[Federal Register Volume 63, Number 229 (Monday, November 30, 1998)]
[Notices]
[Pages 65980-65993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31756]



[[Page 65979]]

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Part VI





United States Sentencing Commission





_______________________________________________________________________



Sentencing Guidelines for United States Courts; Notice

  Federal Register / Vol. 63, No. 229 / Monday, November 30, 1998 / 
Notices  

[[Page 65980]]



UNITED STATES SENTENCING COMMISSION


Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of intent to re-promulgate temporary, emergency 
amendment as permanent amendment; and other proposed amendments to 
sentencing guidelines, policy statements, and commentary. Request for 
public comment.

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SUMMARY: Pursuant to section 994(a), (o), and (p) of title 28, United 
States Code, and certain other provisions of law, the Commission is 
considering promulgating 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, 1999.
    Part I sets out the Commission's proposed re-promulgation of a 
telemarketing fraud amendment as a permanent amendment. On September 
23, 1998, the Commission submitted this telemarketing fraud amendment 
to Congress as a temporary, emergency amendment in response to the 
Telemarketing Fraud Protection Act of 1998, Pub. L. 105-184.
    Part II sets out a proposed ``Economic Crime Package.'' The 
Economic Crime Package developed from the Commission's work in the past 
two years to examine the sufficiency of guidelines covering certain 
economic crimes, particularly fraud, theft, and tax offenses. The 
primary focus of this examination has been: (1) To develop a loss table 
that incorporates the more-than-minimal-planning enhancement and 
increases sentence severity for large-dollar loss offenses; (2) to 
develop a loss definition that, among other things, is more consistent 
across offense types and easier to use; (3) to consolidate the theft, 
property destruction, and fraud guidelines in order to provide 
uniformity of applicable commentary; and (4) to make necessary 
conforming changes to all other guidelines that refer to the fraud and 
theft loss tables.
    Recent highlights of the Commission's work in this area include (1) 
soliciting, in January 1998, public comment on various amendment 
proposals and issues for comment (see 63 FR 602-25); (2) conducting, in 
March 1998, two public hearings, one of which (in San Francisco, 
California) was dedicated exclusively to economic crimes; (3) 
Commissioner consideration, in April 1998, of an ``economic crime 
package'' of amendments to the sentencing guidelines; and (4) 
conducting field testing, in the summer of 1998, of the proposed loss 
definition with the Criminal Law Committee of the Judicial Conference, 
probation officers, and other guideline users.
    The Economic Crime Package primarily is composed of the following: 
(1) The Theft, Property Destruction, and Fraud Package; (2) the Tax 
Package; (3) More than Minimal Planning Conforming Amendments; (4) 
Amendments for Referring Guidelines; and (5) Other Technical and 
Conforming Amendments. The proposed amendments in this part are 
presented 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, in a case in which the Commission is 
considering whether a particular enhancement should provide only a 
minimum offense level or a minimum offense level with an additional 
two-level increase, each option would appear in bracketed text. Second, 
the Commission has highlighted certain issues for comment and invites 
suggestions for specific guideline language.
    Part III proposes to make certain amendments to the probation and 
supervised release guidelines that are consistent with recently enacted 
legislation.
    Finally, Part IV presents several issues for which the Commission 
requests public comment.

DATES: The Commission will announce at a later date the deadline for 
public comment on these proposed amendments and issues for comment, and 
the date for any public hearing(s) that may be scheduled.

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

FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs 
Officer, 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. 994(p).

    (Note: The publication of these proposed amendments and issues 
for comment was approved before October 21, 1998.)

    Authority: 28 U.S.C. 994(a), (o), (p), (x); Pub. L. 105-184, 
section 6, June 23, 1998, 112 Stat. 520.

Richard P. Conaboy,
Chairman.

Part I--Notice of Proposed Re-Promulgation of Telemarketing Fraud 
Amendment as Permanent Amendment

    1. Synopsis of Proposed Amendment: On September 23, 1998, in 
response to directives contained in the Telemarketing Fraud Protection 
Act of 1998, Pub. L. 105-184, the Commission submitted to Congress a 
temporary, emergency amendment that provided (1) a two-level increase 
and a minimum offense level of level 12 in the fraud guideline 
(Sec. 2F1.1) for offenses that involve sophisticated means; and (2) a 
two-level increase in the vulnerable victim guideline (Sec. 3A1.1) for 
offenses that involve a large number of vulnerable victims. The 
amendment, particularly the sophisticated means enhancement, built upon 
and broadened an amendment submitted to Congress on May 1, 1998, which 
created an enhancement in Sec. 2F1.1 for sophisticated concealment. The 
Commission specified an effective date of November 1, 1998 for the 
emergency amendment.
    The Commission proposes to re-promulgate this amendment as a 
permanent, non-emergency amendment and submit it to Congress not later 
than May 1, 1999. Under the terms of the congressionally granted 
authority, the emergency amendment is temporary unless re-promulgated 
in the next amendment cycle under regularly applicable amendment 
procedures. See Pub. L. 100-182, Sec. 21, set forth as an editorial 
note under 28 U.S.C. Sec. 994.
    Proposed Amendment: Section 2F1.1(b) is amended by striking

[[Page 65981]]

subdivision (3) and all that follows through the end of the subsection 
and inserting the following:
    ``(3) If the offense was committed through mass-marketing, increase 
by 2 levels.
    (4) 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) violation of 
any judicial or administrative order, injunction, decree, or process 
not addressed elsewhere in the guidelines, increase by 2 levels. If the 
resulting offense level is less than level 10, increase to level 10.
    (5) If (A) the defendant relocated, or participated in relocating, 
a fraudulent scheme to another jurisdiction to evade law enforcement or 
regulatory officials; (B) a substantial part of a fraudulent scheme was 
committed from outside the United States; or (C) the offense otherwise 
involved sophisticated means, increase by 2 levels. If the resulting 
offense level is less than level 12, increase to level 12.
    (6) If the offense involved (A) the conscious or reckless risk of 
serious bodily injury; or (B) possession of a dangerous weapon 
(including a firearm) in connection with the offense, increase by 2 
levels. If the resulting offense level is less than level 13, increase 
to level 13.
    (7) If the offense--
    (A) substantially jeopardized the safety and soundness of a 
financial institution; or
    (B) affected a financial institution and the defendant derived more 
than $1,000,000 in gross receipts from the offense,

increase by 4 levels. If the resulting offense level is less than level 
24, increase to level 24.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by striking Application Note 14 and all that follows through 
the end of the Application Notes and inserting the following:
    ``15. For purposes of subsection (b)(5)(B), `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)(C), `sophisticated means' means 
especially complex or especially intricate offense conduct pertaining 
to the execution or concealment of an offense. For example, in a 
telemarketing scheme, locating the main office of the scheme in one 
jurisdiction but locating soliciting operations in another jurisdiction 
would ordinarily indicate sophisticated means. Conduct such as hiding 
assets or transactions, or both, through the use of fictitious 
entities, corporate shells, or offshore bank accounts also ordinarily 
would indicate sophisticated means.
    The enhancement for sophisticated means under subsection (b)(5)(C) 
requires conduct that is significantly more complex or intricate than 
the conduct that may form the basis for an enhancement for more than 
minimal planning under subsection (b)(2)(A).
    If the conduct that forms the basis for an enhancement under 
subsection (b)(5) is the only conduct that forms the basis for an 
adjustment under Sec. 3C1.1 (Obstruction of Justice), do not apply an 
adjustment under Sec. 3C1.1.
    16. `Financial institution,' as used in this guideline, is defined 
to include any institution described in 18 U.S.C. Secs. 20, 656, 657, 
1005-1007, and 1014; 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; any 
health, medical or hospital insurance association; brokers and dealers 
registered, or required to be registered, with the Securities and 
Exchange Commission; futures commodity merchants and commodity pool 
operators registered, or required to be registered, with the Commodity 
Futures Trading Commission; and any similar entity, whether or not 
insured by the federal government. `Union or employee pension fund' and 
``any health, medical, or hospital insurance association,'' as used 
above, 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.
    17. An offense shall be deemed to have `substantially jeopardized 
the safety and soundness of a financial institution' if, as a 
consequence of the offense, the institution became insolvent; 
substantially reduced benefits to pensioners or insureds; was unable on 
demand to refund fully any deposit, payment, or investment; was so 
depleted of its assets as to be forced to merge with another 
institution in order to continue active operations; or was placed in 
substantial jeopardy of any of the above.
    18. `The defendant derived more than $1,000,000 in gross receipts 
from the offense,' as used in subsection (b)(7)(B), generally means 
that the gross receipts to the defendant individually, rather than to 
all participants, exceeded $1,000,000. `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. Sec. 982(a)(4).
    19. If the defendant is convicted under 18 U.S.C. Sec. 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.'
    20. If subsection (b)(7) (A) or (B) applies, there shall be a 
rebuttable presumption that the offense involved `more than minimal 
planning.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by redesignating Notes 3 through 13 as Notes 4 through 14, 
respectively; and by inserting after Note 2 the following new Note 3:
    ``3. `Mass-marketing,' as used in subsection (b)(3), means a plan, 
program, promotion, or campaign that is conducted through solicitation 
by telephone, mail, the Internet, or other means to induce a large 
number of persons to (A) purchase goods or services; (B) participate in 
a contest or sweepstakes; or (C) invest for financial profit. The 
enhancement would apply, for example, if the defendant conducted or 
participated in a telemarketing campaign that solicited a large number 
of individuals to purchase fraudulent life insurance policies.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended in Note 1 by striking ``Sec. 2F1.1(b)(3)'' and inserting 
``Sec. 2F1.1(b)(4)''; in redesignated Note 5 (formerly Note 4), by 
striking ``(b)(3)(A)'' and inserting ``(b)(4)(A)''; and in redesignated 
Note 6 (formerly Note 5), by striking ``(b)(3)(B)'' and inserting 
``(b)(4)(B)''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by 
inserting after the fifth paragraph the following new paragraph:
    ``Subsection (b)(5) implements, in a broader form, the instruction 
to the Commission in section 6(c)(2) of Public Law 105-184.''.
    Section 3A1.1(b) is amended to read as follows:
    ``(b)(1) If the defendant knew or should have known that a victim 
of the offense was a vulnerable victim, increase by 2 levels.
    (2) If (A) subdivision (1) applies; and (B) the offense involved a 
large number of vulnerable victims, increase the offense level 
determined under subdivision (1) by 2 additional levels.''.

[[Page 65982]]

    The Commentary to Sec. 3A1.1 captioned ``Application Notes'' is 
amended in Note 2 in the first paragraph by striking `` `victim' 
includes any person'' before ``who is'' and inserting `` `vulnerable 
victim' means a person (A)''; and by inserting after ``(Relevant 
Conduct)'' the following:
    ``; and (B) who is unusually vulnerable due to age, physical or 
mental condition, or who is otherwise particularly susceptible to the 
criminal conduct''.
    The Commentary to Sec. 3A1.1 captioned ``Application Notes'' is 
amended in Note 2 in the second paragraph by striking ``where'' each 
place it appears and inserting ``in which''.
    The Commentary to Sec. 3A1.1 captioned ``Application Notes'' is 
amended in Note 2 in the third paragraph by striking ``offense 
guideline specifically incorporates this factor'' and inserting 
``factor that makes the person a vulnerable victim is incorporated in 
the offense guideline''.
    The Commentary to Sec. 3A1.1 captioned ``Background'' is amended by 
adding at the end the following additional paragraph:
    ``Subsection (b)(2) implements, in a broader form, the instruction 
to the Commission in section 6(c)(3) of Public Law 105-184.''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting ``United States'' before ``Virgin 
Islands''.

Part II--The Economic Crime Package

    In May, 1997, the Commission set as one of its priorities the 
systematic study and analysis of the guidelines for fraud, theft, and 
tax offenses. After approximately two years of data collection, 
analyses, public comment, and public hearings, the Commission developed 
a comprehensive ``Economic Crime Package''.
    The Economic Crime Package is composed of the following: (A) The 
Theft, Property Destruction, and Fraud Package; (B) the Tax Package; 
(C) More than Minimal Planning Conforming Amendments; (D) Amendments 
for Referring Guidelines; and (E) other technical and conforming 
amendments.
    In addition to seeking comment on the Economic Crime Package, the 
Commission invites suggestions for options, other than those presented 
in the Package, for treating theft, fraud, and tax offenses in the 
guidelines.

(A) The Theft, Property Destruction, and Fraud Package

    2. Synopsis of Proposed Amendment: The ``Theft, Property 
Destruction, and Fraud Package'' has the following principal features: 
(A) A consolidated theft, fraud, and property destruction guidelines; 
(B) a new loss table for fraud and theft offenses, with more than 
minimal planning ``built in''; and (C) a clarified loss definition.
    The new consolidated guideline begins with a base offense level of 
level 6. This base offense level has the effect of increasing the base 
offense level for theft and property destruction cases. However, this 
increase will be offset, for the most part, by a higher floor offense 
level in the new loss table for these offenses. The current loss table 
for theft and property destruction has its first offense level increase 
at amounts exceeding $100, whereas the offense level increase in the 
new loss table will begin at amounts exceeding $2000.
    The proposed guideline also provides for a loss table that builds 
more than minimal planning into the table, instead of maintaining this 
factor as a separate two-level enhancement. The first level from the 
former enhancement is built in at amounts exceeding $10,000; the second 
level is built in at amounts exceeding $20,000. The proposed loss table 
also provides an increase in offense level severity beginning at 
amounts exceeding $40,000. Because more than minimal planning is built 
into the loss table, the package also presents options for departure 
language that would either prohibit or discourage a departure from the 
guideline range based on more than minimal planning, or lack thereof.
    The enhancement for sophisticated means is included in the 
consolidated guideline based on the assumption that the enhancement, 
promulgated as a temporary, emergency amendment effective November 1, 
1998, will be re-promulgated as a permanent amendment during the next 
amendment cycle. (See, Part I--Notice of Re-Promulgation of 
Telemarketing Fraud Amendment as Permanent Amendment.) Other changes in 
the guideline structure include (A) the addition of risk of death to 
the risk of serious bodily injury enhancement and an increase in the 
floor offense level from level 13 to level 14 in this enhancement; (B) 
options for a floor offense level and offense level increase for the 
gross receipts enhancement; and (C) options for a bribery cross 
reference and other, general cross references.
    The clarified loss definition begins with the general rule that 
loss is the greater of actual loss or intended loss. The loss 
definition also: (A) Defines ``actual loss,'' ``reasonably 
foreseeable,'' and ``intended loss''; (B) provides flexibility in 
determining the loss amount, giving consideration to a number of 
factors; (C) provides that gain shall be used instead of loss if gain 
is greater than loss and more accurately reflects the seriousness of 
the offense; (D) provides rules for crediting amounts the defendant 
paid back to the victim; (E) provides special rules relating to certain 
kinds of cases, such as ``Ponzi'' schemes; (F) presents options on 
whether interest can be considered in the loss calculation; and (G) 
sets out upward and downward departure considerations.
    Proposed Amendment: Strike the heading to Part B of Chapter Two, 
the heading to Subpart 1 of Part B of Chapter Two, the Introductory 
Commentary to such subpart, Secs. 2B1.1, 2B1.3, and 2F1.1, and insert 
the following:

Part B--Basic Economic Offenses

1. Theft, Embezzlement, Receipt of Stolen Property, Property 
Destruction, Fraud, and Insider Trading

Introductory Commentary
    These sections address basic forms of property offenses: theft, 
embezzlement, fraud, forgery, counterfeiting (other than offenses 
involving altered or counterfeit bearer obligations of the United 
States), insider trading, transactions in stolen goods, and simple 
property damage or destruction. (Arson is dealt with separately in Part 
K, Offenses Involving Public Safety.) These guidelines apply to 
offenses prosecuted under a wide variety of federal statutes, as well 
as offenses that arise under the Assimilative Crimes Act.
    Sec. 2B1.1. Larceny, Embezzlement, and Other Forms of Theft; 
Offenses Involving 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) If the loss exceeded $2,000, increase the offense level as 
follows:

------------------------------------------------------------------------
         Loss (apply the greatest)                Increase in level
------------------------------------------------------------------------
(A) More than $2,000.......................  Add 1.
(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.

[[Page 65983]]

 
(N) More than $100,000,000.................  Add 26.
------------------------------------------------------------------------

    (2) If the offense involved theft from the person of another, 
increase by 2 levels.
    (3) 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.
    (4) 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.
    (5) If the offense was committed through mass-marketing, increase 
by 2 levels.
    (6) If (A) the offense involved theft of property from a national 
cemetery; or (B) property of a national cemetery was damaged or 
destroyed, increase by 2 levels.
    (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 the 
resulting offense level is less than 10, increase to level 10.
    (8) If (A) the defendant relocated, or participated in relocating, 
a fraudulent scheme to another jurisdiction to evade law enforcement or 
regulatory officials; (B) a substantial part of a fraudulent scheme was 
committed from outside the United States; or (C) the offense otherwise 
involved sophisticated means, increase by 2 levels. If the resulting 
offense level is less than level 12, increase to level 12.
    (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) in connection with the offense, increase by 2 
levels. If the resulting offense level is less than level 14, increase 
to level 14.
    (10) If (A) the offense involved an organized scheme to steal 
vehicles or vehicle parts, or to receive stolen vehicles or vehicle 
parts, 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.
    [Gross Receipts, Option 1: [(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.]
    [Gross Receipts, Option 2: [(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, increase by 2 levels. If the 
resulting offense level is less than level 24, increase to level 24.]

    [Note: The Commission also has the option to keep the current 4-
level enhancement (as well as the floor) gross receipts SOC.]

    (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 (A) arson; or (B) property destruction 
by use of explosives, apply Sec. 2K1.4 (Arson: Property Destruction by 
Use of Explosives).
    [(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 most appropriate [, if the resulting 
offense level is greater than that determined above].]
    [(4) If (A) none of subdivisions (1), (2), or (3) of this 
subsection apply; (B) the defendant was convicted under a statute 
proscribing false, fictitious, or fraudulent statements or 
representations generally (e.g., 18 U.S.C. Sec. 1001, 1341, 1342, or 
1343); and (C) the conduct set forth in the count of conviction is more 
specifically covered by another guideline in Chapter Two, apply that 
other guideline.]
    (d) Special Instruction.
    (1) If the defendant was 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. Sec. 1839(1), (2), and (3), 
respectively.
    `Mass-marketing,' means a plan, program, promotion, or campaign 
that is conducted through solicitation by telephone, mail, the 
Internet, or other means to induce a large number of persons to (A) 
purchase goods or services; (B) participate in a contest or 
sweepstakes; or (C) invest for financial profit. The enhancement would 
apply,

[[Page 65984]]

for example, if the defendant conducted or participated in a 
telemarketing campaign that solicited a large number of individuals to 
purchase fraudulent life insurance policies.
    `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.
    `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.
    2. For purposes of subsection (b)(1)--
    (A) General Rule. Loss is the greater of the actual loss or the 
intended loss.
    `Actual loss' means the reasonably foreseeable pecuniary harm that 
resulted or will result from the conduct for which the defendant is 
accountable under Sec. 1B1.3 (Relevant Conduct). `Reasonably 
foreseeable pecuniary harm' means pecuniary harm that the defendant 
knew or, under the circumstances of the particular case, should have 
known would likely follow, in the ordinary course of events, as a 
result of that conduct.
    `Intended loss' means the pecuniary harm intended to be caused by 
the conduct for which the defendant is accountable under Sec. 1B1.3, 
even if that harm would have been unlikely or impossible to accomplish 
(e.g., as in a government sting operation).
    (B) Determination of Loss. The court need not determine the precise 
amount of the loss. Rather, it need only make a reasonable estimate of 
that amount, based on available information and using, as appropriate 
and practicable under the circumstances to best effectuate the general 
rule in subdivision (A), factors such as the following:
    (i) The fair market value of the property, or other thing of value, 
taken or otherwise unlawfully acquired, misapplied, misappropriated, or 
destroyed; or if the fair market value is impracticable to determine or 
inadequately measures the harm, the cost to the victim of replacing 
property taken or otherwise unlawfully acquired or destroyed.
    (ii) The cost of repairs to damaged property, not to exceed the 
replacement cost had the property been destroyed.
    (iii) The approximate number of victims multiplied by the average 
loss to each victim.
    (iv) More general factors, such as the scope and duration of the 
offense and revenues generated by similar operations.
    (C) Gain. The court shall use gain instead of loss under subsection 
(b)(1) if both (i) gain is greater than loss (which may be zero); and 
(ii) gain more accurately reflects the seriousness of the offense.
    (D) Credits Against Loss. Except as provided in subdivision (F)(i), 
loss shall be reduced by the value of the economic benefit the 
defendant or other persons acting jointly with the defendant 
transferred to the victim before the defendant knew or should have 
known that the offense had been detected.
    In the case of collateral, the value of the economic benefit is the 
amount the victim has recovered as of the time of sentencing from 
disposition of the collateral. If the collateral has not been disposed 
of by that time, the value is its fair market value as of the time of 
sentencing.
    In any other case, the value of the economic benefit is its fair 
market value as of the time of transfer to the victim.
    However, in cases in which the economic benefit transferred to the 
victim has little or no value to the victim because it is substantially 
different from what the victim intended to receive, loss shall not be 
reduced by the value of that economic benefit.
    For purposes of this subdivision: (i) ``economic benefit'' includes 
money, property, or services performed; and (ii) ``transferred'' means 
pledged or otherwise provided as collateral, returned, or otherwise 
conveyed.
    Option 1: [(E) Opportunity Costs. Interest (of any kind), 
anticipated profits, and other opportunity costs shall not be included 
in determining loss. However, there may be cases in which the amount of 
interest, anticipated profits, and other opportunity costs is so 
substantial that not including that amount as part of the loss would 
substantially understate the seriousness of the offense or the 
culpability of the defendant. In such cases, an upward departure may be 
warranted.]
    Option 2: [(E) Interest. Interest shall be included in determining 
loss only if it is bargained for as part of a lending transaction that 
is involved in the offense. The court shall include any such interest 
that is accrued and unpaid as of the time the defendant knew or should 
have known that the offense had been detected.]
    (F) Special Rules. The following special rules shall be used to 
assist in determining actual loss in the cases indicated:
    (i) Fraudulent Investment Schemes. In a case involving a fraudulent 
investment scheme, such as a Ponzi scheme, actual loss is the sum of 
the net actual losses of each victim who lost all or part of that 
victim's principal investment as a result of the fraudulent investment 
scheme. Because this subdivision provides, in cases covered hereunder, 
for determination of the net loss of each victim, subdivision (D), 
relating generally to credits against loss, shall not apply to such 
cases.
    (ii) Stolen or Counterfeit Credit Cards and Access Devices; 
Purloined Numbers and Codes. In a case involving stolen or counterfeit 
credit cards (see 15 U.S.C. Sec. 1602(k)), stolen or counterfeit access 
devices (see 18 U.S.C. Sec. 1029(e)(1)), or purloined numbers or codes, 
the actual loss includes any unauthorized charges made with the credit 
cards, access devices, or numbers or codes. The actual loss determined 
for each such credit card, access device, or number or code shall be 
not less than $100.
    (iii) Diversion of Government Program Benefits. In a case involving 
diversion of government program benefits, actual loss is the value of 
the benefits diverted from intended recipients or uses.
    (iv) Davis-Bacon Act Cases. In a case involving a Davis-Bacon Act 
violation (i.e., a violation of 40 U.S.C. Sec. 276a, criminally 
prosecuted under 18 U.S.C. Sec. 1001), the actual loss is the 
difference between the legally required and actual wages paid.
    (G) Upward Departure Considerations. There may be cases in which 
the loss substantially understates the seriousness of the offense or 
the culpability of the defendant. In such cases, an upward departure 
may be warranted. The following is a non-exhaustive list of factors 
that the court may consider in determining whether an upward departure 
is warranted:
    (i) A primary objective of the offense was an aggravating, non-
monetary objective. For example, a primary objective of the offense was 
to inflict emotional harm.
    (ii) The offense caused or risked substantial non-monetary harm. 
For example, the offense caused physical harm, psychological harm, or 
severe emotional trauma, or resulted in a substantial invasion of a 
privacy interest.
    (iii) The offense created a risk of substantial loss beyond the 
loss determined above.
    (iv) The offense (I) endangered national security or military 
readiness; or (II) caused a loss of confidence in an important 
institution.
    (v) The offense (I) endangered the solvency or financial security 
of one or more victims; or (II) impacted numerous victims and the loss 
determination

[[Page 65985]]

substantially understates the aggregate harm.
    (H) Downward Departure Considerations. There also may be cases in 
which the loss substantially overstates the seriousness of the offense 
or the culpability of the defendant. In such cases, a downward 
departure may be warranted. The following is a non-exhaustive list of 
factors that the court may consider in determining whether a downward 
departure is warranted:
    (i) The primary objective of the offense was a mitigating, non-
monetary objective. For example, the primary objective of the offense 
was to fund medical treatment for a sick parent. [However, if, in 
addition to that primary objective, a substantial objective of the 
offense was to benefit the defendant economically, a downward departure 
would not be warranted.]
    (ii) The defendant made complete, or substantially complete, 
restitution prior to the time the defendant knew or should have known 
that the offense had been detected.
    (I) Appropriate Deference. The sentencing judge is in a unique 
position to assess the evidence and estimate the loss based upon that 
evidence. Accordingly, the court's loss determination is entitled to 
appropriate deference. See 18 U.S.C. Sec. 3742(e) and (f).
    3. In some cases in which the amount of intended loss exceeds the 
actual loss, whether some of the intended loss would have occurred may 
be speculative. In such cases, the offense level ordinarily applicable 
to that amount of intended loss sometimes must be reduced, in 
accordance with Sec. 2X1.1. (Conspiracies, Attempts, Solicitations). 
Specifically, in a case involving only inchoate offense conduct (i.e., 
a case in which the defendant was convicted only of an attempt, 
conspiracy, or solicitation, and in which the offense involved only 
intended loss), a decrease of three levels sometimes may apply, as 
provided under Sec. 2X1.1.
    Similarly, in the case of a partially completed offense (e.g., an 
offense involving a completed fraud that is part of a larger, attempted 
fraud in which both actual loss and additional intended loss result), 
the offense level is to be determined, and may be decreased in some 
cases, in accordance with the provisions of Sec. 2X1.1, whether the 
defendant is convicted of the substantive offense, the inchoate offense 
(attempt, solicitation, or conspiracy), or both. As explained more 
fully in Application Note 4 of the Commentary to Sec. 2X1.1, in such a 
case, a three-level decrease in the offense level for the intended loss 
sometimes may apply, except that the offense level for the intended 
loss, with or without a three-level decrease, shall not be used if it 
is less than the offense level for the actual loss.
    Options on Discouraged or Prohibited Departure Based on MMP:
    [4. [Option 1: The Commission has determined that the amount of 
loss involved in a particular case is a more appropriate factor in 
distinguishing the seriousness of an offense than is the extent of 
planning. Accordingly, (A) a sentence below the applicable guideline 
range [Option 2: [ordinarily]] would not be warranted in a case merely 
because it involved only minimal planning; and (B) a sentence above the 
applicable guideline range [Option 2: [ordinarily]] would not be 
warranted in a case merely because it involved more-than-minimal 
planning.]
    5. Subsection (b)(7)(A) applies in the case of a misrepresentation 
that the defendant was an employee or authorized agent 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.
    Subsection (b)(7)(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)).
    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.
    7. For purposes of subsection (b)(8)(B), ``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)(8)(C), `sophisticated means' means 
especially complex or especially intricate offense conduct pertaining 
to the execution or concealment of an offense. For example, in a 
telemarketing scheme, locating the main office of the scheme in one 
jurisdiction but locating soliciting operations in another jurisdiction 
would ordinarily indicate sophisticated means. Conduct such as hiding 
assets or transactions, or both, through the use of fictitious 
entities, corporate shells, or offshore bank accounts also ordinarily 
would indicate sophisticated means.
    If the conduct that forms the basis for an enhancement under 
subsection (b)(8) is the only conduct that forms the basis for an 
adjustment under Sec. 3C1.1 (Obstruction of Justice), do not apply an 
adjustment under Sec. 3C1.1.
    8. For purposes of subsection (b)(10), a minimum measure of loss 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.
    9. 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, 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.
    10. 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. ``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

[[Page 65986]]

directly or indirectly as a result of the offense. See 18 U.S.C. 
Secs. 982(a)(4), 1344.
    11. Subsection (c)[(4)] provides a cross reference to another 
Chapter Two guideline in cases in which the defendant is convicted of a 
general fraud statute, and the conduct set forth in the count of 
conviction is more specifically covered by that other Chapter Two 
guideline. Sometimes offenses involving fraudulent statements are 
prosecuted under 18 U.S.C. Sec. 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 (Structuring Transactions to Evade Reporting 
Requirements; Failure to Report Cash or Monetary Transactions; Failure 
to File Currency and Monetary Instrument Report; Knowingly Filing False 
Reports) would be more apt, and false statements to a customs officer, 
for which Sec. 2T3.1 (Evading Import Duties or Restrictions 
(Smuggling); Receiving or Trafficking in Smuggled Property) 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.
    Offenses involving fraudulent identification documents and access 
devices, in violation of 18 U.S.C. Secs. 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, pursuant to subsection (c)(3).
    12. If the defendant is convicted under 18 U.S.C. Sec. 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.
    Background: This guideline covers offenses involving theft, stolen 
property, property damage or destruction, fraud, forgery, insider 
trading, 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.
    The Commission has determined that, ordinarily, the sentences of 
defendants convicted of federal offenses should reflect the nature and 
magnitude of the pecuniary harm caused by their crimes. Accordingly, 
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 and is a principal factor in determining the 
offense level under this guideline. 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.
    Both direct and consequential pecuniary harm that is reasonably 
foreseeable to result from the offense will be taken into account in 
determining the loss. Accordingly, in any particular case, the 
determination of loss may include consideration of factors not 
specifically set forth in this guideline. For example, in an offense 
involving unlawfully accessing, or exceeding authorized access to, a 
``protected computer,'' as defined in 18 U.S.C. Sec. 1030(e)(2)(A) or 
(B), ``loss'' is the reasonably foreseeable pecuniary harm to the 
victim, which typically includes costs such as conducting a damage 
assessment and restoring the system and data to their condition prior 
to the offense, and any lost revenue due to interruption of service. 
The Commission does not intend that the cost to the government of 
prosecution and criminal investigation of an offense covered by this 
guideline will be included in the determination of loss, even if such 
costs are reasonably foreseeable.
    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 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 an 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)(5) implements, in a broader form, the instruction to 
the Commission in section 6(b)(1) of Public Law 105-184. Subsection 
(b)(6) implements the instruction to the Commission in section 2 of 
Public Law 105-101. Subsection (b)(8) implements, in a broader form, 
the instruction to the Commission in section 6(c)(2) of Public Law 105-
184. 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)(1) implements the instruction to the 
Commission in section 805(c) of Public Law 104-132.''.

(B) The Tax Package

    3. Synopsis of Proposed Amendment: The following proposed amendment 
provides increases that are similar to the loss table presented in the 
consolidated theft, fraud, and property destruction

[[Page 65987]]

guideline, except at amounts between $12,500 and $80,000.
    Proposed Amendment: Strike the tax table in Sec. 2T4.1 and insert a 
new table as follows:
    ``Sec. 2T4.1. Tax Table.

------------------------------------------------------------------------
                                                                 Offense
                 Tax loss (apply the greatest)                    level
------------------------------------------------------------------------
(A) $2,000 or less............................................         6
(B) More than $2,000..........................................         8
(C) More than $5,000..........................................        10
(D) More than $12,500.........................................        12
(E) More than $30,000.........................................        14
(F) More than $80,000.........................................        16
(G) More than $200,000........................................        18
(H) More than $500,000........................................        20
(I) More than $1,200,000......................................        22
(J) More than $2,500,000......................................        24
(K) More than $7,500,000......................................        26
(L) More than $20,000,000.....................................        28
(M) More than $50,000,000.....................................        30
(N) More than $100,000,000....................................    32.''.
------------------------------------------------------------------------

    Issue for Comment: On May 1, 1998, the Commission submitted to 
Congress an amendment that provided a two-level enhancement in the 
fraud guideline, Sec. 2F1.1, for sophisticated concealment. The 
Commission also submitted amendments that generally conformed the 
sophisticated means enhancement in Secs. 2T1.1, 2T1.4 and 2T3.1 to the 
sophisticated concealment enhancement provided in the fraud guideline.
    Subsequent to these amendments, the Congress enacted the 
Telemarketing Fraud Protection Act of 1998, Pub. L. 105-184. This Act 
required the Commission to act under emergency authority and, among 
other things, specifically required the Commission to provide ``an 
additional appropriate sentencing enhancement, if [a telemarketing] 
offense involved sophisticated means, including but not limited to 
sophisticated concealment efforts, such as perpetrating the offense 
from outside the United States.''
    The Commission responded to this directive by building on the 
amendment to Sec. 2F1.1 that added sophisticated concealment. The new 
amendment, which was submitted to Congress in September, 1998, 
broadened the scope of the ``sophisticated concealment'' enhancement to 
cover ``sophisticated means'' of executing or concealing a fraud 
offense.
    The Commission invites comment on whether it should amend 
Secs. 2T1.1, 2T1.4, and 2T3.1 to generally conform the sophisticated 
concealment enhancement (and the accompanying commentary) to the 
sophisticated means enhancement added to the fraud guideline in 
response to the Telemarketing Fraud Protection Act. The Commission also 
invites comment on whether it should provide a minimum offense level of 
[12] for tax offenses that involve either sophisticated concealment or 
sophisticated means (if the Commission conforms the enhancement in 
Secs. 2T1.1, 2T1.4, and 2T3.1).

(C) More Than Mimimal Planning Conforming Amendments

    4. Synopsis of Proposed Amendment: The following amendment makes 
conforming changes that necessarily follow from the incorporation of 
more than minimal planning into the loss table. The amendment proposes 
to strike references to more than minimal planning in appropriate 
places throughout the guidelines.
    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.''; and by redesignating (b)(4) as (b)(3).
    The Commentary to Sec. 2B1.3 captioned ``Application Notes'' is 
amended in Note 1 by striking the first paragraph as follows:
    `` `More than minimal planning' is defined in the Commentary to 
Sec. 1B1.1 (Application Instructions).''
    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

[[Page 65988]]

to defraud more than one victim, increase by 2 levels.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is 
amended by striking Note 2 as follows:
    ``2. `More than minimal planning' (subsection (b)(2)(A)) is defined 
in the Commentary to Sec. 1B1.1 (Application Instructions).'';

by striking Note 4 as follows:
    ``4. `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 20 as follows:
    ``20. If subsection (b)(7) (A) or (B) applies, there shall be a 
rebuttable presumption that the offense involved `more than minimal 
planning.' '';

by redesignating Note 3 as Note 2, and by redesignating Notes 5 through 
19 as Notes 3 through 17, respectively.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by 
striking the third paragraph as follows:
    ``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.''.
    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 the fifth sentence of illustration 
2 by inserting ``and'' before ``1 level''; by striking ``; and 2 levels 
are added because the conduct involved repeated acts with some planning 
(Sec. 2F1.1(b)(2)(A))''; and in the last sentence by striking ``9'' and 
inserting ``7''.

(D) Amendments for Referring Guidelines

    5. Synopsis of Proposed Amendment: Currently, many guideline 
provisions refer to the loss tables in the theft (Sec. 2B1.1) and fraud 
(Sec. 2F1.1) guidelines. In general, the following amendments show how 
the guidelines that refer to either Sec. 2B1.1 or Sec. 2F1.1 are 
proposed to be amended if the Commission were to adopt the consolidated 
guideline presented in Proposed Amendment 1, above.
    The proposed amendment accomplishes the following: (A) Presents a 
reference monetary table to be used as an alternative to the loss table 
in the consolidated guideline for guidelines that already build in more 
than minimal planning; (B) sets out the guidelines that would refer to 
this new reference monetary table; (C) presents three options for 
amending the pornography and obscenity guidelines; (D) presents two 
options for amending the copyright and structuring transactions 
guidelines; (E) presents two options for amending Sec. 2B3.2 for 
offenses involving the invasion of a protected computer; (F) 
consolidates the bank gratuity and principal gratuity guidelines; and 
(G) presents technical and conforming amendments that would be required 
if the Commission consolidates the theft, fraud, and property 
destruction guidelines.

5(A). Reference Monetary Table

    Proposed Amendment: 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) More than $2,000.......................  Add 1.
(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.''.
------------------------------------------------------------------------

5(B). Guidelines That Will Refer to Reference Monetary Table

    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 $2,000, 
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 $2,000, 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 $2,000, 
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 $2,000, 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 
$2,000, 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'',


[[Page 65989]]


and inserting:
    ``(A) If the market value of the fish, wildlife, or plants exceeded 
$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''.
    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 $2,000, 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 $2,000, 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 $2,000, 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 $2,000, 
increase by the corresponding number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table).''.

5(C). Pornography and Obscenity Guidelines

    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 inserting ``(Fraud and 
Deceit)'' after ``Sec. 2F1.1''.
    [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''.
    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 inserting ``(Fraud and 
Deceit)'' after ``Sec. 2F1.1''.
    [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'', and inserting 
``[5]''.
    The Commentary to Sec. 2G3.1 captioned ``Application Note'' is 
amended by striking ``Note'' and inserting ``Notes''; and 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''.
    [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 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: 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.''.
    The Commentary to Sec. 2G3.2 is amended by striking:
    ``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

[[Page 65990]]

``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.''.

5(D). Copyright and Structuring Transactions

    Proposed Amendment: [Option 1: 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 $2,000, 
increase by the corresponding number of levels from the table in 
Sec. 2X6.1 (Reference Monetary Table).''.
    [Option 2: Maintains current reference to the fraud table.
    [Option 1: Section Sec. 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 $2,000.
    [Option 2: Section Sec. 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 $2,000.''.

5(E). Trespass Offenses Involving Invasion of Protected Computers

    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 $2,000, 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 2: Section 2B2.3(b) is amended by striking:
    ``(3) If the offense involved invasion of a protected computer 
resulting in a loss exceeding $2,000, 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).''.

5(F). Consolidation of Bank Gratuity and Principal Gratuity 
Guidelines

    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 $2,000, 
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 canceling a farm 
debt.''.
    Strike Sec. 2C1.6 in its entirety.

5(G). Technical and Conforming Amendments

    Synopsis of Proposed Amendment: The following amendments are 
technical and conforming amendments that would be required if the 
Commission adopts the amendments in (A) that propose to consolidate the 
theft, fraud, and property destruction guidelines.
    Proposed Amendment: The Commentary to Sec. 1B1.1 captioned 
``Application Notes'' is amended in Note 4 in the second paragraph by 
striking the second sentence.
    The Commentary to Sec. 1B1.3 captioned ``Application Notes'' is 
amended in Note 5 by striking ``Sec. 2F1.1 (Fraud and Deceit)'' and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    Chapter Two is amended by striking ``Sec. 2B1.1 (Larceny, 
Embezzlement, and Other Forms of Theft)'' wherever it appears and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''; and 
by striking ``Sec. 2F1.1 (Fraud and Deceit)'' wherever it appears and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    The Commentary to Sec. 2C1.1 captioned ``Application Notes'' is 
amended in Note 2 by striking ``and includes both actual and intended 
loss''.
    The Commentary to Sec. 2C1.7 captioned ``Application Notes'' is 
amended in Note 3 by striking ``and includes both actual and intended 
loss''.
    Section 2F1.2 is deleted in its entirety; and Chapter Two, Part B 
is amended by adding at the end the following new guideline:
    ``Sec. 2B1.4. Insider Trading
    (a) Base Offense Level: 8
    (b) Specific Offense Characteristic
    (1) Increase by the number of levels from the table in Sec. 2B1.1 
(Theft, Property Destruction, and Fraud)

[[Page 65991]]

corresponding to the gain resulting from the offense.
Commentary
    Statutory Provisions: 15 U.S.C. 78j and 17 CFR 240.10b-5. For 
additional statutory provision(s), see Appendix A (Statutory Index).
    Application Note:
    1. Section 3B1.3 (Abuse of Position of Trust or Use of Special 
Skill) should be applied only if the defendant occupied and abused a 
position of special trust. Examples might include a corporate president 
or an attorney who misused information regarding a planned but 
unannounced takeover attempt. It typically would not apply to an 
ordinary ``tippee.''
    Background: This guideline applies to certain violations of Rule 
10b-5 that are commonly referred to as `insider trading.' Insider 
trading is treated essentially as a sophisticated fraud. Because the 
victims and their losses are difficult if not impossible to identify, 
the gain, i.e., the total increase in value realized through trading in 
securities by the defendant and persons acting in concert with him or 
to whom he provided inside information, is employed instead of the 
victims' losses.
    Certain other offenses, e.g., 7 U.S.C. Sec. 13(e), that involve 
misuse of inside information for personal gain also may appropriately 
be covered by this guideline.''.
    The Commentary to Sec. 2B5.3 captioned ``Background'' is amended in 
the first paragraph by striking``, which will generally exceed the loss 
or gain due to the offense''.
    Section 2H3.3(a)(2) is amended by inserting ``or destruction'' 
after ``theft'.
    Section 2H3.3(a) is amended by striking subdivision (3).
    The Commentary to Sec. 2H3.3 captioned ``Background'' is amended by 
striking ``or Sec. 2B1.3 (Property Damage or Destruction)''.
    Section 2K1.4(a) is amended in subdivision (3) by striking ``if the 
offense was committed in connection with a scheme to defraud; or'' and 
inserting a period; and by striking subdivision (4).
    Section 2K1.4(b) is amended in subdivision (2) by striking 
``(a)(4)'' and inserting ``(a)(3)''.
    The Commentary to Sec. 2N2.1 captioned ``Application Notes'' is 
amended in Note 2 by inserting ``theft, property destruction, and'' 
after ``involved''; and by striking ``theft, bribery, revealing trade 
secrets, or destruction of property'' and inserting ``bribery''.
    The Commentary to Sec. 2N3.1 captioned ``Background'' is amended by 
striking ``the guideline for fraud and deception, Sec. 2F1.1,'' and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is 
amended by adding at the end the following new note:
    ``4. 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. Sec. 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. Sec. 501(a)), an 
adjustment under this section for an abuse of a position of trust will 
apply.''.
    Section 3D1.2(d) is amended by striking ``2B1.3'' and inserting 
``2B1.4''; and by striking ``Secs. 2F1.1, 2F1.2;''.
    Section 3D1.3(b) is amended by striking ``(e.g., theft and 
fraud)''.
    The Commentary to Sec. 3D1.3 captioned ``Application Notes'' is 
amended in Note 3 by striking ``(e.g., theft and fraud)''.
    The ``Illustrations of the Operation of the Multiple-Count Rules'' 
after Sec. 3D1.5 is amended in illustration 4 by striking ``Sec. 2F1.1 
(Fraud and Deceit)'' and inserting ``2B1.1 (Theft, Property 
Destruction, and Fraud)''; and by striking illustration 2 in its 
entirety; and by redesignating illustrations 3 and 4 as illustrations 2 
and 3.
    Chapter Eight is amended by striking ``Larceny, Embezzlement, and 
Other Forms of Theft'' wherever it appears and inserting ``Theft, 
Property Destruction, and Fraud''.
    Chapter Eight is amended by striking ``2F1.1 (Fraud and Deceit)'' 
wherever it appears and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud)''.
    The Commentary to Sec. 8A1.2 captioned ``Application Notes'' is 
amended in Note 3(i) by striking ``Sec. '' before ``Sec. 2B1.1''; and 
by striking ``(Larceny, Embezzlement, and Other Forms of Theft), 
Sec. 2F1.1 (Fraud and Deceit)'' and inserting ``(Theft, Property 
Destruction, and Fraud)''.
    Section 8C2.1 subsection (a) is amended by striking ``2B1.3'' and 
inserting ``2B1.4''; and by striking ``Secs. 2F1.1, 2F1.2;'';
    Section 8C2.1 subsection (a) is amended by striking ``2C1.6,''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. Sec. 1281 by striking ``2B1.3 `` and inserting ``2B1.1'';
    in the lines referenced to 16 U.S.C. Secs. 114, 117c, 123, 146, 
413, and 433 by striking ``2B1.3'';
    in the lines referenced to any of 18 U.S.C. Secs. 32(a)(b), 33, 37, 
43, 112(a), 970(a), 1030(a)(5), 1361, 1363, 1366, 1702, 1705, 1706, 
1857, 2275, 2276, 2280, 2281, 2332a, by striking ``2B1.3'' and 
inserting ``2B1.1'';
    in the lines referenced to any of 18 U.S.C. Secs. 1852 through 1854 
by striking ``2B1.3'';
    in the line referenced to 49 U.S.C. App. Sec. 1687(g) by striking 
``2B1.3'' and inserting ``2B1.1''.
    in the line referenced to 18 U.S.C. Sec. 217 by striking ``2C1.6'' 
and inserting ``2C1.2''; in the lines referenced to any of 7 U.S.C. 
Secs. 6, 6b(A), 6b(B), 6b(C), 6c, 6h, 6o, 13(a)(2), 13(a)(3), 13(a)(4), 
23, 270, 2024(b), and 2024(c) by striking ``2F1.1'' and inserting 
``2B1.1'';
    in the line referenced to 12 U.S.C. Sec. 631 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the lines referenced to any of 15 U.S.C. Secs. 50, 77e, 77q, 
77x, 78j, 80-b-6, 158, 645(a), 714m(a), 1644, 1681q, and 1693n(a) by 
striking ``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 15 U.S.C. Sec. 645(b) by striking ``, 
2F1.1'';
    in the line referenced to 15 U.S.C. Sec. 714m(b) by striking ``, 
2F1.1'';
    in the lines referenced to any of 16 U.S.C. Secs. 831t(b) and 
831t(c) by striking ``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 18 U.S.C. Sec. 152 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the line referenced to 18 U.S.C. Sec. 153 by striking ``, 
2F1.1'';
    in the line referenced to 18 U.S.C. Sec. 500 by striking ``, 
2F1.1'';
    in the line referenced to 18 U.S.C. Sec. 501 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the lines referenced to any of 18 U.S.C. Secs. 502, 503, 505-
510, 513, 514, and 642 by striking ``2F1.1'' and inserting ``2B1.1'';
    in the lines referenced to any of 18 U.S.C. Sec. 656, 657, 659, 
663, 665(a), and 666(a)(1)(A), by striking ``, 2F1.1'';

[[Page 65992]]

    in the lines referenced to any of 18 U.S.C. Secs. 709 and 712 by 
striking ``2F1.1'' and inserting ``2B1.1'';
    in the lines referenced to any of 18 U.S.C. Secs. 911, 914, 915, 
917, 1001-1007, 1010-1022 by striking ``2F1.1'' and inserting 
``2B1.1'';
    in the line referenced to 18 U.S.C. Sec. 1023 by striking ``, 
2F1.1'';
    in the lines referenced to any of 18 U.S.C. Secs. 1025, 1026, 1028, 
1029, 1030(a)(6), 1031, 1032 by striking ``2F1.1'' and inserting 
``2B1.1'';
    in the line referenced to 18 U.S.C. Sec. 1033 by striking ``, 
2F1.1'';
    in the lines referenced to any of 18 U.S.C. Secs. 1035, 1341-1344, 
1347, 1422, 1704, 1708, 1712, 1716C, 1720, 1728, 1919, 1920, 1923, 
2072, 2073, 2197, and 2272 by striking ``2F1.1'' and inserting 
``2B1.1'';
    in the lines referenced to any of 18 U.S.C. Secs. 2315 and 2316 by 
striking ``, 2F1.1'';
    in the lines referenced to any of 19 U.S.C. Secs. 1434-1436, 1919, 
and 2316 by striking ``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 20 U.S.C. Sec. 1097(a) by striking ``, 
2F1.1'';
    in the lines referenced to any of 20 U.S.C. Secs. 1097(b) and 
1097(d) by striking ``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 21 U.S.C. Sec. 333(a)(2) by striking 
``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 22 U.S.C. Secs. 1980(g), 2197(n), and 
4221 by striking ``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 25 U.S.C. Sec. 450d by striking ``, 
2F1.1'';
    in the line referenced to 26 U.S.C. Sec. 7208 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the lines referenced to any of 26 U.S.C. Secs. 7214 and 7232 by 
striking ``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 29 U.S.C. Sec. 1141 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the lines referenced to any of 38 U.S.C. Secs. 787 and 3502 by 
striking ``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 41 U.S.C. Sec. 423(e) striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the lines referenced to any of 42 U.S.C. Secs. 408, 1307(a), 
1307(b), 1320a-7b, 1383(d)(2), 1383a(a), 1383a(b), 1395nn(a), 
1395nn(c), 1396h(a), 1713 by striking ``2F1.1'' and inserting 
``2B1.1'';
    in the line referenced to 42 U.S.C. Sec. 1760(g) by striking ``, 
2F1.1'';
    in the line referenced to 42 U.S.C. Sec. 1761(o)(1) by striking 
``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 42 U.S.C. Secs. 1761(o)(2), by striking 
``, 2F1.1'';
    in the line referenced to 42 U.S.C. Sec. 3220(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 42 U.S.C. Sec. 3220(b) by striking ``, 
2F1.1'';
    in the line referenced to 42 U.S.C. Sec. 3426 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the line referenced to 42 U.S.C. Sec. 3791 by striking ``, 
2F1.1'';
    in the line referenced to 42 U.S.C. Sec. 3792 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the line referenced to 42 U.S.C. Sec. 3795 by striking ``, 
2F1.1'';
    in the line referenced to 42 U.S.C. Sec. 5157 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the line referenced to 45 U.S.C. Sec. 359(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    in the line referenced to 46 U.S.C. Sec. 1276 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    in the lines referenced to any of 49 U.S.C. Secs. 121, 11903, 
14912, 16102, 80116, by striking ``2F1.1'' and inserting ``2B1.1'';
    in the lines referenced to any of 7 U.S.C. Sec. 13(d) and 13(f) by 
striking ``2F1.2'' and inserting ``2B1.4'';
    in the line referenced to 15 U.S.C. Sec. 78j by striking ``2F1.2'' 
and inserting ``2B1.4''; and
    in the line referenced to 18 U.S.C. Sec. 1902 by striking ``2F1.2'' 
and inserting ``2B1.4'.

Part III--Conditions of Probation and Supervised Release

    6. Synopsis of Proposed Amendment: In the Departments of Commerce, 
Justice, and State, the Judiciary, and Related Agencies Appropriations 
Act, 1998, Pub. L. 105-119, Congress amended sections 3563(a) and 
3583(d) of title 18, United States Code, to add a new mandatory 
condition of probation for persons convicted of sex offenses. The new 
mandatory condition requires a person convicted of a sex offense (as 
described in 18 U.S.C. Sec. 4042(c)(4)) to report that person's address 
and any change of residence to the probation officer supervising the 
case and to register as a sex offender in any State where the person 
resides, works, or is a student. These amendments to sections 3563(a) 
and 3583(d) become effective one year after November 26, 1997.
    The following proposed amendment would add this new condition to 
the mandatory conditions of probation and supervised release listed in 
Secs. 5B1.3 and 5D1.3.
    Proposed Amendment: Subsection 5B1.3(a) is amended by adding at the 
end the following new subdivision:
    ``(9) a defendant convicted of a sexual offense as described in 18 
U.S.C. Sec. 4042(c)(4) shall report the address where the defendant 
will reside and any subsequent change of residence to the probation 
officer responsible for supervision, and shall register as a sex 
offender in any State where the person resides, is employed, carries on 
a vocation, or is a student (see 18 U.S.C. Sec. 3563(a)(8)).''.
    Subsection 5D1.3(a) is amended by adding at the end the following 
new subdivision:
    ``(7) a defendant convicted of a sexual offense as described in 18 
U.S.C. Sec. 4042(c)(4) shall report the address where the defendant 
will reside and any subsequent change of residence to the probation 
officer responsible for supervision, and shall register as a sex 
offender in any State where the person resides, is employed, carries on 
a vocation, or is a student (see 18 U.S.C. Sec. 3583(d)).''.

Part IV--Issues for Comment

    7. Unauthorized Compensation: As a result of enacted legislation, 
the maximum term of imprisonment for violations of 18 U.S.C. Sec. 209 
is now five years if the conduct is willful. Before that change, the 
maximum term of imprisonment for any violation of 18 U.S.C. Sec. 209 
was one year. The Commission invites comment on whether, in view of the 
increased maximum term of imprisonment for violations of 18 U.S.C. 
Sec. 209, the guideline offense levels in Sec. 2C1.4 (Payment or 
Receipt of Unauthorized Compensation) should be increased, and, if so, 
by what amount.
    8. Cloning of Wireless Telephones: (A). The Wireless Telephone 
Protection Act, Pub. L. 105-418 (the ``Act''), provides a general 
directive to the Commission to review and amend, if appropriate, the 
sentencing guidelines and policy statements to provide an appropriate 
penalty for offenses involving the cloning of wireless telephones, 
including attempts and conspiracies. The Commission invites comment on 
whether and how it should amend the guidelines for offenses involving 
the cloning of wireless telephones, including offenses involving an 
attempt or conspiracy to clone a wireless telephone. See 18 U.S.C. 
Sec. 1029(e)(9) (as amended by the Act).
    Specifically, should the Commission amend Sec. 2F1.1 (Fraud), the 
guideline to which such offenses are referenced, to provide a tailored 
enhancement (specific offense characteristic) if the offense, including 
any relevant conduct, involved the use of hardware (a ``copycat box'') 
or software which has been configured for altering or modifying a 
wireless telephone? If so, what should be the magnitude of such an 
enhancement? Should the

[[Page 65993]]

Commission provide a specific offense characteristic in Sec. 2F1.1, or 
a cross reference to other offense guidelines, if the cloning offense 
facilitated, or was in connection with, another offense? If such a 
specific offense characteristic or a cross reference is warranted, by 
how many levels should the sentence for such offenders be increased?
    (B). If the Commission does not adopt a comprehensive revision of 
the guidelines and commentary for theft, property destruction, and 
fraud offenses, such as the comprehensive revision set forth in the 
Economic Crime Package proposed in Amendment 2, above (which, in the 
proposed loss definition, includes a special rule for access devices 
and purloined numbers), should the Commission nevertheless adopt a 
special rule for cases involving stolen, unauthorized, or counterfeit 
access devices used in cloning offenses? Such a special rule could, for 
example, provide for a minimal loss amount of $100 in the case of each 
such access device.
    9. Nuclear, Chemical, and Biological Weapons: Section 1423(a) of 
the Defense Authorization Act for Fiscal Year 1997 expressed the sense 
of Congress that the guidelines for the offenses of importation, 
attempted importation, exportation, and attempted exportation of 
nuclear, biological, and chemical weapons materials provide inadequate 
punishment for those offenses. Section 1423(b) of that Act urged the 
Commission to amend the guidelines to increase the penalties for such 
offenses under (1) section 11 of the Export Administration Act of 1979 
(50 U.S.C. App. 2410); (2) sections 38 and 40 of the Arms Export 
Control Act (22 U.S.C. 2778 and 2780); (3) the International Economic 
Powers Act (50 U.S.C. 1701 et seq.); and (4) section 309(c) of the 
Nuclear Non-Proliferation Act of 1978 (22 U.S.C. 2156a(c)).
    The Commission invites comment on whether, as Congress suggests, 
the guidelines, particularly Secs. 2M5.1 (Evasion of Export Controls) 
and 2M5.2 (Exportation of Arms, Munitions, or Military Equipment or 
Services Without Required Validated Export License) provide inadequate 
penalties for these offenses. If the guidelines provide inadequate 
punishment, how should the Commission address that inadequacy? Should 
the base offense level be increased? Are there specific offense 
characteristics that should be added to the guidelines to take into 
account more egregious offense conduct? Alternatively, should 
encouraged upward departure commentary be added to these guidelines for 
cases in which more egregious conduct occurs?
    Section 511 of the Antiterrorism and Effective Death Penalty Act of 
1996 pertains to biological weapons. It incorporates attempt and 
conspiracy into 18 U.S.C. Sec. 175, which prohibits the production, 
stockpiling, transferring, acquiring, retaining, or possession of 
biological weapons. It also expands the scope of biological weapons 
provisions in chapter 10 of title 18 by expanding the meaning of 
biological agents.
    Section 201 of the Chemical Weapons Convention Implementation Act 
of 1998 creates a new offense at 18 U.S.C. Sec. 229. The new offense 
makes it unlawful for a person knowingly (1) to develop, produce, 
otherwise acquire, transfer directly or indirectly, receive, stockpile, 
retain, own, possess, or use, or threaten to use, any chemical weapon; 
or (2) to assist or induce, in any way, any person to violate paragraph 
(1), or to attempt or conspire to violate paragraph (1). The penalty, 
set out in 18 U.S.C. Sec. 229A, is any term of years, or, if the death 
of another person results, death or life imprisonment.
    The Commission also invites comment as to how the guidelines should 
be amended to cover these statutes. One approach could be to amend 
Sec. 2M6.1 (Unlawful Acquisition, Alteration, Use, Transfer, or 
Possession of Nuclear Material, Weapons, or Facilities) to include 
conduct that violates these statutes. If the Commission were to select 
this approach, what changes, if any, would be appropriate to 
accommodate these offenses? For example, should an alternative base 
offense level be added in the case of biological or chemical materials, 
weapons, or facilities? Are there specific offense characteristics that 
should be added to take into account the range of likely offense 
conduct? Should commentary encouraging an upward (or downward) 
departure be added for cases in which certain atypical conduct occurs?
    10. Tax Privacy Issues: The Internal Revenue Service Restructuring 
and Reform Act of 1998, Pub. L. 105-206, created an offense, codified 
at 26 U.S.C. Sec. 7217, that makes it unlawful for the President, Vice 
President, anyone employed in their executive offices, or certain other 
high-ranking officials of the executive branch to request the Internal 
Revenue Service to conduct or terminate an audit or other investigation 
of the tax liability of any person. The maximum term of imprisonment is 
5 years.
    The Act also amended 26 U.S.C. Sec. 7213, which makes it unlawful 
for federal and state employees and certain other persons to disclose 
tax return information. The Act amended Sec. 7213 to also make it 
unlawful to disclose tax-related computer software. The maximum term of 
imprisonment for such offenses is 5 years.
    The Taxpayer Browsing Protection Act, Pub. L. 105-35, created an 
offense, codified at 26 U.S.C. Sec. 7213A, that makes it unlawful for 
federal and state employees and certain other persons to inspect tax 
return information in any way other than that authorized under the 
Internal Revenue Code. The maximum term of imprisonment for such 
offenses is one year.
    These new provisions are similar in nature to another tax offense, 
codified at 26 U.S.C. Sec. 7216, which makes it unlawful for persons 
who are in the business of preparing tax returns to knowingly or 
recklessly disclose any such information or to use any such information 
for any purpose other than the preparation of the tax return. The 
maximum term of imprisonment for such offenses is one year.
    The Commission invites comment on whether and/or how the sentencing 
guidelines might be amended to address violations of 26 U.S.C. 
Secs. 7213, 7213A, 7216, and 7217. One approach may be to rework the 
guideline pertaining to the interception of communications or 
eavesdropping, Sec. 2H3.1, because arguably all of the offenses 
described above implicate the privacy interests of the taxpayer whose 
tax information was the subject of the offense. An alternative approach 
would be to create a new guideline dealing with the invasion of privacy 
with respect to the audit, inspection, or disclosure of tax 
information. Are there other approaches that might be appropriate to 
address these offenses? The Commission invites alternative suggestions 
with proposed offense levels.

[FR Doc. 98-31756 Filed 11-27-98; 8:45 am]
BILLING CODE 2210-40-P, 2211-01-P