious entities.'',

and inserting:

    ``3. For purposes of subsection (b)(2), `sophisticated concealment' 
means complex or intricate offense conduct that is designed to prevent 
discovery of the offense or its extent. This enhancement applies to 
conduct in which deliberate steps are taken to hide assets or 
transactions, or both, or otherwise make the offense, or its extent, 
difficult to detect. Thus, the use of corporate shells, fictitious 
entities, foreign bank accounts, or similarly sophisticated actions 
ordinarily indicate `sophisticated concealment.'' '.
    Section 2T3.1(b)(1) is amended by striking ``If sophisticated means 
were used to impede discovery of the nature or existence of the 
offense, increase by 2 levels.'' and inserting:
    ``If the offense involved sophisticated concealment, increase by 2 
levels. If the resulting offense level is less than level 12, increase 
to level 12.''.
    The Commentary to Sec. 2T3.1 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``3. For purposes of subsection (b)(1), `sophisticated concealment' 
means complex or intricate offense conduct that is designed to prevent 
discovery of the offense or its extent. This enhancement applies to 
conduct in which deliberate steps are taken to hide assets or 
transactions, or both, or otherwise make the offense, or its extent, 
difficult to detect. Thus, the use of corporate shells, fictitious 
entities, foreign bank accounts, or similarly sophisticated actions 
ordinarily indicate `sophisticated concealment.'' '.]
(D). Financial Institution, Personal Profit Enhancement

Synopsis of Proposed Amendment

    Proposals considered by the Commission in April, 1997 would have 
modified an enhancement for defendants who personally and substantially 
profit from financial institution fraud. This enhancement is contained 
in the theft, commercial/bank bribery, and fraud guidelines. In view of 
the substantial increases in the loss table for large-scale offenses, 
it is proposed to adhere somewhat more closely to the minimum dictates 
of this congressionally-directed enhancement, which requires a minimum 
offense level of 24 (approximately a five-year sentence) for defendants 
who derive more than $1 million in ``gross receipts'' from specified 
financial institution offenses. Thus, the amendment would delete the 
four-level increase currently required under the enhancement while 
retaining the minimum offense level of 24. This would avoid unwarranted 
double counting for offenses involving loss amounts in excess of $2.5 
million (equivalent to level 24 under the new loss table options). 
Although the effect of the enhancement would be moderated somewhat, it 
would continue to apply to a broader spectrum of cases than required 
under the congressional directive.
    The amendment also addresses significant interpretive problems 
regarding the meaning of the current guideline phrase ``affected a 
financial institution and the defendant derived more than $1 million in 
gross receipts from the offense.'' The proper interpretation of this 
language has been the subject of a number of hotline calls and some 
litigation (although no circuit conflict has yet resulted).
    The amended commentary would address the confusion about the 
meaning of the phrase ``affected a financial institution'' by deleting 
that problematic language. The new language would make clear that the 
enhancement applies when the offense is perpetrated against, and the 
money is derived from, one or more financial institutions.
    Additionally, the definition for ``gross receipts'' would be 
amended to clarify that ``gross receipts from the offense'' includes 
property under the control of, or in the custody of, the financial 
institution for a second party, e.g., a depositor. The background 
commentary would also be amended to reflect the Commission's intent to 
implement the congressional directive in a broader fashion than 
required.
    Because this SOC exists in the alternative to another SOC 
(regarding causing or threatening the institution's solvency), it is 
not possible to ascertain from the monitoring data exactly how 
frequently it has been applied. However, the data indicate that one or 
the other SOC was applied in 8 (.2%) FY 1995 theft cases, and 12 (.4%) 
of FY 1996 theft cases; with respect to fraud cases, the SOC was 
applied in 38 (.6%) of FY 1995 cases and in 50 (.8%) of FY 1996 cases. 
The SOC was not applied in any commercial/bank bribery cases during 
either fiscal year.
    Proposed Amendment: Section 2B1.1(b)(6) is amended by striking
``--'' after ``offense''; by striking ``(A)'' before ``substantially''; 
by striking ``; or (B) affected a financial institution and the 
defendant derived more than $1,000,000 in gross receipts from the 
offense,'', and inserting a comma; by redesignating subdivision (7) as 
subdivision (8); and by inserting the following as new subdivision (7):

[[Page 625]]

    ``(7) If the defendant derived more than $1,000,000 in gross 
receipts from one or more financial institutions as a result of the 
offense, and the offense level as determined above is less than level 
24, increase to level 24.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended in Note 11 by inserting before the first sentence the 
following:
    ``For purposes of subsection (b)(7), `gross receipts' means any 
moneys, funds, credits, assets, securities, or other real or personal 
property, whether tangible or intangible, owned by, or under the 
custody or control of, a financial institution, that are obtained 
directly or indirectly as a result of the offense. See 18 U.S.C. 
982(a)(4), 1344.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended in Note 11 by striking ``from the offense,'' before ``as used 
in''; by striking ``(6)(B)'' and inserting ``(7)''; by striking 
``generally'' before ``means''; and by striking the last sentence as 
follows:
    `` `Gross receipts from the offense' includes all property, real or 
personal, tangible or intangible, which is obtained directly or 
indirectly as a result of such offense. See 18 U.S.C. 982(a)(4).''.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended in 
the sixth paragraph by striking ``Subsection'' and inserting 
``Subsections''; by striking ``(A)'' and inserting ``and (7)''; by 
striking ``implements'' and inserting ``implement''; by striking 
``instruction'' and inserting ``instructions''; and by inserting at the 
end before the period ``and Section 2507 of Public Law 101-647, 
respectively''.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by 
striking the last paragraph as follows:
    ``Subsection (b)(6)(B) implements the instruction to the Commission 
in Section 2507 of Public Law 101-647.''.
    Section 2F1.1(b)(6) is amended by striking ``--'' after 
``offense''; by striking ``(A)'' before ``substantially''; by striking 
``; or (B) affected a financial institution and the defendant derived 
more than $1,000,000 in gross receipts from the offense,'' and 
inserting a comma; and by adding at the end the following new 
subdivision:
    ``(7) If the defendant derived more than $1,000,000 in gross 
receipts from one or more financial institutions as a result of the 
offense, and the offense level as determined above is less than level 
24, increase to level 24.''.
    The Commentary to Sec. 2F1.1 captioned ``Aplication Notes'' is 
amended in Note 16 by inserting before the first sentence the 
following:
    ``For purposes of subsection (b)(7), `gross receipts' means any 
moneys, funds, credits, assets, securities, or other real or personal 
property, whether tangible or intangible, owned by, or under the 
custody or control of, a financial institution, that are obtained 
directly or indirectly as a result of the offense. See 18 U.S.C. 
982(a)(4), 1344.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended in Note 16 by striking ``from the offense,'' before ``as used 
in''; by striking ``(6)(B)'' and inserting ``(7)''; by striking 
``generally'' before ``means''; and by striking the last sentence as 
follows:
    `` `Gross receipts from the offense' includes all property, real or 
personal, tangible or intangible, which is obtained directly or 
indirectly as a result of such offense. See 18 U.S.C. 982(a)(4).''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended in 
the seventh paragraph by striking ``Subsection'' and inserting 
``Subsections''; by striking ``(A)'' and inserting ``and (7)''; by 
striking ``implements'' and inserting ``implement''; by striking 
``instruction'' and inserting ``instructions''; and by inserting at the 
end before the period ``and Section 2507 of Public Law 101 647, 
respectively''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by 
striking the last paragraph as follows:
    ``Subsection (b)(6)(B) implements the instruction to the Commission 
in Section 2507 of Public Law 101-647.''.
    Section 2B4.1(b)(2) is amended by striking ``--'' after 
``offense''; by striking ``(A)'' before ``substantially''; by striking 
``; or (B) affected a financial institution and the defendant derived 
more than $1,000,000 in gross receipts from the offense,'' and 
inserting a comma; and by adding at the end the following new 
subdivision:
    ``(3) If the defendant derived more than $1,000,000 in gross 
receipts from one or more financial institutions as a result of the 
offense, and the offense level as determined above is less than level 
24, increase to level 24.''.
    The Commentary to Sec. 2B4.1 captioned ``Application Notes'' is 
amended in Note 5 by inserting before the first sentence the following:
    ``For purposes of subsection (b)(3), `gross receipts' means any 
moneys, funds, credits, assets, securities, or other real or personal 
property, whether tangible or intangible, owned by, or under the 
custody or control of, a financial institution, that are obtained 
directly or indirectly as a result of the offense. See 18 U.S.C. 
982(a)(4), 1344.''.
    The Commentary to Sec. 2B4.1 is captioned ``Application Notes'' is 
amended in Note 5 by striking ``from the offense,'' before ``as used 
in'' ; by striking ``(2)(B)'' and inserting ``(3)''; by striking 
``generally'' before ``means''; and by striking the last sentence as 
follows:
    `` `Gross receipts from the offense' includes all property, real or 
personal, tangible or intangible, which is obtained directly or 
indirectly as a result of such offense. See 18 U.S.C. 982(a)(4).''.
    The Commentary to Sec. 2B4.1 captioned ``Background'' is amended in 
the seventh paragraph by striking ``Subsection'' and inserting 
``Subsections''; by striking ``(A)'' and inserting ``and (3)''; by 
striking ``implements'' and inserting ``implement''; by striking 
``instruction'' and inserting ``instructions''; and by inserting at the 
end before the period ``and Section 2507 of Public Law 101 647, 
respectively''.
    The Commentary to Sec. 2B4.1 captioned ``Background'' is amended by 
striking the last paragraph as follows:
    ``Subsection (b)(2)(B) implements the instruction to the Commission 
in Section 2507 of Public Law 101-647.''.

Telemarketing Fraud

6. Issue for Comment
    The Commission is examining the characteristics of telemarketing 
fraud offenses, the statutory enhancement for telemarketing fraud at 18 
U.S.C. 2326, and whether current adjustments in Sec. 2F1.1 (Fraud), 
Sec. 3A1.1 (Hate Crime Motivation or Vulnerable Victim), and the policy 
statements in Sec. 5K2.0-Sec. 5K2.18 (Other Grounds for Departures) 
provide adequate punishment for defendants convicted of telemarketing 
fraud offenses.
    In conjunction with its examination, the Commission invites comment 
on the following issues:
(A) Telemarketing Fraud Generally
    Should telemarketing fraud offenses be treated differently from 
other types of fraud offenses involving comparable numbers and nature 
of victims and comparable monetary loss? What types of harms unique to 
telemarketing fraud are not adequately addressed by the guidelines? 
Should Sec. 2F1.1 be amended to provide an increase of [2-8] levels to 
correspond to the application of the statutory enhancement in 18 U.S.C. 
2326?
(B) Multiple Victims
    Do the guidelines adequately address fraud offenses that impact 
multiple victims? If not, how should they be amended to address this 
concern? Should, for example, the fraud guideline include a table 
providing tiered offense level increases that correspond to the

[[Page 626]]

number of victims involved in the offense? If so, what are the 
appropriate offense level increases and corresponding ranges of number 
of victims? Should such an enhancement be based on the total number of 
victims or the number of vulnerable victims? If the enhancement is 
based on vulnerability, is it more appropriate to amend Sec. 3A1.1 to 
reflect multiple victims?
(C) Revictimization
    Commission analysis indicates that telemarketing fraud often 
involves repeat victimization of persons previously victimized, 
typically through ``reloading'' (a process in which a telemarketing 
offender targets victims whose names are included on lists of 
individuals previously contacted and victimized) or ``recovery 
services'' schemes (a process in which an offender poses as a 
government agent or other individual in a position to help the victim 
recover, for a fee, the losses incurred as a result of the initial 
telemarketing scheme). Commission analysis further indicates that 
district courts often enhance the sentence under Sec. 3A1.1 (Vulnerable 
Victim) in these cases. Does Sec. 3A1.1 adequately address 
revictimization concerns? To ensure consistent application of this 
enhancement, should the Commission amend the guideline or commentary to 
ensure that Sec. 3A1.1 is applicable when the offense involves an 
individual susceptible to the offense because of prior victimization? 
Alternatively, should the Commission promulgate additional specific 
offense characteristics addressing this aspect of telemarketing fraud?
(D) Departures
    Currently, Application Note 10 of Sec. 2F1.1 encourages upward 
departures when monetary loss inadequately measures the harm and 
seriousness of fraudulent conduct. Should some of the listed departure 
factors be converted into specific offense characteristics? For 
example, should the fact that ``the offense caused reasonably 
foreseeable, physical or psychological harm or severe emotional 
trauma'' (subsection (c)), or ``the offense involved the knowing 
endangerment of the solvency of one or more victims''(subsection (f)), 
or other factors be made into specific enhancements under the fraud 
guideline? Is so, what offense level weight should be assigned to these 
factors? In addition, should the Commission promulgate any currently 
specified grounds for departure listed in Chapter 5K as specific 
offense characteristics? If so, what weight should be given these 
factors?
    (E) Sophisticated means. Elsewhere in these proposed amendments, 
the Commission has (1) included, on a phased-in basis, an enhancement 
for more-than-minimal planning in proposed revisions of the loss table 
applicable for fraud offenses, and (2) proposed a new enhancement for 
``sophisticated concealment'' conduct (defined to include perpetrating 
an offense from outside U.S. borders). In this regard, the Senate-
passed version of a telemarketing fraud bill (H.R. 1847, 105th Cong., 
1st Sess.) directs the Commission to ``provide an additional 
appropriate sentencing enhancement if [sic] offense involved 
sophisticated means, including but not limited to sophisticated 
concealment efforts, such as perpetrating the offense from outside the 
United States.'' The Commission invites comment on whether the proposed 
amendments adequately address concerns expressed in the congressional 
directive. If not, how should the enhancement be augmented to most 
effectively implement such a potential directive?
(F) Other Factors
    Are there additional factors that the Commission should address, 
either by specific offense characteristics, guideline commentary, or 
departure provisions, to provide appropriate punishment for 
telemarketing offenses?

7. Circuit Conflicts

Synopsis of Proposed Amendment
    The Commission has identified the resolution of several circuit 
conflicts for consideration this year. Parts (A) through (J) present 
particular circuit conflicts under consideration.
(A) Aberrant Behavior

Synopsis of Proposed Amendment

    The amendment addresses the circuit conflict regarding whether the 
aberrant behavior departure is limited to only spontaneous and 
thoughtless acts. Compare United States v. Marcello, 13 F.3d 752 (3d 
Cir. 1994); United States v. Glick, 946 F.2d 335 (4th Cir. 1991); 
United States v. Williams 974 F.2d 25 (5th Cir. 1991), cert. denied, 
507 U.S. 934 (1993); United States v. Carey, 895 F.2d 318 (7th Cir. 
1990) with United States v. Grandmaison, 77 F.3d 555 (1st Cir. 1996); 
United States v. Takai, 941 F.2d 738 (9th Cir. 1991). The proposal 
removes the departure from Chapter One and creates a guideline in 
Chapter Five that limits the departure to a spontaneous and thoughtless 
act.

Proposed Amendment

    Chapter One, Part A, is amended in subdivision 4(d) in the last 
paragraph by striking the last sentence as follows:
    ``The Commission, of course, has not dealt with the single acts of 
aberrant behavior that still may justify probation at higher offense 
levels through departures.''.
    Chapter Five, Part K, is amended by adding at the end the following 
new policy statement:
    ``Sec. 5K2.19 Single Act of Aberrant Behavior (Policy Statement). 
If the offense consisted of a single act of aberrant behavior, a 
downward departure may be warranted. A `single act of aberrant 
behavior' means a spontaneous and thoughtless act. This definition does 
not include a course of conduct composed of multiple planned criminal 
acts, even if the defendant is a first-time offender.''.
(B) Misrepresentation with respect to Charitable Organizations

Synopsis of Proposed Amendment

    The amendment addresses the circuit conflict regarding whether an 
employee of a charity or governmental agency who misapplies or 
embezzles funds misrepresents that he was acting ``on behalf of the 
agency'' within the meaning of the two-level enhancement under 
Sec. 2F1.1(b)(3)(A). Compare United States v. Frazier, 53 F.3d 1105 
(10th Cir. 1995) with United States v. Marcum, 16 F.3d 599 (4th Cir.) 
cert. denied, 513 U.S. 845 (1994). The proposed amendment provides 
enhancements for both (1) the legitimate employee of a charitable, 
educational, religious or political organization, or government agency 
who commits a fraud by misrepresenting to an individual outside the 
organization or agency that the defendant is acting on behalf of the 
employer organization or agency; and (2) the defendant who commits a 
fraud by pretending to be an employee or authorized agent of a 
charitable, educational, religious or political organization, or 
government agency.

Proposed Amendment

    Section 2F1.1(b)(3) is amended by striking:
``the offense involved (A) a misrepresentation that the defendant was 
acting on behalf of a charitable, education, religious or political 
organization, or a government agency,'',

and inserting:

    ``(A)(i) the defendant is an employee or authorized agent of a 
charitable, education, religious or political organization, or a 
government agency, who used that employment or position

[[Page 627]]

as an authorized agent under false pretenses to victimize an individual 
who is not an employee of that organization or agency; (ii) the offense 
involved a misrepresentation that the defendant was an employee or 
authorized agent of a charitable, educational, religious or political 
organization, or a government agency;'';

and by inserting ``the offense involved a'' following ``(B)''.

    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by striking Note 4 as follows:

    ``4. Subsection (b)(3)(A) provides an adjustment for a 
misrepresentation that the defendant was acting on behalf of a 
charitable, educational, religious or political organization, or a 
government agency. Examples of conduct to which this factor applies 
would include a group of defendants who solicit contributions to a non-
existent famine relief organization by mail, a defendant who diverts 
donations for a religiously affiliated school by telephone 
solicitations to church members in which the defendant falsely claims 
to be a fund-raiser for the school, or a defendant who poses as a 
federal collection agent in order to collect a delinquent student 
loan.'',

and inserting a new Note 4 as follows:

    ``4. Subsection (b)(3)(A) provides enhancements for a defendant's 
use of false pretenses to take advantage of a victim's charitable 
motives, or trust in government agencies. The enhancement in 
(b)(3)(A)(i) applies if (a) the defendant is a legitimate employee of a 
charitable, educational, religious or political organization, or a 
government agency, (b) the false pretense was that the defendant was 
acting for the interest or benefit of the organization or agency when, 
in fact, the defendant was acting for personal gain; and (c) the 
offense victimizes an individual who is not an employee of that 
organization or agency. For example, this enhancement would apply in a 
case in which the president of a charitable organization skims proceeds 
from a public bingo game which the president conducts under the false 
pretenses of raising money solely for the charitable organization. [If 
this enhancement applies, do not apply Sec. 3B1.3 (Abuse of Position of 
Trust or Use of Special Skill).]
    The enhancement in (b)(3)(A)(ii) applies if (A) the defendant is 
not a legitimate employee of a charitable, education, religious or 
political organization or a government agency, and (B) the 
misrepresentation was that the defendant was an employee or authorized 
agent of an organization or agency referred to in (a).
    Because the enhancements in (b)(3)(A) apply in the case in which a 
defendant uses false pretenses to take advantage of charitable motives 
or trust in government agencies, clauses (i) and (ii) do not apply if 
the defendant simply embezzles money from the employer organization or 
agency or otherwise commits a fraud directed at the organization or 
agency. However, such a defendant who holds a position of public or 
private trust will be subject to an adjustment under Sec. 3B1.3 (Abuse 
of Position of Trust or Use of Special Skill).''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended in 
the fourth paragraph by striking the first, second, and third sentences 
as follows:
    ``Use of false pretenses involving charitable causes and government 
agencies enhances the sentences of defendants who take advantage of 
victims' trust in government or law enforcement agencies or their 
generosity and charitable motives. Taking advantage of a victim's self-
interest does not mitigate the seriousness of fraudulent conduct. 
However, defendants who exploit victims' charitable impulses or trust 
in government create particular social harm.''.
(C) Violation of Judicial Process

Synopsis of Proposed Amendment

    This amendment addresses the circuit conflict regarding whether 
filing fraudulent forms with bankruptcy and probate courts violates a 
judicial order or process within the meaning of the two-level 
enhancement under Sec. 2F1.1(b)(3)(B). Two options are presented. 
Option One adopts the majority view and defines the scope of the 
enhancement to include fraudulent court filings. See United States v. 
Michalek, 54 F.3d 325 (7th Cir. 1995); United States v. Lloyd, 947 F.2d 
339 (8th Cir. 1991)(per curiam); United States v. Welch, 103 F.3d 906 
(9th Cir. 1996)(per curiam); United States v. Messner, 107 F.3d 1448 
(10th Cir. 1997); United States v. Bellew, 35 F.3d 518 (11th Cir. 
1994)(per curiam). In Option One, ``violation of a judicial order'' is 
interpreted broadly to mean an abuse of judicial proceedings (presented 
as both an enhancement and an upward departure provision in 
coordination with the consolidation of theft and fraud proposal, see 
Proposed Amendment 3, supra.) Option Two adopts the minority view and 
defines the scope of the enhancement to exclude fraudulent court 
filings. See United States v. Shadduck, 112 F.3d 523 (1st Cir. 1997); 
United States v. Carrozella, 105 F.3d 796 (2d Cir. 1997). In this 
option, ``violation of a judicial order'' is interpreted narrowly to 
mean a violation of a command or order issued to a specific person or 
party (presented as both an enhancement and an upward departure 
provision in coordination with the consolidation of theft and fraud 
proposal, see Proposed Amendment 3, supra.)

Proposed Amendment

    [Option (1)(a) Enhancement provision:
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended in Note 5 by striking:
    ``This subsection does not apply to conduct addressed elsewhere in 
the guidelines; e.g., a violation of a condition of release (addressed 
in Sec. 2J1.7 (Offense Committed While on Release)) or a violation of 
probation (addressed in Sec. 4A1.1 (Criminal History Category)).'',

and by adding at the end the following new paragraphs:

    ``This enhancement also applies if the offense involves a violation 
of a special judicial process, such as a bankruptcy or probate 
proceeding. A violation of a special judicial process occurs when the 
offense conduct for which the defendant is accountable involves a 
misuse of a judicial proceeding to gain an undeserved advantage. For 
example, a defendant who files a false document with a bankruptcy court 
to conceal an asset violates the bankruptcy process because concealing 
the asset from creditors misuses the debtor's protection from creditors 
and gives the defendant an undeserved advantage in the proceeding.
    This enhancement does not apply to conduct addressed elsewhere in 
the guidelines (e.g., a violation of a condition of release addressed 
in Sec. 2J1.7 (Commission of Offense While on Release) or a violation 
of probation addressed in Sec. 4A1.1 (Criminal History Category)).''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended in 
the fourth paragraph by adding at the end the following new sentence:
    ``Similarly, a defendant who violates a special judicial process 
deserves additional punishment because the defendant is taking 
advantage of a judicial proceeding to gain an undeserved advantage.''.]
    [Option (1)(b) Upward departure provision: Section 2F1.1(b)(3) is 
amended by striking ``(A)''; and by striking ``or (B) violation of any 
judicial or administrative order, injunction, decree, or process not 
addressed elsewhere in the guidelines,''.

[[Page 628]]

    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended in Note 5 by striking:
    ``Subsection (b)(3)(B) provides an adjustment for violation of any 
judicial or administrative order, injunction, decree, or process. If it 
is established that an entity the defendant controlled was a party to 
the prior proceeding, and the defendant had knowledge of the prior 
decree or order, this provision applies even if the defendant was not a 
specifically named party in that prior case. For example, a defendant 
whose business was previously enjoined from selling a dangerous 
product, but who nonetheless engaged in fraudulent conduct to sell the 
product, would be subject to this provision. This subsection does not 
apply to conduct addressed elsewhere in the guidelines; e.g., a 
violation of a condition of release (addressed in Sec. 2J1.7 (Offense 
Committed While on Release)) or a violation of probation (addressed in 
Sec. 4A1.1 (Criminal History Category)).'',

and inserting:

    ``If the defendant committed a violation of any judicial or 
administrative order, injunction, decree, or process, an upward 
departure may be warranted. If it is established that an entity the 
defendant controlled was a party to the prior proceeding and the 
defendant had knowledge of that prior decree or order, an upward 
departure pursuant to this note may be warranted, even if the defendant 
was not a specifically named party in that prior case. For example, an 
upward departure may be warranted in the case of a defendant whose 
business was previously enjoined from selling a dangerous product, but 
who nonetheless engaged in fraudulent conduct to sell the product. 
However, an upward departure based on conduct addressed elsewhere in 
the guidelines (e.g., a violation of a condition of release addressed 
in Sec. 2J1.7 (Commission of Offense While on Release) or a violation 
of probation addressed in Sec. 4A1.1 (Criminal History Category)) is 
not authorized under this note.
    An upward departure pursuant to this note also may be warranted if 
the offense involves a violation of a special judicial process, such as 
a bankruptcy or probate proceeding. A violation of a special judicial 
process occurs when the offense conduct for which the defendant is 
accountable involves a misuse of a judicial proceeding to gain an 
undeserved advantage. For example, a defendant who files a false 
document with a bankruptcy court to conceal an asset violates the 
bankruptcy process because concealing the asset from creditors misuses 
the debtor's protection from creditors and gives the defendant an 
undeserved advantage in the proceeding.''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended in 
the fourth paragraph by striking the last sentence as follows:
    ``A defendant who has been subject to civil or administrative 
proceedings for the same or similar fraudulent conduct demonstrates 
aggravated criminal intent and is deserving of additional punishment 
for not conforming with the requirements of judicial process or orders 
issued by federal, state, or local administrative agencies.''.]
    [Option (2)(a) Enhancement provision: The Commentary to Sec. 2F1.1 
captioned ``Application Notes'' is amended in Note 5 in the by 
striking:
    ``Subsection (b)(3)(B) provides an adjustment for violation of any 
judicial or administrative order, injunction, decree, or process. If it 
is established that an entity the defendant controlled was a party to 
the prior proceeding, and the defendant had knowledge of the prior 
decree or order, this provision applies even if the defendant was not a 
specifically named party in that prior case. For example, a defendant 
whose business was previously enjoined from selling a dangerous 
product, but who nonetheless engaged in fraudulent conduct to sell the 
product, would be subject to this provision. This subsection does not 
apply to conduct addressed elsewhere in the guidelines; e.g., a 
violation of a condition of release (addressed in Sec. 2J1.7 (Offense 
Committed While on Release)) or a violation of probation (addressed in 
Sec. 4A1.1 (Criminal History Category)).'',

and inserting:

    ``Subsection (b)(3)(B) provides an enhancement if the defendant 
commits a fraud in contravention of a prior official judicial or 
administrative warning, in the form of an order, injunction, decree, or 
process, to take or not to take a specified action. A defendant who 
does not comply with such an official judicial or administrative 
warning demonstrates aggravated criminal intent and deserves additional 
punishment. If it is established that an entity the defendant 
controlled was a party to the prior proceeding that resulted in the 
official judicial or administrative warning, and the defendant had 
knowledge of that prior decree or order, this enhancement applies even 
if the defendant was not a specifically named party in that prior case. 
For example, a defendant whose business was previously enjoined from 
selling a dangerous product, but who nonetheless engaged in fraudulent 
conduct to sell the product, is subject to this enhancement. This 
enhancement does not apply to conduct addressed elsewhere in the 
guidelines (e.g., a violation of a condition of release addressed in 
Sec. 2J1.7 (Commission of Offense While on Release) or a violation of 
probation addressed in Sec. 4A1.1 (Criminal History Category)).''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended in 
the fourth paragraph by striking the last sentence as follows:
    ``A defendant who has been subject to civil or administrative 
proceedings for the same or similar fraudulent conduct demonstrates 
aggravated criminal intent and is deserving of additional punishment 
for not conforming with the requirements of judicial process or orders 
issued by federal, state, or local administrative agencies.''.]
    [Option 2(b) Upward departure provision: Section 2F1.1(b)(3) is 
amended by striking ``(A)''; and by striking ``or (B) violation of any 
judicial or administrative order, injunction, decree, or process not 
addressed elsewhere in the guidelines,''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended in Note 5 in the by striking:
    ``Subsection (b)(3)(B) provides an adjustment for violation of any 
judicial or administrative order, injunction, decree, or process. If it 
is established that an entity the defendant controlled was a party to 
the prior proceeding, and the defendant had knowledge of the prior 
decree or order, this provision applies even if the defendant was not a 
specifically named party in that prior case. For example, a defendant 
whose business was previously enjoined from selling a dangerous 
product, but who nonetheless engaged in fraudulent conduct to sell the 
product, would be subject to this provision. This subsection does not 
apply to conduct addressed elsewhere in the guidelines; e.g., a 
violation of a condition of release (addressed in Sec. 2J1.7 (Offense 
Committed While on Release)) or a violation of probation (addressed in 
Sec. 4A1.1 (Criminal History Category)).'',

and inserting:

    ``An upward departure may be warranted if the defendant commits a 
fraud in contravention of a prior official judicial or administrative 
warning, in the form of an order, injunction, decree, or process, to 
take or not to take a specified action. The failure to comply with such 
a warning demonstrates aggravated criminal intent that may deserve a 
sentence outside the guideline range. If it is established that an 
entity

[[Page 629]]

the defendant controlled was a party to the prior proceeding and the 
defendant had knowledge of the prior decree or order, an upward 
departure pursuant to this note may be warranted, even if the defendant 
was not a specifically named party in that prior case. For example, an 
upward departure may be warranted in the case of a defendant whose 
business was previously enjoined from selling a dangerous product, but 
who nonetheless engaged in fraudulent conduct to sell the product. 
However, an upward departure based on conduct addressed elsewhere in 
the guidelines(e.g., a violation of a condition of release addressed in 
Sec. 2J1.7 (Commission of Offense While on Release) or a violation of 
probation addressed in Sec. 4A1.1 (Criminal History Category)) is not 
authorized under this note.''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended in 
the fourth paragraph by striking the last sentence as follows:
    ``A defendant who has been subject to civil or administrative 
proceedings for the same or similar fraudulent conduct demonstrates 
aggravated criminal intent and is deserving of additional punishment 
for not conforming with the requirements of judicial process or orders 
issued by federal, state, or local administrative agencies.''.]
(D) Grouping Failure to Appear Count with Underlying Offense

Synopsis of Proposed Amendment

    This amendment addresses the circuit conflict regarding whether the 
guideline procedure of grouping the failure to appear count of 
conviction with the underlying offense violates the statutory mandate 
of imposing a consecutive sentence. Compare United States v. Agoro, 996 
F.2d 1288 (1st Cir. 1993); United States v. Flores, 23 F.3d 408 (6th 
Cir. 1994)(unpublished) with United States v. Packer, 70 F.3d 357 (5th 
Cir. 1995), cert. denied, 117 S.Ct. 75 (1996). The proposal maintains 
the current grouping rules for failure to appear and obstruction of 
justice, but addresses internal inconsistencies in the guidelines. 
Specifically, the proposal (1) more clearly distinguishes between 
statutes that require imposition of a consecutive term of imprisonment 
only if imprisonment is imposed (e.g., 18 U.S.C. 3146 (Penalty for 
failure to appear) and statutes that require both a minimum term of 
imprisonment and a consecutive sentence (e.g., 18 U.S.C. 924(c) (Use of 
a firearm in relation to crime of violence or drug trafficking 
offense)); (2) adds a paragraph stating that the method outlined for 
determining sentence for failure to appear and similar statutes ensures 
an incremental, consecutive punishment; and (3) adds departure 
provision if offense conduct involves multiple obstructive behavior.

Proposed Amendment

    The Commentary to Sec. 2J1.6 captioned ``Application Notes'' is 
amended in Note 3 in paragraph two by striking:
    ``Otherwise, in the case of a conviction on both the underlying 
offense and the failure to appear, the failure to appear is treated 
under Sec. 3C1.1 (Obstructing or Impeding the Administration of 
Justice) as an obstruction of the underlying offense; and the failure 
to appear count and the count(s) for the underlying offense are grouped 
together under Sec. 3D1.2(c). Note that although 18 U.S.C. 3146(b)(2) 
does not require a sentence of imprisonment on a failure to appear 
count, it does require that any sentence of imprisonment on a failure 
to appear count be imposed consecutively to any other sentence of 
imprisonment. Therefore, in such cases, the combined sentence must be 
constructed to provide a `total punishment' that satisfies the 
requirements both of Sec. 5G1.2 (Sentencing on Multiple Counts of 
Conviction) and 18 U.S.C. 3146(b)(2). For example, where the combined 
applicable guideline range for both counts is 30-37 months and the 
court determines a `total punishment' of 36 months is appropriate, a 
sentence of thirty months for the underlying offense plus a consecutive 
six months sentence for the failure to appear count would satisfy these 
requirements.'',

 and inserting:

    ``Otherwise, in the case of a conviction on both the underlying 
offense and the failure to appear, the failure to appear is treated 
under Sec. 3C1.1 (Obstructing or Impeding the Administration of 
Justice) as an obstruction of the underlying offense; and the failure 
to appear count and the count(s) for the underlying offense are grouped 
together under Sec. 3D1.2(c). (Note that 18 U.S.C. 3146(b)(2) does not 
require a sentence of imprisonment on a failure to appear count, 
although if a sentence of imprisonment on the failure to appear count 
is imposed, the statute requires that the sentence be imposed to run 
consecutively to any other sentence of imprisonment. Therefore, unlike 
a count in which the statute mandates both a minimum and a consecutive 
sentence of imprisonment, the grouping rules of Secs. 3D1.1-3D1.5 
apply. See Sec. 3D1.1(b), comment. (n.1), and Sec. 3D1.2, comment. 
(n.1).) The combined sentence will then be constructed to provide a 
`total punishment' that satisfies the requirements both of Sec. 5G1.2 
(Sentencing on Multiple Counts of Conviction) and 18 U.S.C. 
Sec. 3146(b)(2). For example, if the combined applicable guideline 
range for both counts is 30-37 months and the court determines a `total 
punishment' of 36 months is appropriate, a sentence of thirty months 
for the underlying offense plus a consecutive six months sentence for 
the failure to appear count would satisfy these requirements. (Note 
that the combination of this instruction and increasing the offense 
level for the obstructive, failure to appear conduct has the effect of 
ensuring an incremental, consecutive punishment for the failure to 
appear count, as required by 18 U.S.C. 3146(b)(2).)''.
    The Commentary to Sec. 2J1.6 captioned ``Application Notes'' is 
amended by redesignating Note 4 as Note 5 and inserting the following 
as new Note 4:
    ``4. If a defendant is convicted of both the underlying offense and 
the failure to appear count, and the defendant committed additional 
acts of obstructive behavior (e.g., perjury) during the investigation, 
prosecution, or sentencing of the instant offense, an upward departure 
may be warranted. The upward departure will ensure an enhanced sentence 
for obstructive conduct for which no adjustment under Sec. 3C1.1 
(Obstruction of Justice) is made because of the operation of the rules 
set out in Application Note 3.''.
    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended in Note 6 by striking ``Where'' and inserting ``If''; and by 
striking ``where'' both places it appears and inserting ``if''.
    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended in Note 7 in the first sentence by striking ``Where'' and 
inserting ``If''; by striking ``both of the'' and inserting ``both of 
an''; by inserting ``e.g., 18 U.S.C. 3146 (Penalty for failure to 
appear); 18 U.S.C. 1621 (Perjury generally))'' following ``obstruction 
offense''; and by striking ``the underlying'' and inserting ``an 
underlying''.
    Section 3D1.1(b) is amended by striking the first sentence as 
follows:
    ``Any count for which the statute mandates imposition of a 
consecutive sentence is excluded from the operation of Secs. 3D1.2-
3D1.5.'',

    and inserting:
    ``Exclude from the application of Secs. 3D1.2-3D1.5 any count for 
which the statute (1) specifies a term of imprisonment to be imposed; 
and (2) requires that such term of imprisonment be imposed to run 
consecutively to any other term of imprisonment.''.

[[Page 630]]

    The Commentary to Sec. 3D1.1 captioned ``Application Notes'' is 
amended in Note 1 by striking the following:
    ``1. Counts for which a statute mandates imposition of a 
consecutive sentence are excepted from application of the multiple 
count rules. Convictions on such counts are not used in the 
determination of a combined offense level under this Part, but may 
affect the offense level for other counts. A conviction for 18 U.S.C. 
924(c) (use of firearm in commission of a crime of violence) provides a 
common example. In the case of a conviction under 18 U.S.C. 924(c), the 
specific offense characteristic for weapon use in the primary offense 
is to be disregarded to avoid double counting. See Commentary to 
Sec. 2K2.4 (Use of Firearm, Armor-Piercing Ammunition, or Explosive 
During or in Relation to Certain Crimes). Example: The defendant is 
convicted of one count of bank robbery (18 U.S.C. 2113), and one count 
of use of a firearm in the commission of a crime of violence (18 U.S.C. 
924(c)). The two counts are not grouped together, and the offense level 
for the bank robbery count is computed without application of an 
enhancement for weapon possession or use. The mandatory five-year 
sentence on the weapon-use count runs consecutively, as required by 
law. See Sec. 5G1.2(a).'',

and inserting:

    ``1. Subsection (b) applies if a statute (A) specifies a term of 
imprisonment to be imposed; and (B) requires that such term of 
imprisonment be imposed to run consecutively to any other term of 
imprisonment. See, e.g., 18 U.S.C. 924(c) (requiring mandatory term of 
five years to run consecutively). The multiple count rules set out 
under this Part do not apply to a count of conviction covered by 
subsection (b). However, a count covered by subsection (b) may affect 
the offense level determination for other counts. For example, a 
defendant is convicted of one count of bank robbery (18 U.S.C. 2113), 
and one count of use of a firearm in the commission of a crime of 
violence (18 U.S.C. 924(c)). The two counts are not grouped together 
pursuant to this guideline, and, to avoid unwarranted double counting, 
the offense level for the bank robbery count under USSG Sec. 2B3.1 is 
computed without application of the enhancement for weapon possession 
or use as otherwise required by subsection (b)(2) of that guideline. 
Pursuant to 18 U.S.C. 924(c), the mandatory five-year sentence on the 
weapon-use count runs consecutively to the guideline sentence imposed 
on the bank robbery count. See Sec. 5G1.2(a).
    Unless specifically instructed, subsection (b) does not apply when 
imposing a sentence under a statute that requires the imposition of a 
consecutive term of imprisonment only if a term of imprisonment is 
imposed (i.e., the statute does not otherwise require a term of 
imprisonment to be imposed). See, e.g., 18 U.S.C. 3146 (Penalty for 
failure to appear); 18 U.S.C. 924(a)(4) (regarding penalty for 18 
U.S.C. 922(q)(possession or discharge of a firearm in a school zone)). 
Accordingly, the multiple count rules set out under this Part do apply 
to a count of conviction under this type of statute.''.
    The Commentary to Sec. 3D1.2 captioned ``Application Notes'' is 
amended in Note 1 by striking ``mandates imposition of a consecutive 
sentence'' and inserting ``(A) specifies a term of imprisonment to be 
imposed; and (B) requires that such term of imprisonment be imposed to 
run consecutively to any other term of imprisonment''; and by inserting 
``; id., comment.(n.1)'' following ``Sec. 3D1.1(b)''.
    Section 5G1.2(a) is amended by striking ``mandates imposition of a 
consecutive sentence'' and inserting ``(1) specifies a term of 
imprisonment to be imposed; and (2) requires that such term of 
imprisonment be imposed to run consecutively to any other term of 
imprisonment''; and by inserting ``by the statute'' following 
``determined''.
    The Commentary to Sec. 5G1.2 is amended in the last paragraph by 
striking:
    ``Counts for which a statute mandates a consecutive sentence, such 
as counts charging the use of a firearm in a violent crime (18 U.S.C. 
924(c)) are treated separately. The sentence imposed on such a count is 
the sentence indicated for the particular offense of conviction. That 
sentence then runs consecutively to the sentences imposed on the other 
counts.'',

and inserting:

    ``Subsection (a) applies if a statute (a) specifies a term of 
imprisonment to be imposed; and (b) requires that such term of 
imprisonment be imposed to run consecutively to any other term of 
imprisonment. See, e.g., 18 U.S.C. 924(c) (requiring mandatory term of 
five years to run consecutively to any other term of imprisonment). The 
term of years to be imposed consecutively is determined by the statute 
of conviction, and is independent of a guideline sentence on any other 
count.'';

by inserting ``, e.g.,'' following ``See''; and by adding at the end 
the following:

    ``Subsection (a) also applies in certain other instances in which 
an independently determined and consecutive sentence is required. See, 
e.g., Application Note 3 of the Commentary to Sec. 2J1.6 (Failure to 
Appear by Defendant), relating to failure to appear for service of 
sentence.''.
(E) Imposters and the Abuse of Trust Adjustment

Synopsis of Proposed Amendment

    This amendment addresses the circuit conflict regarding whether the 
abuse of position of trust adjustment in Sec. 3B1.3 applies to 
imposters. The majority view defines the scope of the adjustment to 
include imposters. See United States v. Gill, 99 F.3d 484 (1st Cir. 
1996); United States v. Queen, 4 F.3d 925 (10th Cir. 1993), cert. 
denied, 510 U.S. 1182 (1994). The minority view defines the scope of 
the enhancement to exclude imposters. See United States v. Echevarria, 
33 F.3d 175 (2d Cir. 1994). The proposed amendment provides that the 
abuse of position of trust adjustment applies to the imposter who 
indicates that he legitimately holds a position of trust when in fact 
he does not and gives two examples of such circumstances.

Proposed Amendment

    The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is 
amended in Note 1 in the third sentence by inserting ``public or 
private'' following ``position of''; in the fourth sentence by striking 
``would apply'' and inserting ``applies''; and in the last sentence by 
striking ``would'' and inserting ``does.''.
    The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is 
amended by redesignating Note 2 as Note 3 and inserting the following 
as new Note 2:
    ``2. This enhancement also applies in a case in which the defendant 
provides sufficient indicia to the victim that the defendant 
legitimately holds a position of private or public trust when, in fact, 
the defendant does not. For example, the enhancement applies in the 
case of a defendant who (A) perpetrates a financial fraud by leading an 
investor to believe the defendant is a legitimate investment broker; or 
(B) perpetrates a fraud by representing falsely to a patient or 
employer that the defendant is a licensed physician. In making the 
misrepresentation, the defendant assumes a position of trust, relative 
to the victim, that provides the defendant with the same opportunity to 
commit a difficult-to-detect crime that the defendant would have had if 
the position were held legitimately.''.
    The Commentary to Sec. 3B1.3 captioned ``Background'' is amended by 
inserting after the first sentence the following:
    ``The adjustment also applies to persons who provide sufficient 
indicia to the victim that they legitimately hold

[[Page 631]]

a position of public or private trust when, in fact, they do not.''.
    Issue for Comment: The Commission invites comment on whether, in 
reference to the above proposed amendment, it should amend Sec. 3B1.3 
to provide that the adjustment does not apply to an imposter (i.e., an 
individual who poses as an individual in a position of public or 
private trust).
(F) Instant Offense and Obstruction of Justice

Synopsis of Proposed Amendment

    This amendment addresses the circuit conflict regarding whether the 
term ``instant offense'', as used in the obstruction of justice 
guideline, Sec. 3C1.1, includes obstructions that occur in cases 
closely related to the defendant's case or only those specifically 
related to the ``offense of conviction''. Three options are presented. 
Option One (a), the majority view, defines the scope of the adjustment 
broadly to apply to obstructions of justice in closely related cases. 
See United States v. Powell, 113 F.3d 464 (3d Cir.), cert. denied, 118 
S.Ct. 454 (1997); United States v. Walker, 119 F.3d 403 (6th Cir.), 
cert. denied, __ S. Ct. __, 1997 WL 739733, (U.S., Dec. 15, 1997); 
United States v. Acuna, 9 F.3d 1442 (9th Cir. 1993); United States v. 
Bernaugh, 969 F.2d 858 (10th Cir. 1992). Option One (b) is a variation 
of the majority view, which (1) clarifies the temporal element of the 
obstruction guideline (that the obstructive conduct must occur during 
the investigation, prosecution, or sentencing of the defendant's 
offense of conviction); and (2) instructs that the obstruction must 
relate to either the defendant's offense of conviction or to a closely 
related case, such as that of a co-defendant. Option Two, the minority 
view, defines the scope of the adjustment narrowly to apply only to 
obstructions of justice directly connected to the offense of 
conviction. See United States v. Perdomo, 927 F.2d 111 (2d Cir. 1991); 
United States v. Partee, 31 F.3d 529 (7th Cir. 1994).

Proposed Amendment

    [Option 1(a): The Commentary to Sec. 3C1.1 captioned ``Application 
Notes'' is amended by redesignating Notes 1 through 8 as Notes 2 
through 9, respectively; and by inserting the following as new Note 1:
    ``1. For purposes of this guideline--
    `Instant offense' means the offense of which the defendant is 
convicted and any state or federal offense committed by the defendant 
or another person that is closely related to the offense of 
conviction.''.
    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended in Note 4(b), as redesignated, by inserting before the 
semicolon the following:

``during the investigation, prosecution, or sentencing of the 
defendant's instant offense (see definition in Application Note 1)''.]

    [Option 1(b): Section 3C1.1 is amended by inserting ``(A)'' 
following ``justice''; by inserting ``the course of'' following 
``during'' and by inserting ``of conviction, and (B) the obstructive 
conduct related to the defendant's offense of conviction or a closely 
related offense'' following ``instant offense''.
    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended by redesignating Notes 1 through 8 as Note 2 through 9, 
respectively; and by inserting the following as new Note 1:
    ``1. This adjustment applies if the defendant's obstructive conduct 
(A) occurred during the course of the investigation, prosecution, or 
sentencing of the defendant's instant offense of conviction, and (B) 
related to the defendant's offense of conviction or a closely related 
case, such as that of a co-defendant.''.]
    [Option 2: Section 3C1.1 is amended by inserting ``of conviction'' 
following ``instant offense''.
    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended by redesignating Notes 1 through 8 as Note 2 through 9, 
respectively; and by inserting the following as new Note 1:
    ``1. This adjustment applies if the defendant's obstructive conduct 
(A) occurred during the course of the investigation, prosecution, or 
sentencing of the defendant's instant offense of conviction, and (B) 
related solely to the defendant's instant offense of conviction.''.
    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended in Note 4, as redesignated, in the last paragraph by striking 
``where'' and inserting ``of conviction if''.
    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended in Note 5(a), as redesignated, by inserting ``of conviction'' 
after ``instant offense''.]
(G) Failure to Admit Drug Use While on Pretrial Release

Synopsis of Proposed Amendment

    This amendment addresses the circuit conflict regarding whether 
lying to a probation officer about drug use while out on bail warrants 
the obstruction of justice adjustment. Compare United States v. 
Belletiere, 971 F.2d 961 (3d Cir. 1992); United States v. Thompson, 944 
F.2d 1331 (7th Cir. 1994), cert. denied, 502 U.S. 1097 (1992) with 
United States v. Garcia, 20 F.3d 670 (6th Cir. 1994), cert. denied, 513 
U.S. 1159 (1995). The amendment adopts the majority view and excludes 
from application of Sec. 3C1.1 a defendant's denial of drug use while 
on pre-trial release.

Proposed Amendment

    The Commentary to Sec. 3C1.1 captioned ``Application Notes'' is 
amended in Note 4 in the first sentence of the first paragraph by 
striking ``enhancement'' and inserting ``adjustment''; and by inserting 
``or affect the determination of whether other guideline adjustments 
apply (e.g., Sec. 3E1.1 (Acceptance of Responsibility))'' following 
``guideline range''; in the second sentence by striking ``enhancement'' 
and inserting ``adjustment''; and by adding at the end the following 
new subdivision:
    ``(e) lying to a probation or pretrial services officer about 
defendant's drug use while on pre-trial release, although such conduct 
may be a factor in determining whether to reduce the defendant's 
sentence under Sec. 3E1.1 (Acceptance of Responsibility).''.
(H) Meaning of ``Incarceration'' for Computing Criminal History

Synopsis of Proposed Amendment

    This amendment addresses the circuit conflict regarding whether 
confinement in a community treatment center or halfway house following 
revocation of parole, probation, or supervised release qualifies as 
``incarceration'' in determining the defendant's subsequent criminal 
history score. Two options are presented. Option One (the Sixth Circuit 
view) includes confinement in a community treatment center, halfway 
house, or home detention following revocation of parole, probation, or 
supervised release in the definition of incarceration in determining 
the defendant's subsequent criminal history score. See United States v. 
Rasco, 963 F.2d 132 (6th Cir.), cert denied, 506 U.S. 883 (1992). 
Option Two (the Ninth Circuit view) excludes confinement in a community 
treatment center, halfway house, or home detention following revocation 
of parole, probation, or supervised release from the definition of 
incarceration in determining the defendant's subsequent criminal 
history score. See United States v. Latimer, 991 F.2d 1509 (9th Cir. 
1992).

Proposed Amendment

    [Option 1: The Commentary to Sec. 4A1.2 captioned ``Application 
Notes'' is amended in Note 8 by striking ``Section'' and inserting 
``Sections''; by striking ``establishes'' and inserting

[[Page 632]]

``establish''; by inserting ``the offense of conviction and'' following 
``includes''; by striking ``. See'' and inserting ``within the scope 
of''; by striking ``(Relevant Conduct)'' following ``Sec. 1B1.3'' and 
by adding at the end the following new paragraph:
    ``Consistent with subsection (k) and Application Note 11 of this 
guideline, a term of imprisonment imposed upon revocation of probation, 
parole, or supervised release is considered part of the original 
sentence of imprisonment, even if the term of imprisonment imposed upon 
revocation was served in home detention, a community treatment center, 
or a halfway house. For example, for purposes of determining the 
applicable time period under Sec. 4A1.2(e)(1), a prior sentence of 
imprisonment that is not within the 15-year time period nevertheless 
will be countable if the defendant (A) was placed on probation, parole, 
or supervised release for that offense and (B) was sentenced to a term 
of imprisonment for revocation of the probation, parole, or supervised 
release within 15 years of the defendant's commencement of the instant 
offense.''.]
    [Option 2: The Commentary to Sec. 4A1.2 captioned ``Application 
Notes'' is amended in Note 8 by striking ``Section'' and inserting 
``Sections''; by striking ``establishes'' and inserting ``establish''; 
and by adding at the end the following new paragraphs:
    ``For purposes of subsection (d)(2), home detention and confinement 
in a halfway house or community treatment center, when imposed upon 
revocation of probation, parole, or supervised release, are not within 
the meaning of `sentence to confinement.'
    For purposes of subsection (e), home detention and confinement in a 
halfway house or community treatment center, when imposed upon 
revocation or probation, parole, or supervised release, are not with 
the meaning of `sentence of imprisonment.' ''.]
(I) Diminished Capacity

Synopsis of Proposed Amendment

    This amendment addresses the circuit conflict regarding whether a 
diminished capacity departure is precluded if the defendant committed a 
``crime of violence'' as that term is defined in the career offender 
guideline. Four options are presented.
    Option One (the majority view) defines the scope of the departure 
narrowly to exclude all offenses that would be crimes of violence under 
the career offender guideline. See United States v. Poff, 926 F.2d 588 
(7th Cir.)(en banc), cert. denied, 502 U.S. 827 (1991); United States 
v. Maddelena, 893 F.2d 815 (6th Cir. 1989), cert. denied, 502 U.S. 882 
(1991); United States v. Mayotte, 76 F.3d 887 (8th Cir. 1996); United 
States v. Borrayo, 898 F.2d 91 (9th Cir. 1989); United States v. Rosen, 
896 F.2d 789 (3d Cir. 1990); United States v. Dailey, 24 F.3d 1323 
(11th Cir. 1994). Option Two (the minority view) defines the scope of 
the departure broadly to allow consideration of the facts and 
circumstances surrounding the commission of the crime in determining 
whether a defendant is dangerous. See United States v.  Chatman, 986 
F.2d 1446 (D.C. Cir. 1993); United States v. Weddle, 30 F.3d 532 (4th 
Cir. 1994). Option Three (a variation of the minority view) defines the 
scope of the departure to exclude cases that involve actual violence or 
a serious threat of violence. Option Four defines the scope of the 
departure broadly by removing the ``nonviolent offense'' limitation.

Proposed Amendment

    [Option 1: Section 5K2.13 is amended by striking ``a non-violent 
offense'' and inserting ``an offense other than a crime of violence''; 
by striking ``lower'' before ``sentence''; and by inserting ``below the 
applicable guideline range'' following ``sentence''.
    Section 5K2.13 is amended by adding at the end the following new 
Commentary:

Commentary

Application Note
    1. `Crime of violence' is defined in Sec. 4B1.2 (Definitions of 
Terms Used in Section 4B1.1).''.]
    [Option 2: Section 5K2.13 is amended by striking ``lower'' before 
``sentence''; by inserting ``below the applicable guideline range'' 
following ``sentence''; and by striking:

``to reflect the extent to which reduced mental capacity contributed to 
the commission of the offense, provided that the defendant's criminal 
history does not indicate a need to protect the public'',

and inserting:

    ``In determining whether an offense is non-violent, the court 
should consider the totality of the facts and circumstances of the 
offense. If the facts and circumstances of the offense or the 
defendant's criminal history indicate the defendant is dangerous such 
that there is a need for incarceration to protect the public, a 
departure under this policy statement is not warranted. If a departure 
is warranted, the departure should reflect the extent to which reduced 
mental capacity contributed to the commission of the offense.''.]

    [Option 3: Section 5K2.13 is amended by striking the text in its 
entirety as follows:

    ``If the defendant committed a non-violent offense while suffering 
from significantly reduced mental capacity not resulting from voluntary 
use of drugs or other intoxicants, a lower sentence may be warranted to 
reflect the extent to which reduced mental capacity contributed to the 
commission of the offense, provided that the defendant's criminal 
history does not indicate a need for incarceration to protect the 
public.'',

and inserting:

    ``A sentence below the applicable guideline range may be warranted 
if the defendant committed the offense while suffering from a 
significantly reduced mental capacity. However, the court may not 
depart below the applicable guideline range if (1) the significantly 
reduced mental capacity was caused by the voluntary use of drugs or 
other intoxicants; (2) the facts and circumstances of the defendant's 
offense indicate a need to protect the public because the offense 
involved actual violence or a serious threat of violence; or (3) the 
defendant's criminal history indicates a need to incarcerate the 
defendant to protect the public. If a departure is warranted, the 
extent of the departure should reflect the extent to which the reduced 
mental capacity contributed to the commission of the offense.

Commentary

Application Note
    1. For purposes of this policy statement--
    `Significantly reduced mental capacity' means the defendant is 
unable to (A) understand the wrongfulness of the behavior comprising 
the offense or to exercise the power of reason; or (B) control behavior 
that the defendant knows is wrongful.''.]
    [Option 4: Section 5K2.13 is amended by striking ``a non-violent'' 
and inserting ``the''; by striking ``lower'' before ``sentence''; by 
inserting ``below the applicable guideline range'' following 
``sentence''; by striking ``provided that the defendant's criminal 
history does not'' and inserting ``unless the nature and circumstances 
of the offense or the defendant's criminal history''.]
    Issue for Comment: The Commission invites comment on whether Policy 
Statement 5K2.0 (Grounds for Departure) should be amended to

[[Page 633]]

incorporate the analysis and holding of the United States Supreme Court 
decision in Koon v. United States, 116 S.Ct. 2035 (1996). If so, how 
should the policy statement be amended to accomplish this objective?

Homicide

Chapter Two, Part A

8. Issue for Comment (Homicide)

    In 1997, the Commission undertook an in-depth examination of the 
manslaughter guidelines, Sec. 2A1.3 (Voluntary Manslaughter), and 
Sec. 2A1.4 (Involuntary Manslaughter), and the statutory penalties for 
these offenses, to determine whether the guideline and/or statutory 
penalties need to be adjusted. The Commission formed a staff working 
group to analyze data on manslaughter cases sentenced under the 
guidelines, to review how states have sentenced manslaughter cases, and 
to assess the appropriate relationship (particularly with respect to 
offense levels) of the manslaughter guidelines to the other homicide 
guidelines; i.e., those for first and second degree murder, Secs. 2A1.1 
and 2A1.2. The Commission also held a public hearing on November 12, 
1997, to address the issue of appropriate sentences for manslaughter 
offenses. As a consequence of that hearing and the preliminary analyses 
of the Working Group, the Commission has expanded the investigation to 
include the sentencing guidelines applicable to other forms of 
homicide.
    In connection with its further review and possible amendment of the 
homicide guidelines, the Commission requests comment on the following 
issues:
(A) Second Degree Murder (Sec. 2A1.2)
    (1) Are the guideline penalties for this offense appropriate 
relative to those for voluntary manslaughter, assault, and other 
violent offenses? Specifically, should the base offense level under 
Sec. 2A1.2 be increased from level 33 and, if so, by what amount?
    (2) Should Sec. 2A1.2 be amended to add specific offense 
characteristics for any aggravating or mitigating factors and, if so, 
what factors? Alternatively, should an application note encouraging 
departure be added for any such factors?
(B) Voluntary Manslaughter (Sec. 2A1.3)
    (1) Are the guideline penalties for this offense appropriate 
relative to those for second degree murder, aggravated assault, assault 
with intent to kill, and other violent offenses?
    Specifically, should the base offense level under Sec. 2A1.3 be 
increased and, if so, by what amount? For example, one option would be 
to increase the base offense level from level 25 (i.e., a guideline 
range of 57-71 months for a defendant in criminal history category I 
with no adjustments) to level 28 (i.e., a guideline range of 78-97 
months for such a defendant).
    (2) Should a specific offense characteristic, or an application 
note encouraging an upward departure, be added to account for prior 
violent conduct, such as a pattern of domestic abuse?
    (3) Should an application note be added requiring a minimum period 
of supervised release and a condition of participation in a substance 
abuse program in a case in which alcohol or drug abuse was involved in 
the offense?
(C) Involuntary Manslaughter (Sec. 2A1.4)
    (1) The Commission's examination of sentencing data indicate that 
the heartland of involuntary manslaughter is alcohol-related vehicular 
homicide. Currently under the guideline, a base offense level of level 
14 (i.e., 15-21 months for a defendant in criminal history category I 
with no adjustments) applies to such reckless conduct. The Commission 
invites comment on whether the guideline penalties for this and other 
forms of involuntary manslaughter are appropriate relative to those for 
other offenses.
    Specifically, should the base offense level applicable to reckless 
conduct or, alternatively, vehicular homicides, be increased and, if 
so, by what amount? For example, one option would be to increase the 
base offense level for reckless conduct to level 17 (i.e., 24-30 months 
for a defendant in criminal history category I with no adjustments).
    (2) Should specific offense characteristics be added for (i) prior 
offenses for driving under the influence of alcohol that are not 
counted in criminal history; (ii) driving without a license (in a 
jurisdiction where a license is required), or driving with a revoked or 
suspended license; (iii) multiple deaths; (iv) causing a substantial 
risk of harm to innocent ``bystanders''; or (v) ``road rage'' that 
proximately resulted in the vehicular homicide? Alternatively, should 
an application note be added encouraging upward departure for any of 
these factors?
    (3) Should an application note be added requiring a minimum period 
of supervised release and a condition of participation in a substance 
abuse program in a case in which alcohol or drug abuse was involved in 
the offense?
    (4) In addition to, or in lieu of, proposed amendments to the 
Involuntary Manslaughter guideline, the Commission invites comment on 
alternative approaches that, arguably, may be more effective in 
preventing vehicular homicide offenses. For example, should steps be 
taken to punish more severely and/or uniformly the underlying conduct 
of driving under the influence of alcohol or drugs (DUI)? What actions 
might the Commission take that would most effectively address these 
contributing problems?

(D) Closely Related Guidelines:

    If the Commission amends any of the guidelines referenced above in 
the manner indicated, should it also amend other homicide or closely 
related guidelines (e.g., Sec. 2A1.5 (Conspiracy or Solicitation to 
Commit Murder), Sec. 2A2.1 (Assault With Intent to Commit Murder; 
Attempted Murder)) in order to maintain proportionality among penalties 
for the offenses covered by these guidelines? If so, how should such 
guidelines be amended?

Legislative Amendments

Electronic Copyright Infringement

9. Issue for Comment
    The No Electronic Theft Act, Public Law 105-147, was recently 
enacted to provide a statutory basis to prosecute and punish persons 
who, without authorization and without realizing financial gain or 
commercial advantage, electronically access copyrighted materials or 
encourage others to do so. The Act includes a directive to the 
Commission to (A) ensure that the applicable guideline range for a 
crime committed against intellectual property (including offenses set 
forth at section 506(a) of title 17, United States Code, and sections 
2319, 2319A, and 2320 of title 18, United States Code) is sufficiently 
stringent to deter such a crime; and (B) ensure that the guidelines 
provide for consideration of the retail value and quantity of the items 
with respect to which the crime against intellectual property was 
committed.
    Each of the statutes mentioned in the congressional directive 
currently are referenced to Sec. 2B5.3 (Criminal Infringement of 
Copyright or Trademark). That guideline provides for incrementally 
greater punishment when the retail value of the infringing items 
exceeded $2,000. However, when copyrighted materials are infringed upon 
by electronic means, there is no ``infringing item'', as would be the 
case with counterfeited goods. Therefore, the Commission must determine 
how to value the infringed upon items in order to implement the 
congressional directive to take into account the retail value and 
quantity of the items with respect to which the offense was

[[Page 634]]

committed. The Commission invites comment on how Sec. 2B5.3 (Criminal 
Infringement of Copyright or Trademark) should be amended to best 
effectuate the congressional directives.
    An approach suggested by the Department of Justice is set forth 
below. The Commission invites comment on this and alternative 
proposals.
    Department of Justice Proposed Amendments to Sec. 2B5.3:
    The text of Sec. 2B5.3 is amended to read as follows: ``(a) Base 
offense level: [6]
    (b) Specific Offense Characteristic
    (1) If the loss to the copyright or trademark exceeded $2,000, 
increase by the corresponding number of levels from the table in 
Sec. 2F1.1 (Fraud and Deceit).''.
    The Commentary to Sec. 2B5.3 captioned ``Application Note'' is 
amended in Note 1 by striking:
    `` `Infringing items' means the items that violate the copyright or 
trademark laws (not the legitimate items that are infringed upon).'',

and inserting:

    ``A court may calculate the `loss to the copyright or trademark 
owner' in any reasonable manner. In determining `loss to the copyright 
or trademark owner,' the court may consider lost profits, the value of 
the infringed upon items, the value of the infringing items, the injury 
to the copyright or trademark owner's reputation, and other associated 
harms.''.
    The Commentary to Sec. 2B5.3 captioned ``Application Note'' is 
amended by striking ``Note'' and inserting ``Notes''; and by adding at 
the end the following new note:
    ``2. In some cases, the calculable loss to the victim understates 
the true harm caused by the offense. For example, a defendant may post 
copyrighted material to an electronic bulletin board or similar online 
facility, making it easy for others to illegally obtain and further 
distribute the material. In such an instance, it may not be possible to 
determine or even estimate how many copies were downloaded, or how much 
damage the defendant's conduct ultimately caused. In such cases, an 
upward departure may be warranted. See Chapter Five, Part K 
(Departures).''.
    The Commentary to Sec. 2B5.3 captioned ``Background'' is amended in 
the first paragraph by striking ``value of the infringing items'' and 
inserting ``loss to the copyright or trademark owner''; and by striking 
``loss or''.

Offenses Against Property of National Cemetery

10. Synopsis of Proposed Amendment
    This amendment implements the directive to the Commission in the 
Veteran's Cemetery Protection Act of 1997. That Act directs the 
Commission to provide a sentence enhancement of not less than two 
levels for any offense against the property of a national cemetery.

Proposed Amendment

    Section 2B1.1(b) is amended by adding at the end the following new 
subdivision:
    ``(8) If the offense involved theft of property from a national 
cemetery, increase by [2] levels.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended in Note 1 by adding at the end the following new paragraph:
    `` `National cemetery' means a cemetery (A) established under 
section 2400 of title 38, United States Code, or (B) under the 
jurisdiction of the Secretary of the Army, the Secretary of the Navy, 
the Secretary of the Air Force, or the Secretary of the Interior.''.
    The Commentary to Sec. 2B1.1 captioned ``Background'' is amended by 
adding at the end the following new paragraph:
    ``Subsection (b)(8) implements the instruction to the Commission in 
Section 2 of Public Law 105 101.''.
    Section 2B1.3(b) is amended by redesignating subdivision (3) as 
subdivision (4) and inserting the following as the new subdivision (3):
    ``(3) If property of a national cemetery was damaged or destroyed, 
increase by [2] levels.''
    The Commentary to Sec. 2B1.3 captioned ``Application Notes'' is 
amended in Note 1 by adding at the end the following new paragraph:
    `` `National cemetery' means a cemetery (A) established under 
section 2400 of title 38, United States Code, or (B) under the 
jurisdiction of the Secretary of the Army, the Secretary of the Navy, 
the Secretary of the Air Force, or the Secretary of the Interior.''.
    The Commentary to Sec. 2B1.3 captioned ``Background'' is amended by 
inserting the following as the first paragraph:
    ``Subsection (b)(3) implements the instruction to the Commission in 
Section 2 of Public Law 105-101.''.
    Section 2K1.4 (b) is amended by striking ``Characteristic'' and 
inserting ``Characteristics'' and by adding at the end the following 
new subdivision:
    ``(2) If the base offense level is not determined under (a)(4), and 
the offense occurred on a national cemetery, increase by [2] levels.''.
    The Commentary to Sec. 2K1.4 captioned ``Application Notes'' is 
amended by adding at the end the following new note and background 
commentary:
    ``4. `National cemetery' means a cemetery (A) established under 
section 2400 of title 38, United States Code, or (B) under the 
jurisdiction of the Secretary of the Army, the Secretary of the Navy, 
the Secretary of the Air Force, or the Secretary of the Interior.
    Background: Subsection (b)(2) implements the directive to the 
Commission in Section 2, Public Law 105-101.''.
    Issue for Comment: The Commission invites comment on whether, in 
addition to the increases provided in the proposed amendments to 
guidelines Sec. 2B1.1, 2B1.3, and 2K1.4, these guidelines also should 
be amended to provide a minimum or ``floor'' offense level for a crime 
that involves theft, vandalism, or destruction of property of a 
national cemetery.

Expansion of Prohibited Person in Firearm Guideline

    11. Synopsis of Proposed Amendment
    This is a two part amendment. First, this amendment addresses 
section 658 of the Treasury, Postal Service, and General Government 
Appropriations Act, 1997 (contained in the Omnibus Consolidated 
Appropriations Act for Fiscal Year 1997). Section 658 amended 18 U.S.C. 
922(d) to prohibit the sale of a firearm or ammunition to a person who 
has been convicted in any court of a misdemeanor crime of domestic 
violence. It also amended 18 U.S.C. 922(g) to prohibit a person who has 
been convicted in any court of a misdemeanor crime of domestic violence 
from transporting or receiving a firearm or ammunition. Section 
922(s)(3)(B)(i), which lists what a person not licensed under 18 U.S.C. 
923 must include in a statement to the handgun importer, manufacturer, 
or dealer, is amended to require certification that the person to whom 
the gun is transferred was not convicted in any court of a misdemeanor 
crime of domestic violence. Section 658 also amended 18 U.S.C. 921(a) 
to define ``misdemeanor crime of domestic violence''.
    Violations of 18 U.S.C. 922(d) and (g) are covered by the firearms 
guideline, Sec. 2K2.1. The new provisions at section 922(d) (sale of a 
firearm to a ``prohibited person'') and section 922(g) (transporting, 
possession, and receipt of a firearm by a ``prohibited person'') affect 
Application Note 6 of Sec. 2K2.1, which defines ``prohibited person''. 
The proposed amendment amends Application Note 6 to include a person 
convicted of a misdemeanor crime of domestic violence within the scope 
of ``prohibited person''. It also defines ``misdemeanor crime of 
domestic violence'' by reference to the new statutory definition of 
that term.

[[Page 635]]

    Second, this amendment increases the base offense level for a 
defendant who knowingly sells to a prohibited person. This proposal is 
presented in response to a proposed directive contained in juvenile 
justice legislation approved by the Senate Judiciary Committee early in 
1997. That legislation is likely to be considered by the Senate early 
in 1998. The House of Representatives passed two juvenile justice bills 
in 1997; however, no House passed bill includes this specific proposal, 
which originated with the Department of Justice. The legislative 
provision would require the Commission to increase the base offense 
level for offenses subject to the firearms guideline, Sec. 2K2.1, to 
assure that a person who transferred a firearm and who knew that the 
transferee was a prohibited person is subject to the same base offense 
level as the transferee.
    This proposal amends the two alternative base offense levels that 
pertain to prohibited persons in the firearms guideline to carry out 
the legislative provision described above. The pertinent base offense 
level structure under the current firearms guideline is as follows:
    (1) A base offense level of 14 applies if the defendant is a 
prohibited person.
    (2) A base offense level of 12 applies to a defendant who 
transferred a firearm to a prohibited person (and to a variety of other 
firearms offenses).
    (3) A base offense level of 20 applies if the defendant is a 
prohibited person and the offense involved certain modified shotguns, 
other unusual weapons, or semiautomatic assault weapons.
    (4) A base offense level of 18 applies to a defendant who 
transferred such a weapon to a prohibited person.
    The proposed amendment makes level 14 (instead of level 12) 
applicable to a defendant who knowingly transfers a firearm to a 
prohibited person and makes level 20 (instead of level 18) applicable 
to a defendant who transfers a weapon described in paragraph (3) above 
to a prohibited person.
    Note that the pending legislative directive would require the 
specified offense level increases only in those cases in which the 
defendant transferor knew that the transferee was a prohibited person. 
The draft amendment presented below also raises the policy option, 
shown in brackets, of whether the same, heightened offense levels 
should apply if the transferor lacked actual knowledge but did have 
``reasonable cause to believe'' that the transferee was a prohibited 
person. The latter, less demanding mental state suffices for conviction 
under the relevant statute (18 U.S.C. 922(d)).

Proposed Amendment

    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended in Note 6 by striking ``or'' before ``(vi)''; and by inserting 
the following before the period:

``; or (vii) has been convicted in any court of a misdemeanor crime of 
domestic violence as defined in 18 U.S.C. 921(a)(33)''.

    Section 2K2.1(a)(4) is amended by striking ``the defendant''; by 
inserting ``the defendant'' after ``(A)''; by striking ``is a 
prohibited person, and'' after ``(B)''; and in subdivision (B) by 
inserting the following before the semicolon:

``; and the defendant (i) is a prohibited person; or (ii) transferred 
the firearm to a prohibited person and knew [or had reasonable cause to 
believe] that the transferee was a prohibited person''.

    Section 2K2.1(a)(6) is amended by inserting ``(A)'' after 
``defendant''; and by inserting ``; or (B) transferred the firearm to a 
prohibited person and knew [or had reasonable cause to believe] that 
the transferee was a prohibited person'' before ``; or''.

Conditions of Probation and Supervised Release

12. Synopsis of Proposed Amendment
    This is a three-part amendment that corrects a number of omissions 
arising out of the 1996-97 reworking of the guidelines related to 
conditions of probation, Sec. 5B1.3, and supervised release, 
Sec. 5D1.3.
    First, the amendment adds to Sec. 5B1.3 a condition of probation 
regarding deportation, in response to Sec. 374 of the Illegal 
Immigration Reform and Immigrant Responsibility Act of 1996. That 
section amended 18 U.S.C. 3563(b) to add a new discretionary condition 
of probation, reflected in the amendment below, with respect to 
deportation.
    Second, this amendment deletes the reference in the supervised 
release guideline to ``just punishment'' as a reason for the imposition 
of curfew as a condition of supervised release. The need to provide 
``just punishment'' is not included in 18 U.S.C. 3583(c) as a factor to 
be considered in imposing a term of supervised release.
    Third, this amendment amends the guidelines pertaining to 
conditions of probation and supervised release to indicate that 
discretionary (as opposed to mandatory) conditions are policy 
statements of the Commission, not binding guidelines.

Proposed Amendment

    Section 5B1.3(d) is amended by adding at the end the following new 
subdivision:
    ``(6) Deportation
    A condition ordering deportation by a United States district court 
or a United States magistrate judge if (A) the defendant and the United 
States entered into a stipulation of deportation pursuant to section 
238(d)(5) of the Immigration and Nationality Act; or (B) in the absence 
of a stipulation of deportation, if, after notice and hearing pursuant 
to such section, the Attorney General demonstrates by clear and 
convincing evidence that the alien is deportable.''.
    Section 5D1.3(d) is amended by adding at the end the following new 
subdivision:
    ``(6) Deportation
    A condition ordering deportation by a United States district court 
or a United States magistrate judge if (A) the defendant and the United 
States entered into a stipulation of deportation pursuant to section 
238(d)(5) of the Immigration and Nationality Act; or (B) in the absence 
of a stipulation of deportation, if, after notice and hearing pursuant 
to such section, the Attorney General demonstrates by clear and 
convincing evidence that the alien is deportable.''.
    Section 5D1.3(e)(5) is amended by striking ``to provide just 
punishment for the offense,''.
    Section 5B1.3(c) is amended by inserting ``(Policy Statement)'' 
before ``The following''.
    Section 5B1.3(d) is amended by inserting ``(Policy Statement)'' 
before ``The following''.
    Section 5B1.3(e) is amended in the title by adding at the end 
``(Policy Statement)''.
    Section 5D1.3(c) is amended by inserting ``(Policy Statement)'' 
before ``The following''.
    Section 5D1.3(d) is amended by inserting ``(Policy Statement)'' 
before ``The following''.
    Section 5D1.3(e) is amended in the title by adding at the end 
``(Policy Statement)''.
[FR Doc. 98-91 Filed 1-5-98; 8:45 am]
BILLING CODE 2210-40-P