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Sentencing — amount of loss

By: WISCONSIN LAW JOURNAL STAFF//March 28, 2012//

Sentencing — amount of loss

By: WISCONSIN LAW JOURNAL STAFF//March 28, 2012//

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United States Court of Appeals For the Seventh Circuit

Criminal

Sentencing — amount of loss

Interest payments should not be credited against loss in fraudulent loan cases.

“We have not had occasion to address whether interest payments should be credited against loss in fraudulent loan cases, but we conclude that the district court correctly declined to deduct Peugh’s interest payments from the loss amount. These payments were not money ‘returned’ to State Bank: they did not reduce the loans’ outstanding principal balance; instead they were exchanged for value in the form of time holding the bank’s money. See United States v. Johnson, 16 F.3d 166, 171 (7th Cir. 1994) (explaining that in fraudulent loan cases, loss is measured ‘by the difference in value exchanged rather than simply by the face value of the loan or by the gross amount of money that changes hands’). Moreover, the guidelines specify that ‘interest of any kind’ is to be excluded from the loss amount. See U.S.S.G. § 2B1.1, Application Note 3(D)(i). This implies that interest, whether paid or unpaid, is to play no role in the loss calculation. In other words, if interest accrued does not increase the loss amount—and it did not here—then interest paid should not reduce it either. See United States v. Allen, 88 F.3d 765, 771 (9th Cir. 1996) (“[T]he district court used only the loan principal to calculate the ‘amount of the loan;’ it did not consider accrued interest. Therefore, payments made toward interest cannot be considered as repayments made on the loan.”); United States v. Coghill, 204 Fed.Appx. 328, 330, 2006 WL 3327057 (4th Cir. Nov. 15, 2006) (unpublished) (holding that neither interest accrued nor interest paid should factor into the loss amount). Additionally, money spent to facilitate fraud is not deductible from the loss amount, see United States v. Spano, 421 F.3d 599, 607 (7th Cir. 2005), and Peugh’s interest payments facilitated his loan-fraud scheme by keeping him in good standing with State Bank while he fraudulently obtained additional loans.”

Affirmed.

10-2184 U.S. v. Peugh

Appeal from the United States District Court for the Northern District of Illinois, Kapala, J., Rovner, J.

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