United States v. Confredo ( 2008 )


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  • 06-3201-cr
    U.S. v. Confredo
    UNITED STATES COURT OF APPEALS
    FOR THE SECOND CIRCUIT
    August Term 2007
    Heard: February 5, 2008                                    Decided: June 10, 2008
    Docket No. 06-3201-cr
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    UNITED STATES OF AMERICA,
    Appellee,
    v.
    GARY J. CONFREDO,
    Defendant-Appellant.
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    Before: NEWMAN, WINTER, and PARKER, Circuit Judges.
    Appeal from the June 29, 2006, amended judgment of conviction
    from the United States District Court for the Southern District of New
    York (Leonard B. Sand, District Judge), sentencing the Defendant to
    205     months     for    fraud    offenses.   Defendant    challenges   the   loss
    calculation and an enhancement for offenses committed while released
    on bail.
    Remanded for reconsideration of loss calculation.
    James H. Feldman, Ardmore, Penn. (Peter
    Goldberger, Law Offices of Alan Ellis,
    Ardmore, Penn., on the brief), for
    Defendant-Appellant.
    Robin W. Morey, Asst. U.S. Atty., New
    York, N.Y. (Michael J. Garcia, U.S.
    Atty., Celeste L. Koeleveld, Asst. U.S.
    Atty., New York, N.Y., on the brief),
    for Appellee.
    JON O. NEWMAN, Circuit Judge.
    This sentencing appeal primarily concerns a loss calculation
    under    the    provision     of    the    Sentencing      Guidelines      governing   an
    “intended loss” for fraud offenses. See U.S.S.G. § 2F1.1 (1997).                       The
    appeal also presents a challenge to an enhancement for offenses
    committed while released on bail. See 
    id. § 2J1.7.
                           Gary Confredo
    appeals from the June 29, 2006, amended judgment of the District Court
    for the Southern District of New York (Leonard B. Sand, District
    Judge) sentencing him to imprisonment for 205 months following his
    plea    of     guilty   to    various      offenses      involving      fraudulent   loan
    applications.       We remand for reconsideration of the intended loss
    amount.
    Background
    Criminal conduct and guilty plea.                  Doing business through an
    entity called Granite Financial Services, Confredo and his associates
    coordinated       the   submission         of     more   than    200    fraudulent   loan
    applications to New York City area banks, including approximately 100
    applications seeking in excess of $21 million from Citibank, N.A., on
    behalf    of    hundreds     of    small   businesses      who   were    his   customers.
    Confredo’s customers knew that the loan applications were fraudulent.
    To carry out the scheme, Confredo exploited his educational
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    training in finance and his experience as a former loan officer for a
    bank; he knew what banks looked for when deciding whether to extend a
    business   loan;   and    he    drafted   or    procured    the   drafting   of   the
    fictitious loan applications, tax returns, financial statements, and
    other supporting documents accordingly. On paper, the loan applicants
    were well-established and profitable businesses; in reality, many of
    them were not even going concerns but merely vehicles concocted by
    Confredo and his associates for the sole purpose of securing loans for
    their customers.
    The majority of Confredo’s customers were not credit-worthy, and
    would not have obtained loans without the false information supplied
    to the banks by Confredo and his associates.           Defense counsel alleged
    at a proceeding before Judge Sand in May 2006, without dispute from
    the Government, that in the majority of instances, individuals and/or
    institutions   with      good   credit    co-signed    the    loan    applications.
    However, there is no indication that any of the approximately $12
    million in loans that were ultimately granted were secured by bona
    fide assets pledged as collateral.
    For the services provided by Confredo and his co-conspirators,
    Granite Financial Services received a fee that typically amounted to
    between ten and fifteen per cent of the loan amount.                 Customers paid
    a portion of the fee up front; if the bank denied a customer’s loan
    application, Confredo or his associates would sometimes return the
    customer’s payment and sometimes retain it.                The presentence report
    -3-
    (“PSR”) estimates that, after payments to his associates and staff,
    Confredo’s      personal    share    of     the    proceeds     from   the   scheme     was
    “approximately $2,276,467.”
    While on bail following his arrest, Confredo purported to give
    truthful information during proffer sessions with the Government, but
    the Government became suspicious and enlisted a cooperator to meet
    with Confredo and record their discussion.                      During that meeting,
    Confredo told the cooperator that he was still arranging fraudulent
    loan deals while on bail, had been lying during the proffer sessions,
    and had been involved in loan sharking.
    In light of his post-arrest criminal conduct and his discussion
    with the cooperator, the Government presented additional evidence to
    the   grand     jury,    which     returned       a     superseding    indictment     (the
    “indictment”) in October 1998, certain counts of which related to
    offenses Confredo had committed while released on bail.
    In February 1999, pursuant to a plea agreement, Confredo pled
    guilty to one count of bank fraud (18 U.S.C. § 1344), two counts of
    false statements on a loan application (18 U.S.C. § 1014), one count
    of false statement to a federal law enforcement officer (18 U.S.C.
    § 1001), and one count of witness tampering (18 U.S.C. § 1512(b)(3)).
    The last four offenses were committed after Confredo’s initial arrest
    and   release    in     November    1997.         The   plea   agreement     includes   no
    stipulations as to amount of loss or the applicable sentencing range
    under the Sentencing Guidelines.
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    The loss calculation.     The PSR calculated the loss amount to be
    the “total amount requested in [the] various loan applications”
    involved in Confredo’s scheme, which it estimated to be $24.2 million.
    Citibank was the target of the majority of the fraudulent applications
    (more than 100), and it loaned approximately $11 million to Confredo’s
    customers.     The PSR noted that the actual loss to the banks was
    “extremely difficult to ascertain due to the amount of loans involved,
    the continual loan payments received by the banks from the customers
    of the loans and the negotiations of settlement agreements between the
    banks and these customers.”    But the Probation Office did obtain loss
    statements from a few banks.    One Citibank official reported payments
    of about $2.5 million, and hence an expected actual loss of $8.5
    million; but another Citibank official reported a total loss of $9.5
    million.     The combined actual loss reported by the other banks from
    whom the Probation Office obtained statements was slightly higher than
    $1 million.    Confredo did not file any objections to the PSR.
    The first sentencing.     Using the 1997 Guidelines, applicable to
    Confredo’s offense conduct, Judge Sand began with a base offense level
    of 6, see § 2F1.1(a)1, added 12 levels not challenged on this appeal,
    added 16 levels for an intended loss of more than $20 million but less
    than $40 million, see § 2F1.1(b)(1)(Q), and added 3 more levels
    1
    All references are to the 1997 Guidelines, unless otherwise
    noted.
    -5-
    because four counts of Confredo’s conviction involved offenses he
    committed while on release after his arrest, see § 2J1.7.           The
    adjusted offense level of 37 in Criminal History Category I yielded a
    sentence range of 210 to 262 months.2
    With respect to the loss enhancement, the Government argued, and
    the probation officer agreed, that Judge Sand should determine the
    enhancement based on the intended loss attributable to Confredo’s
    conduct, which they contended was represented by the combined face
    value of the loan applications, $24.2 million. Confredo conceded that
    the actual loss caused by his scheme was in excess of $10 million, but
    less than $20 million.3     Judge Sand ruled that intended, rather than
    actual, loss was the proper measure of the amount of loss under
    U.S.S.G. § 2F1.1(b)(1)(Q), and that the amount of the intended loss
    was the total of all the loan applications.     Judge Sand also adopted
    the PSR’s restitution recommendation, ordering restitution in the
    2
    The Probation office had determined the adjusted offense level
    to be 39, which included a 2-level sophisticated means enhancement
    pursuant to U.S.S.G. § 2F1.1(b)(5)(C) (1998).       Judge Sand did not
    apply this enhancement on ex post facto grounds because it was
    authorized after Confredo’s offense.
    3
    Apparently Confredo concedes that the larger $9.5 million loss
    figure reported by Citibank is accurate, bringing the total actual
    loss to an amount in excess of $10 million.
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    amount of $9,338,479.81.
    Although Confredo did not dispute the amount of intended loss for
    purposes of determining the appropriate loss enhancement, defense
    counsel did discuss the amount of loss at the first sentencing in the
    context of Confredo’s request for a downward departure.       Among the
    grounds advanced to justify a departure was a claim that the amount of
    loss calculation overstated the true amount of loss for various
    reasons, including Confredo’s alleged “intention . . . that the loans
    would be paid for the most part.”
    The three-level enhancement for offenses committed while on
    release was not discussed at the first sentencing, but is challenged
    on appeal under Apprendi v. New Jersey, 
    530 U.S. 466
    (2000), decided
    after the sentencing.
    Judge Sand denied Confredo’s request for a downward departure and
    orally announced a sentence of 262 months, which was the top of the
    applicable Guidelines range.     Judge Sand also entered 262 months as
    the total term of imprisonment on the judgment form.     However, Judge
    Sand’s distribution of the sentence among Confredo’s five counts of
    conviction yielded a total of only 230 months, as reflected in the
    summary order disposing of Confredo’s prior appeal. See United States
    v. Confredo, 1 Fed. Appx. 68, 70 (2d Cir. Jan. 12, 2001) (“Confredo
    I”).    In addition, with respect to the four counts to which the
    section 2J1.7 enhancement applied, Judge Sand did not apportion the
    sentence between the underlying offenses and the enhancement, as
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    required by 18 U.S.C. § 3147.
    First appeal. Confredo appealed, raising numerous claims. As to
    two of the issues raised on the first appeal-–the confusion about
    whether the total sentence was 230 or 262 months, and the absence of
    a section 3147 apportionment--the Government conceded that a remand
    for    resentencing     was    necessary.       As   additional    grounds    for
    resentencing, Confredo presented the two claims that are the subject
    of    this   appeal:   (1)    the   District   Court’s   loss   calculation   was
    erroneous; and (2) the section 2J1.7 enhancement was unlawful under
    Apprendi, decided after the first sentencing, because the indictment
    did not charge that he had committed offenses while on release.
    On the first appeal, we remanded for resentencing on the first
    two grounds just discussed. See Confredo I, 1 Fed. Appx. at 70.              As to
    Confredo’s Apprendi claim, we declined to consider it, stating, “We
    find it more appropriate to allow the district court to consider it in
    the first instance on remand.”         
    Id. at 71
    n.3.    As to Confredo’s claim
    regarding the loss amount, we noted that Confredo “did not object to
    the loss calculation in the presentence report or object to the
    district court’s loss calculation at sentencing.” 
    Id. at 71
    . However,
    because the loss amount issue had been discussed in connection with
    Confredo’s request for a downward departure, we deemed it appropriate
    to permit the District Court to revisit the issue on remand.
    Confredo’s conviction in the Eastern District of New York.             The
    United States Attorney’s Office for the Eastern District of New York
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    prosecuted Confredo for laundering some of the proceeds generated by
    his fraudulent loan application scheme. Confredo pled guilty, and, in
    March 2001, the late Judge Jacob Mishler imposed a 57-month sentence.
    Judge Mishler ordered this sentence to run concurrently with whatever
    sentence Judge Sand would impose on remand in this case.
    Resentencing.        In June 2006, Judge Sand resentenced Confredo.4
    At the resentencing hearing, the only disputed issues as to the
    applicable sentencing range were the loss amount calculation and the
    section 2J1.7 enhancement.        As to loss amount, the Government argued
    that Judge Sand should follow the Probation Office’s recommendation of
    a 16-level enhancement for a loss amount of between $20 and $40
    million.     The Government’s position was based entirely on the loan
    applications; it maintained that because Confredo’s customers had
    applied for a combined value of more than $20 million in loans, the
    “intended loss” was more than $20 million.            Confredo argued for a 15-
    level enhancement on the theory that his intended loss was between $10
    and $20 million; he contended that he did not intend a loss in excess
    of $20 million to occur because he expected the banks to reject some
    4
    The delay between remand and resentencing was caused by several
    factors,     as   Judge   Sand   recounted   orally    at   resentencing.   The
    principal reasons for the delay appear to have been defense counsel’s
    requests for extensive discovery related to loss amount, and, once
    Blakely v. Washington, 
    542 U.S. 296
    (2004), was decided, “the parties’
    desire to await the Booker decision and address its impact.”
    -9-
    of the loan applications and expected at least some of his customers
    to pay back all or some of their loans.      Confredo cited evidence that
    many applications were denied and some loan repayments had occurred,
    leaving the actual loss between $10 million and $20 million, and in
    fact closer to $10 million.
    As he had at the first sentencing, Judge Sand agreed with the
    Government’s loss calculation.        As a threshold matter, Judge Sand
    ruled that Confredo had “waived” his loss amount argument by not
    raising it at the first sentencing, but then rejected Confredo’s
    argument on the merits. In summary, Judge Sand found the expectation-
    of-repayment point unpersuasive because
    [Confredo] undertook no obligation himself to pay off the loans
    he secured. His “cut” was paid when the loans were secured; it
    did not matter whether they were paid back. Confredo is not a
    borrower who used fraud to obtain a loan which he then paid back
    in full. See generally United States v. Schneider, 
    930 F.2d 555
       [(7th Cir. 1991)].     Confredo secured loans for dozens of
    entities and he retained no control whether those loans were
    paid off, nor did his remuneration change depending on whether
    the borrowers paid any of the funds back.
    Consequently, Judge Sand again ruled that in this case the
    “intended loss” was the combined face value of all the loans for which
    Confredo’s customers had applied, which the PSR estimated to be $24.2
    million.   He stated that he had rejected all of Confredo’s arguments,
    including the statutory and Apprendi objections to the section 2J1.7
    enhancement,   and   was   staying   with   the   original   210-262   month
    Guidelines range.    Confredo’s counsel asked the Judge to impose a
    sentence at the low end of the range, taking into account various
    mitigating factors, including the fact that several million dollars of
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    loans provided to Confredo’s customers by Citibank had been repaid,
    reducing the bank’s losses.
    Judge Sand then orally delivered a formal opinion explaining his
    reason for giving a non-Guideline sentence, consistent with what he
    understood his obligations to be under United States v. Rattoballi,
    
    452 F.3d 127
    (2d Cir. 2006).       Because Judge Mishler lacked authority
    to have the Eastern District sentence run concurrently with a sentence
    that had not yet been imposed, cf. Santa v. Tippy, 
    14 F.3d 157
    , 160
    (2d Cir. 1994) (citing Mack v. Nelson, 
    455 F. Supp. 690
    , 692 (D. Conn.
    1978)), Judge Sand implemented Judge Mishler’s intent by subtracting
    57 months, which Confredo had already served, from the top of the
    applicable    guideline   range,    262   months,   which   Judge   Sand   would
    otherwise have used.       He then imposed a sentence of 205 months,
    resulting in the same amount of time to be served as if he had imposed
    a sentence of 262 months to which Judge Mishler’s 57-month sentence
    would have run concurrently.5
    Discussion
    I. Amount of Loss
    Availability of claim.          As noted, Judge Sand ruled at the
    resentencing that Confredo had “waived” (more accurately, forfeited)
    his challenge to the loss amount calculation by failing to raise it at
    the first sentencing.     It is true that Confredo filed no objections to
    5
    The amended judgment being appealed was further amended by a
    judgment entered July 20, 2006, to correct a clerical mistake.
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    the PSR, and his counsel appeared to concede at the first sentencing
    both that the intended loss controlled and that the amount of this
    loss was more than $20 million.     But it is also true that Confredo
    sought a departure in part on the ground that he intended some of the
    loans to be repaid, which in fact they were.    Even if the loss claim
    was not properly asserted in the District Court, we will entertain the
    claim under all the circumstances on the somewhat relaxed application
    of plain error review that we and other courts have on occasion deemed
    appropriate for unpreserved sentencing errors. See United States v.
    Simmons, 
    343 F.3d 72
    , 80 (2d Cir. 2003); United States v. Cortes-
    Claudio, 
    312 F.3d 17
    , 24 (1st Cir. 2002); United States v. Sofsky, 
    287 F.3d 122
    , 125 (2d Cir. 2002).
    Merits.   Confredo challenges the aggregation of all the loan
    applications to arrive at the intended loss amount for two reasons:
    (1) based on his experience as a loan officer, he did not expect that
    all of the loans for which he prepared applications would be granted,
    let alone at the full amounts sought, and (2) he expected some of the
    loans to be repaid by his customers.     Conceding an intended loss of
    more than $10 million but less than $20 million, he contends that the
    loss enhancement should have been 15 levels, see § 2F1.1(b)(1)(P),
    instead of 16.    Although the dispute concerns only one level of
    enhancement, the difference between the resulting maximums of the two
    arguably applicable ranges is 27 months.
    In considering Confredo’s claim, we encounter some uncertainty as
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    to the standard of review, arising from uncertainty as to whether
    Judge Sand’s 16-level enhancement was based on a finding of fact,
    which we would review only for clear error, see United States v.
    Rubenstein, 
    403 F.3d 93
    , 99 (2d Cir. 2005), or was based, at least in
    part, on an interpretation of the relevant guideline, which we would
    review de novo, see id.; cf. United States v. Rutkoske, 
    506 F.3d 170
    ,
    178 (2d Cir. 2007) (court of appeals has obligation to determine if
    trial court’s method of calculating loss was legally acceptable).
    Even    though      a    non-Guidelines        sentence    was   imposed    in    order   to
    effectuate Judge Mishler’s attempt to make his sentence concurrent,
    any    error   in       making   the       initial    calculation   of   the     applicable
    guideline range will normally undermine the validity of the resulting
    sentence,      especially        in    a    case   like   Confredo’s     where    the   non-
    Guidelines sentence is calculated precisely with reference to what a
    Guidelines sentence would have been. See United States v. Fagans, 
    406 F.3d 138
    , 141 (2d Cir. 2005).
    If Judge Sand found as a matter of fact that Confredo intended to
    cause a loss equal to the face amount of all of the loans, such a
    finding would likely be affirmed on review only for clear error.
    Similarly, if Judge Sand concluded that Confredo had failed to present
    evidence putting his intent in issue, we would likely affirm a
    conclusion that the aggregate amount of the loans was the intended
    loss.    However, the rationale for Judge Sand’s decision appears to be
    based, at least in part, on his view that a presenter of fraudulent
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    loan applications will be deemed as a matter of law to have intended
    a loss equal to the aggregate amount of the loans whenever the
    presenter   is   not   the   borrower.    Whether   that   is    a   correct
    interpretation of the fraud guideline requires consideration of the
    somewhat varied case law on the subject.
    Prior to 1991, we had stated that the proper measure of intended
    loss was the total value of the loan obtained or sought, without
    regard to whether the defendant had intended to repay the lender. See
    United States v. Brach, 
    942 F.2d 141
    , 143 (2d Cir. 1991).                The
    rationale was that the defendant’s crime was analogous to theft, see
    United States v. Kopp, 
    951 F.2d 521
    , 528-29, 533 (3d Cir. 1991), a
    rationale supported by the pre-1991 version of Application Note 7 of
    the fraud guideline, which appeared to treat fraud offenses like theft
    offenses when calculating the loss amount, see U.S.S.G. § 2F1.1,
    comment. (n.7) (1990) (cross-referencing commentary to guideline for
    theft offenses, U.S.S.G. § 2B1.1 (1990)); 
    Brach, 942 F.2d at 143
    .
    In 1991, the Sentencing Commission amended Application Note 7.
    See U.S.S.G. App. C, Amend. No. 393, at 222-23 (1991).          The Note had
    instructed the sentencing court to determine loss based on “a probable
    or intended loss.” U.S.S.G. § 2F1.1, comment. (n.7) (1990).             The
    amended version deletes the word “probable,” but preserves the general
    rule, applicable in both fraud and theft cases, that the sentencing
    court should use the loss amount that the defendant intended if that
    amount exceeds the actual loss and can be determined. See U.S.S.G.
    -14-
    §   2F1.1,   comment.   (n.7)    (1991).      It    also    acknowledges    that
    “[f]requently loss in a fraud case will be the same as in a theft
    case.” 
    Id. But the
    amended version recognizes that there might be
    types of fraud where an analogy to theft would not be appropriate; in
    such cases “additional factors are to be considered in determining the
    loss or intended loss.” 
    Id. Among such
    cases are “Fraudulent Loan Application and Contract
    Procurement Cases,” which are treated in subsection (b) of Note 7.
    The 1997 version of Note 7(b), applicable here, provides the general
    rule for loss calculation in fraudulent loan application cases:
    In fraudulent loan application cases and contract procurement
    cases, the loss is the actual loss to the victim (or if the loss
    has not yet come about, the expected loss). For example, if a
    defendant fraudulently obtains a loan by misrepresenting the
    value of his assets, the loss is the amount of the loan not
    repaid at the time the offense is discovered, reduced by the
    amount the lending institution has recovered (or can expect to
    recover) from any assets pledged to secure the loan. However,
    where the intended loss is greater than the actual loss, the
    intended loss is to be used.
    U.S.S.G. § 2F1.1, comment. (n.7(b)) (1997) (emphasis added).               Thus,
    amended Note 7(b) gives the defendant credit for objective facts--
    payments prior to discovery of fraud and assets pledged to secure the
    loan--that might alter a loss calculation if based solely on face
    amounts of loan applications.
    Although   Note   7(b)   sensibly    takes   into    account   differences
    between theft offenses and fraudulent loan applications, it does not
    specifically provide a method for determining intended loss in a case
    like the present one, where (a) no collateral is involved, and (b) the
    -15-
    defendant   is   not    a   borrower   but     a   preparer   of    fraudulent     loan
    applications who claims to have expected that a number of loans would
    be denied and at least some portion of the loans granted would be
    repaid.
    In Brach, a case governed by the pre-amendment version of section
    2F1.1, we upheld the use of the face value of a fraudulently obtained
    loan as the loss amount, even though the defendant, who was the
    borrower, had in fact repaid the entire loan, and we assumed that he
    had intended to repay the loan when he applied for it. See 
    Brach, 942 F.2d at 143
    .     Consistent with the pre-amendment version of Note 7, we
    applied the commentary to the guideline for theft offenses, concluding
    that a defendant’s intent to repay a fraudulently obtained loan was
    immaterial to the loss calculation because “‘loss’ includes the value
    of all property taken, even though all or part of it was returned.”
    
    Id. Based on
    the text of the pre-amendment version of the Note, we
    also observed that “loss” in a fraud case may consist of the “probable
    loss   resulting     from   the   fraud,”      
    id. (internal quotation
         marks
    omitted),    which     we   equated    with    the    potential      loss   that    the
    defendant’s conduct could have caused, see 
    id. Brach was
    rejected by several courts, notably the Third Circuit
    in a thoughtful opinion by the late Judge Becker.                  See United States
    v. Kopp, 
    951 F.2d 521
    (3d Cir. 1991); United States v. Moored, 
    38 F.3d 1419
    , 1426-27 (6th Cir. 1994); United States v. Shaw, 
    3 F.3d 311
    , 313
    (9th Cir. 1993).        Kopp involved a defendant who had fraudulently
    -16-
    procured a $13.75 million loan that was secured by real property. See
    
    id. at 524.
            The defendant claimed he had intended to repay, but the
    loan went into default; when the bank sold the property securing the
    loan,    it    recovered     more      than    the   value       of   the    loan.   See   
    id. Nevertheless, the
    district court ruled that the face amount of the
    loan    was    the    appropriate      measure       of    the    loss    intended    by   the
    defendant, and sentenced him accordingly. See 
    id. at 525.
    Judge Becker’s opinion disagreed with Brach and sided with a
    Seventh Circuit opinion authored by Judge Posner, see 
    id. at 529,
    532-
    33, which had observed that it was “simple” but “irrational” to treat
    all frauds as equivalent to thefts, preferring an approach that took
    account of whether the defendant actually intended to pocket the face
    value of the amount he had fraudulently procured, see United States v.
    Schneider, 
    930 F.2d 555
    , 558-59 (7th Cir. 1991).                         In addition, based
    on a careful analysis of the then-applicable version of section 2F1.1,
    Judge Becker rejected an approach that equated the Guidelines-approved
    measures      of    “probable”    or     “intended”       loss    with      “the   worst   case
    scenario [of] potential loss (here, the face value of the loan).”
    
    Kopp, 951 F.2d at 529
    ; see also 
    id. at 533.
                           Finally, Judge Becker
    observed that the approach taken by Brach was inconsistent with the
    1991 amendments to Note 7. See 
    id. at 534-35.
    After       Kopp,   the   Third    Circuit         has    consistently      held    that
    “[i]ntended loss refers to the defendant’s subjective expectation, not
    to the risk of loss to which he may have exposed his victims.” United
    -17-
    States v. Yeaman, 
    194 F.3d 442
    , 460 (3d Cir. 1999); see United States
    v. Geevers, 
    226 F.3d 186
    , 192 (3d Cir. 2000).         Judge Becker’s opinion
    in Geevers devised a sensible approach for district courts to use in
    determining   the   defendant’s   “intended   loss”    in    cases   where   the
    Government seeks to equate possible loss with intended loss:                 The
    district court may presume that the defendant intended the victims to
    lose the entire face value of the instrument, but the defendant may
    rebut the presumption by producing “evidence to demonstrate that he
    actually intended” to cause a lesser loss.      See 
    id. at 193-94.
    Since the Commission amended Note 7, we have left open the
    possibility that a defendant is free at sentencing to present evidence
    of his intent regarding the issue of loss.             In United States v.
    Ravelo, 
    370 F.3d 266
    , 270-274 (2d Cir. 2004), where the defendant made
    numerous unsuccessful attempts to get cash advances on credit cards in
    excess of cash advance limits, we approved use of the aggregate
    amounts he would have obtained if he had succeeded on each attempt in
    the absence of evidence of contrary intent. See 
    id. at 273.
                Ravelo
    cited Geevers as having “adopted [a] similar approach[] in analogous
    circumstances.”     See 
    id. at 273
    n.6.
    In United States v. Singh, 
    390 F.3d 168
    (2d Cir. 2004), a doctor
    caused his office to submit to medicare and medicaid insurers bills
    that were higher than the fixed rates established by the Government
    for the services provided. See 
    id. at 176-77,
    193.          The district court
    determined intended loss based on the combined total of the face value
    -18-
    of the bills.   See 
    id. at 193.
       The defendant argued that he never
    intended to receive full reimbursement because he knew the rate
    schedules were carved in stone. Consistent with the Geevers approach,
    Singh held that the defendant “should have a further opportunity on
    remand to show, if he can, that the total amount he expected to
    receive from the insurers was indeed less than the amounts he actually
    billed.”   
    Id. at 194.
    We conclude that, after adoption of amended Note 7, the defendant
    should have an opportunity to persuade the sentencing judge that the
    loss he intended was less than the face amount of the loans.        A
    defendant who applied for, or caused someone else to apply for, a
    $1 million loan, fully expecting at least $250,000 to be repaid,
    intended a loss of no more than $750,000 (although, if no repayment is
    made, he would be subject to punishment for an actual loss of $1
    million). Similarly, a defendant who applied for, or caused others to
    apply for, ten $1 million loans, expecting at least three to be
    rejected, intended a loss of no more than $7 million (although, if all
    were accepted and none was repaid, he would be subject to punishment
    for an actual loss of $10 million).
    We will therefore remand to afford Judge Sand an opportunity to
    reconsider the intended loss in accordance with this opinion.   Either
    on the present record, or after receipt of additional evidence in the
    Judge’s discretion, the Judge should determine the extent, if any, to
    which Confredo has proven a subjective intent to cause a loss of less
    -19-
    than the aggregate amount of the loans, in which event the applicable
    loss calculation should be based only on the intended loss, unless the
    actual loss is higher.            As with all loss calculations, absolute
    precision is not required. See § 2F1.1 comment. (n.8).
    II.   The Section 2J1.7 Enhancement
    The 1997 version of section 2J1.7,6 which was applied here to
    enhance Confredo’s offense level by three levels, provided:
    If an enhancement under 18 U.S.C. § 3147 applies, add 3 levels
    to the offense level for the offense committed while on release
    as if this section were a specific offense characteristic
    contained in the offense guideline for the offense committed
    while on release.
    As     is   clear   from   its   text,    section   2J1.7   was   designed   to
    implement 18 U.S.C. § 3147, which provides, in relevant part:
    A person convicted of an offense committed while released under
    this chapter shall be sentenced, in addition to the sentence
    prescribed for the offense to --
    (1) a term of imprisonment of not more than ten years if
    the offense is a felony . . . .
    A term of imprisonment imposed under this section shall be
    consecutive to any other sentence of imprisonment.
    18 U.S.C. § 3147; see United States v. Stevens, 
    66 F.3d 431
    , 435-36
    (2d Cir. 1995).
    Confredo did not challenge the section 2J1.7 enhancement at his
    first sentencing because the conceptual basis for his argument is
    6
    In 2006, the Commission deleted section 2J1.7 and moved it in
    substance to Chapter Three of the Guidelines, see U.S.S.G. § 3C1.3
    (2007); Supplement to Appendix C, Amendment 684, at 154-58 (2006).
    -20-
    Apprendi, which was decided later.     He raised the issue for the first
    time in his initial appeal and then at his resentencing, and does so
    again on this appeal.     Although the Government contends that plain
    error review applies, Judge Sand considered the enhancement on the
    merits at the resentencing following the remand order that suggested
    he do so.
    Whether or not the Apprendi objection was preserved, it is
    without merit, although the matter requires some discussion.              The
    initial issue is whether Apprendi applies to Confredo’s sentence.          It
    is undisputed that the sentence does not exceed the statutory maximum
    punishment Judge Sand could have imposed, based on Confredo’s guilty
    plea, even without the three-level section 2J1.7 enhancement.            This
    reason has prompted numerous courts to reject Apprendi challenges to
    section 2J1.7 enhancements in analogous cases.       See   United States v.
    Samuel, 
    296 F.3d 1169
    , 1172-76 (D.C. Cir. 2002); United States v.
    Randall, 
    287 F.3d 27
    , 30-31 (1st Cir. 2002); United States v. Ellis,
    
    241 F.3d 1096
    , 1103-04 (9th Cir. 2001); United States v. Parolin, 
    239 F.3d 922
    , 930 (7th Cir. 2001).       However, our Court has ruled that
    Apprendi applies not only where an enhanced sentence exceeds the
    statutory maximum but also where an enhancement exposes the defendant
    to the risk of a sentence that exceeds the statutory maximum. See
    United States v. Gonzalez, 
    420 F.3d 111
    , 128-29 (2d Cir. 2005) (“The
    Apprendi rule applies to the resolution of any fact that would
    substitute   an   increased   sentencing   range   for   the   one   otherwise
    -21-
    applicable to the case.”). Whether Confredo was “exposed” to a higher
    maximum sentence than the maximum for the offenses to which he pled is
    not as clear as one might suppose.          Consideration of that issue
    requires an examination of the interplay between the guideline,
    section 2J1.7, and the related statute, 18 U.S.C. § 3147.
    The three level enhancement of section 2J1.7 is to be added “[i]f
    an enhancement under 18 U.S.C. § 3147 applies.” U.S.S.G. § 2J1.7.
    Section 3147 is entitled “Penalty for an offense committed while on
    release,” and several courts have held that it does not create a
    separate offense but merely provides a sentence enhancement. See
    United States v. Jackson, 
    891 F.2d 1151
    , 1152-53 (5th Cir. 1989);
    United States v. Di Pasquale, 
    864 F.2d 271
    , 279-80 (3d Cir. 1988);
    United States v. Sink, 
    851 F.2d 1120
    , 1121 (8th Cir. 1988); United
    States v. Patterson, 
    820 F.2d 1524
    , 1526 (9th Cir. 1987); cf. 
    Samuel, 296 F.3d at 1173
    (expressing uncertainty as to whether section 3147
    creates a separate offense).
    Because Judge Sand did not impose a specific sentence under
    section 3147 on any of the counts charging offenses committed while on
    release, it is arguable that section 3147 has not been “applie[d].”
    However, Judge Sand recognized that section 2J1.7 represents the
    Sentencing   Commission’s   method    for   implementing   section   3147’s
    requirement of additional consecutive punishment.      Understanding why
    this is so requires consideration of the Commission’s statements in
    the Background explanation of section 2J1.7 and the Commission’s
    -22-
    technique, explained in Application Note 2 to this section, for
    determining and imposing a sentence for an offense committed while on
    release.
    The Background explanation includes the following
    [T]he court is required to impose a consecutive term of
    imprisonment under [section 3147], but there is no
    requirement as to any minimum term.   [Section 2J1.7] is
    drafted to enable the court to determine and implement a
    combined “total punishment” consistent with the overall
    structure of the guidelines, while at the same time
    complying   with   the   statutory  requirement   [i.e.,
    consecutiveness].
    U.S.S.G. § 2J1.7 comment. (backg’d).
    Application Note 2 states:
    Under 18 U.S.C. § 3147, a sentence of imprisonment must
    be imposed in addition to the sentence for the underlying
    offense, and the sentence of imprisonment imposed under 18 U.S.C. § 3147 must runs consecutively to any other
    sentence of imprisonment. Therefore, the court, in order to comply
    with the statute, should divide the sentence on the judgment form
    between the sentence attributable to the underlying offense and the
    sentence attributable to the enhancement.                                 The court will have to
    ensure that the “total punishment” (i.e., the sentence for the offense
    committed while on release plus the sentence enhancement under 18
    U.S.C. § 3147) is in accord with the guideline range for the offense
    committed while on release, as adjusted by the enhancement in this
    section. For example, if the applicable adjusted guideline range is
    30-37 months and the court determines “total punishment” of 36 months
    is appropriate, a sentence of 30 months for the underlying offense
    plus 6 months under 18 U.S.C. § 3147 would satisfy this requirement.
    U.S.S.G. § 2J1.7, comment. (n.2).7
    As the Seventh Circuit has usefully explained, the correct way to
    7
    As we have pointed out, the Commission’s example in the last six
    lines of Note 2 is incorrect under the Commission’s own recommended
    procedure. See 
    Stevens, 66 F.3d at 436
    .
    -23-
    perform the task required by Note 2 comprises several steps: (1)
    determine the applicable sentencing range for the offense committed on
    release without the section 2J1.7 enhancement, (2) determine the
    applicable sentencing range with the enhancement, (3) select an
    appropriate     sentence   within   the   enhanced   sentencing   range,   (4)
    apportion any part of the sentence that falls within the unenhanced
    range to the offense committed while on release, (5) apportion the
    remainder of the sentence to the enhancement, and (6) impose the term
    apportioned to the enhancement to run consecutively to the term
    apportioned to the unenhanced sentence. See United States v. Wilson,
    
    966 F.2d 243
    , 249 (7th Cir. 1992).           We have endorsed the Seventh
    Circuit’s methodology. See 
    Stevens, 66 F.3d at 434-36
    .
    Judge Sand endeavored to follow Application Note 2 and the Wilson
    methodology.     He recognized, however, that, because of the adjustment
    to account for the sentence imposed by Judge Mishler--reducing by 57
    months what would have been a Guidelines sentence of 262 months--
    Confredo’s sentence would be a non-Guidelines sentence and the Judge’s
    calculation would be “similar to that performed in Stevens.”           Judge
    Sand’s methodology, detailed in the margin,8 satisfied the purpose of
    8
    Judge Sand determined a total punishment range at level 37 (the
    enhanced level), which was 210-262 months, selected the top of the
    range, 262, as an initial punishment and then subtracted the 57 months
    of Judge Mishler’s sentence to reach a total punishment of 205 months.
    Then he spread those 205 months among the five counts of conviction as
    -24-
    Note 2 and section 3147 because the enhanced portions of the sentences
    for all offense-on-release counts run consecutively to all other
    sentences.
    The Government contends that Judge Sand applied only section
    2J1.7, and not section 3147.    The Government relies on the language of
    section 2J1.7, which states that the three-level enhancement is to be
    applied “as if this section were a specific offense characteristic
    contained in the offense guideline for the offense committed while on
    release.” The District of Columbia Circuit has accepted that view, at
    least as long as a defendant is not separately charged with a section
    3147 offense, see 
    Samuel, 296 F.3d at 1172-76
    , and the First Circuit
    has rejected an Apprendi challenge to a section 2J1.7 enhancement on
    similar grounds, see 
    Randall, 287 F.3d at 30-31
    .         We disagree.
    Since the section 2J7.1 enhancement is the Commission’s technique
    for   implementing   section   3147,   use   of   that   enhancement    is   an
    follows: 100 months on Count 2, 30 months on Count 15, 30 months on
    Count 16, 30 months on Count 23, and 15 months on Count 28. Then he
    made an allocation within the sentence for each of the four offense-
    on-release counts as follows:    Count 15, 13 months for the offense and
    17 months for the enhancement; Count 16, 13 months for the offense and
    17 months for the enhancement; Count 23, 14 months for the offense and
    16 months for the enhancement; Count 28, 7 months for the offense and
    8 months for the enhancement. Finally, and most significantly, he
    specified that all five sentences are to run consecutively.
    -25-
    application of section 3147.      Indeed, the only reason the Commission
    requires apportionment is to satisfy section 3147’s requirement of
    consecutiveness.   The Commission cannot take a statutory requirement
    of   consecutive     punishment   and,     by   calling   it   an   offense
    characteristic, avoid the reality that a defendant, punished for
    committing an offense while on release, is exposed to the additional
    consecutive ten-year maximum provided by section 3147.
    Since section 3147 applies (even though not as a separately
    charged offense), Apprendi also applies because section 3147 exposes
    Confredo to a higher maximum, i.e., ten more years, than the highest
    maximum he could have received on the offense-on-release counts.
    Under our decision in Gonzalez, it does not matter that the added
    sentence in fact left the total sentence within the maximum for the
    underlying offenses. 
    See 420 F.2d at 128-29
    .
    Although Apprendi applies, its jury fact-finding requirement has
    not been violated.    Confredo sufficiently admitted the fact on which
    the enhancement rested, i.e., that he committed the offenses while on
    release. See United States v. Booker, 
    543 U.S. 220
    , 244 (2005)
    (Apprendi not violated where fact is “admitted by the defendant).
    During his plea colloquy, Confredo stated that, after he had been
    arrested, he had participated in the proffer sessions at which he made
    the false statements underlying Count 23, at a time when the public
    record indisputably establishes that he had been released, and he
    acknowledged meeting a co-conspirator in the Bronx and Manhattan on a
    -26-
    number of occasions to prepare false loan applications, activity that
    occurred after his release.   Under these circumstances, jury fact-
    finding that the offenses occurred while on release was not required
    or, in any event, any error was harmless. See United States v.
    Wallace, 
    276 F.3d 360
    , 369 (7th Cir. 2002) (stipulation and plea
    colloquy); United States v. Champion, 
    234 F.3d 106
    , 109-10 (2d Cir.
    2000) (stipulation).   Moreover, the presentence report alleged that
    the offenses were committed while on release, and this aspect of the
    PSR was not challenged. See United States v. Fagans, 
    406 F.3d 138
    , 142
    (2d Cir. 2005).
    The only aspect of the Apprendi claim that might remain is the
    absence from the indictment of an allegation that the offenses were
    committed while on release. See 
    Apprendi, 530 U.S. at 476
    (citing
    Jones v. United States, 
    526 U.S. 227
    , 243 n.6 (1999)).    The Supreme
    Court has ruled that an Apprendi violation concerning an omission from
    an indictment is not noticeable as plain error where the evidence is
    overwhelming that the grand jury would have found the fact at issue.
    See United States v. Cotton, 
    535 U.S. 625
    , 631-34 (2002).    We think
    the same analysis should apply to harmless error. See United States v.
    Salazar-Lopez, 
    506 F.3d 748
    , 752-56 (9th Cir. 2007); United States v.
    Robinson, 
    367 F.3d 278
    , 285-89 & n.7 (5th Cir. 2004).     There is no
    doubt that the grand jury would have found that the offenses were
    committed while Confredo was on release.   Moreover, as the Government
    contends, Confredo had ample notice, prior to his plea, that he faced
    -27-
    an enhancement under section 2J1.7. Cf. United States v. Doe, 
    297 F.3d 76
    , 87-88 (2d Cir. 2002) (on plain error review, omission from
    indictment       did   not    violate       substantial      rights    because    of     prior
    notice).
    Confredo’s        challenge       to     the    section       2J1.7   enhancement      is
    rejected.9
    Conclusion
    The case is remanded for reconsideration of the sentence.
    9
    The Government contends that no Apprendi error occurred because
    the fact of committing the offenses while on release is similar to the
    prior     conviction      facts    that       are     exempted      from     Apprendi.     See
    Almendarez-Torres v. United States, 
    523 U.S. 224
    (1998).                          The First
    Circuit has accepted this argument, see 
    Randall, 287 F.3d at 30
    ,
    although, as Justice Thomas has pointed out, a majority of the Supreme
    Court now agrees that Almendarez-Torres was incorrectly decided. See
    Shepard     v.   United      States,    
    544 U.S. 13
    ,    27    (2007)    (Thomas,     J.,
    concurring).       In view of our disposition of the Apprendi claim, we
    need not consider this alternative argument.
    -28-