United States v. Merritt ( 2004 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 02-7206
DAVID J. MERRITT,
Defendant-Appellant.

UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 02-7207
DAVID J. MERRITT,
Defendant-Appellant.

UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 02-7208
DAVID J. MERRITT,
Defendant-Appellant.

UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 02-7209
DAVID J. MERRITT,
Defendant-Appellant.

2 UNITED STATES v. MERRITT
Appeals from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Raymond A. Jackson, District Judge.
(CR-98-06; CA-01-15; CR-97-43; CA-01-16)
Argued: May 6, 2004
Decided: June 25, 2004
Before NIEMEYER, MICHAEL, and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion. Judge Niemeyer wrote
a separate concurring opinion.
COUNSEL
ARGUED: Derek Sterling Bentsen, Third Year Law Student, Appel-
late Litigation Clinic, UNIVERSITY OF VIRGINIA SCHOOL OF
LAW, Charlottesville, Virginia, for Appellant. Michael R. Smythers,
Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Norfolk, Virginia, for Appellee. ON BRIEF:
Neal L. Walters, Charlottesville, Virginia, for Appellant. Paul J.
McNulty, United States Attorney, Michael J. Elston, Assistant United
States Attorney, Alexandria, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
A jury in the United States District Court for the Eastern District
of Virginia convicted David Merritt on seventy-six counts of an
UNITED STATES v. MERRITT 3
indictment for offenses including mail fraud, false statements in a
bankruptcy proceeding and fraudulent transfer of bankruptcy assets.
Thereafter, Merritt waived indictment and venue and pled guilty to
six new counts, including mail fraud and false statements to a finan-
cial institution, arising from illegal acts committed in the Middle Dis-
trict of Florida. The two cases were consolidated for sentencing and
the district court imposed a 140-month term of imprisonment and
ordered Merritt to pay restitution. On direct review, we affirmed Mer-
ritt’s conviction and sentence. See United States v. Merritt, 205 F.3d
1335 (table), 2000 WL 148214 (4th Cir. 2000) (per curiam) (unpub-
lished).
Merritt moved for a writ of habeas corpus pursuant to 28 U.S.C.
§ 2255. In his motion, Merritt asserted that (1) he was improperly sen-
tenced on inaccurate information; (2) he was sentenced in violation
of Apprendi v. New Jersey, 530 U.S. 466 (2000); (3) the government
engaged in prosecutorial misconduct based on misrepresentations it
made at sentencing; (4) the government engaged in prosecutorial mis-
conduct by moving for an upward departure; (5) he received ineffec-
tive assistance of counsel both during plea negotiations and
sentencing; (6) the government engaged in prosecutorial misconduct
in informing him of his sentencing exposure; and (7) the court vio-
lated Fed. R. Crim. P. 11(e). The district court dismissed the first four
claims as procedurally defaulted, and denied relief on the merits of
each remaining claim. On appeal, we granted Merritt two certificates
of appealability — one based on his ineffective assistance of counsel
during plea negotiations before trial; the other based on ineffective
assistance of counsel at sentencing — but dismissed the remaining
claims. Having now considered the ineffective assistance of counsel
claims on the merits, we find that they fail for the reasons that follow.
I.
In July 1997, Merritt was indicted on seventy-seven counts includ-
ing mail fraud, making false statements during a bankruptcy proceed-
ing and fraudulent transfer of assets. Prior to trial, Merritt’s attorney
and the government settled on a plea agreement whereby Merritt
would plead guilty to three counts and receive a specific sentence,
pursuant to Fed. R. Crim. P. 11(e)(1)(C) (1997),1 of eighteen months’
1
After reorganization of Rule 11, the provision’s current form is Fed.
R. Crim. P. 11(c)(1)(C).
4 UNITED STATES v. MERRITT
imprisonment. In deciding whether to accept the plea offer, Merritt
asserts that his counsel (hereinafter "trial counsel") informed him that
he would face a forty-one month sentence if convicted on the indict-
ment. Purportedly relying on this information, Merritt maintains he
rejected the government’s plea offer and decided to go to trial.
At trial, in December 1997, the jury convicted Merritt of seventy-
six of the seventy-seven counts upon which he was indicted.2 The ini-
tial Presentence Report ("PSR"), which was amended several times
prior to sentencing, calculated a sentencing range of 41-51 months
under the United States Sentencing Guidelines. On March 9, 1998,
Merritt’s probation officer amended the PSR based on new informa-
tion and calculated a sentencing range of 97-121 months.
On March 10, 1998, the day that sentencing was to take place,
Merritt waived venue and pled guilty to a new six count criminal
information based on separate fraudulent conduct that occurred in the
Middle District of Florida. In the plea agreement, Merritt agreed to
waive his right to appeal his sentence on both the original seventy-six
and the six new counts. After entering the plea agreement, the district
court consolidated the cases for sentencing. Prior to the sentencing
hearing, the government moved for an upward departure based on
aggravating circumstances.
Meanwhile, during his review of the original PSR, Merritt alleg-
edly discovered several factual inconsistencies. Specifically, Merritt
noticed the PSR’s "Victim Impact" section stated that his scheme
defrauded victims of $1,742,233.38, but acknowledged that "some of
the victims have received some funds through the bankruptcy pro-
cess," thus leaving $1,369,625.90 attributed to Merritt as actual loss
for the purpose of restitution. Of this actual loss, Merritt asserted
there were inaccuracies which led to an overstatement of approxi-
mately $480,000. Merritt sent four letters to trial counsel prior to sen-
tencing regarding these inaccuracies, directed trial counsel to relevant
witnesses who could attest to the errors, and requested a meeting to
discuss these matters further. Trial counsel, however, never responded
to the letters. Instead, trial counsel subpoenaed some of the identified
witnesses, although he declined to have them testify at Merritt’s sen-
2
The government dismissed the other count.
UNITED STATES v. MERRITT 5
tencing hearing. Merritt alleges that on the morning of April 29, 1998,
the day of sentencing, trial counsel told him "not to worry, I have
your objections covered." At the sentencing hearing, however, trial
counsel did not object to the actual loss amounts calculated in the
PSR; instead, he conceded that they were correct. At the conclusion
of the sentencing hearing, the district court imposed a 140-months
term of imprisonment and ordered restitution.
On direct appeal, we affirmed Merritt’s conviction and sentence.
Merritt, 2000 WL 148214, at *3. Merritt filed a motion pursuant to
28 U.S.C. § 2255, and the district court denied all claims for relief.
This appeal ensued, and, as noted above, we granted certificates of
appealability on Merritt’s two ineffective assistance of counsel claims
while dismissing his remaining claims.
II.
We analyze Merritt’s ineffectiveness of counsel claims under the
familiar test enunciated in Strickland v. Washington, 466 U.S. 668,
687 (1984).3 To prevail, Merritt must show (1) "counsel’s perfor-
mance fell below an objective standard of reasonableness," as deter-
mined by comparison to "prevailing professional norms," id. at 688,
3
In its brief, the government argued that we should dismiss the case
because Merritt waived his right to appeal. Following our grant of certifi-
cates of appealability on the ineffective assistance of counsel claims, the
government did not raise the waiver argument at oral argument. Regard-
less, we find the government’s waiver arguments are without merit.
While Merritt waived his right to challenge sentence, he did not waive
his right to pursue his ineffective assistance of counsel claims or other
issues on collateral review. We noted as much on direct review, finding
that Merritt knowingly and intelligently "waived the right to contest his
sentence so long as it was within the statutory maximum," Merritt, 2000
WL 148214, at *2, while recognizing "Merritt’s waiver should not be
extended past sentencing issues. Merritt did not expressly waive the right
to appeal non-sentencing issues arising out of the jury verdict in either
his plea agreement or the plea hearing." Id.; see also Dist. Ct. slip op. at
4 (noting that Merritt did not waive his right to collateral attacks). Mer-
ritt’s § 2255 claims do not directly contest the propriety of his sentence,
rather they challenge his counsel’s efficacy during plea negotiations and
at sentencing. Accordingly, they are not barred by his plea agreement.
6 UNITED STATES v. MERRITT
and (2) he was prejudiced by his attorney’s deficient conduct, i.e., but
for the errors, there is a reasonable probability that the outcome of the
proceeding would have been different. Id. at 694.
Merritt asserts that his trial counsel was ineffective when providing
him pre-trial advice during plea negotiations regarding his potential
sentencing exposure if he was found guilty at trial. Merritt also argues
that his trial counsel was ineffective because counsel failed to object
to the actual loss amounts detailed in the PSR, which the district court
used in determining sentence. With regard to the first claim, we find
that Merritt has failed to demonstrate that trial counsel’s performance
fell below an objective standard of reasonableness. With regard to the
second claim, we conclude that Merritt is unable to demonstrate prej-
udice, thus we need not decide whether his counsel’s performance
was, in fact, deficient.
III.
Merritt first asserts his counsel was ineffective because on or
around November 3, 1997, after Merritt had been offered a plea
agreement specifying an eighteen-month term of imprisonment, trial
counsel allegedly advised Merritt that his "maximum sentence expo-
sure" would be forty-one months’ imprisonment if he proceeded to
trial and was found guilty. In a sworn affidavit, which was presented
to the district court, Merritt alleged that while he was present, his trial
counsel phoned the Assistant United States Attorney ("AUSA") han-
dling the case, and the AUSA, who was on speaker phone, informed
them that Merritt would face forty-one months if convicted. Merritt
further claimed that when the call ended, trial counsel told him "you
heard it from [the AUSA] that if you go to trial and loose [sic], you
are looking at 41 months." The government flatly denies that this
alleged conversation occurred.
Nonetheless, Merritt admits that after the alleged phone call ended,
trial counsel recommended that he take the plea. Failing to take trial
counsel’s advice, Merritt rejected the plea after weighing the 41-
month sentence he allegedly was informed he would receive if found
guilty at trial against the 18 months’ imprisonment specified in the
plea agreement. Merritt asserts, through his affidavit, that had he
UNITED STATES v. MERRITT 7
known his sentencing exposure was the 140 months to which he was
sentenced, he would have accepted the plea.
To succeed on an ineffective assistance of counsel claim in the plea
context, the Supreme Court has stated that the movant must show that
his counsel’s performance was deficient and "there is a reasonable
probability that, but for counsel’s errors, he would not have pleaded
guilty and would have insisted on going to trial." Hill v. Lockhart, 474
U.S. 52, 59 (1985); accord United States v. Lambey, 974 F.2d 1389,
1394 (4th Cir. 1992). Thus, the prejudice inquiry focuses on "whether
counsel’s constitutionally ineffective performance affected the out-
come of the plea process." Hill, 474 U.S. at 59. Courts have since
applied the Strickland/Hill test in cases where, as here, the opposite
situation than that in Hill is at issue, i.e., ineffective assistance alleg-
edly caused the defendant to reject a plea agreement and proceed to
trial. See Magana v. Hofbauer, 263 F.3d 542, 547-48 (6th Cir. 2001)
(requiring that movant show deficient performance and that, but for
counsel’s advice, he would have pled guilty); United States v. Gor-
don, 156 F.3d 376, 379-81 (2d Cir. 1998) (per curiam) (recognizing
ineffective assistance claim where counsel’s gross misadvice regard-
ing potential sentencing exposure caused defendant to reject plea
offer); United States v. Day, 969 F.2d 39, 42-43 (3d Cir. 1992)
(same).
Accordingly, our inquiry requires a determination of whether Mer-
ritt has shown that his trial counsel provided him gross misadvice
regarding his sentencing exposure, and, if so, whether but for this
gross misadvice, there is a reasonable probability that Merritt would
have accepted the plea agreement specifying a sentence of eighteen-
months’ imprisonment. In conducting this inquiry, we first recognize
that there is some disagreement within the circuits as to whether
objective evidence, in addition to the defendant’s statement, is
required to establish an ineffective assistance of counsel claim in this
context. Compare Magana, 263 F.3d at 547 n.1 (suggesting there is
no need for additional evidence so long as defendant shows "reason-
able probability" of a different outcome), and Gordon, 156 F.3d at
381 (holding that sentencing "disparity provides sufficient objective
evidence — when combined with a petitioner’s statement concerning
his intentions — to support a finding of prejudice under Strickland"),
with Diaz v. United States, 930 F.2d 832, 835 (11th Cir. 1991) (find-
8 UNITED STATES v. MERRITT
ing awareness of plea offer and after-the-fact testimony concerning
desire to plea insufficient), and Johnson v. Duckworth, 793 F.2d 898,
902 n.3 (7th Cir. 1986) (expressing doubt as to whether defendant’s
self-serving, post-conviction testimony regarding his intent as to plea
offer would be sufficient, by itself, to establish the "reasonable proba-
bility" that defendant would have accepted the plea). In dismissing
Merritt’s claim, the district court appeared to adopt the reasoning of
the latter line of cases, because in holding that Merritt failed to make
an initial showing of misadvice, it stated "only [Merritt’s] post hoc
bald assertion exists to prove that he would have accepted the initial
18-month plea, which the Court finds insufficient to establish preju-
dice."4
Ultimately, we find it unnecessary to resolve what type of evidence
is needed to establish an ineffective assistance of counsel claim in this
context because, even if we were to adopt the line of cases supporting
the proposition that a "post hoc assertion" by defendant is sufficient
to support such a claim, Merritt nonetheless fails to establish ineffec-
tive assistance. In evaluating the effectiveness of trial counsel’s
advice regarding the desirability of the plea bargain and attendant sen-
tence exposure, we agree with the Third Circuit’s statement that
although it is difficult to "state precisely what standard defense coun-
sel must meet when advising their clients about the desirability of a
plea bargain and, concomitantly, about sentence exposure . . . . we can
say, however, that familiarity with the structure and basic content of
the Guidelines . . . has become a necessity for counsel who seek to
give effective representation." Day, 969 F.2d at 43.
In this case, however, even assuming arguendo that Merritt’s alle-
gations concerning trial counsel’s advice as to sentencing exposure
are true, we conclude that trial counsel demonstrated familiarity with
the structure and content of the Sentencing Guidelines as they applied
in Merritt’s case. Merritt claims that during the alleged speaker phone
call with the AUSA, the AUSA told them "that [Merritt] would
receive a 41 month sentence, based on 18 points from loss of $1.5
4
Merritt also supported his claim with sworn affidavits from friends
and family who attest that Merritt was weighing an eighteen-month plea
agreement against a forty-one month maximum exposure if found guilty
at trial. See App. to Request for COA, Ex. G-2.
UNITED STATES v. MERRITT 9
million, 2 points for minimal planning, and 2 points for obstruction
of justice, for a sentencing guideline level of 22." Indeed, after Merritt
was convicted on seventy-six counts of the original indictment, the
initial PSR, dated January 30, 1998, calculated a base offense level
of 6 for the various fraudulent offenses, U.S.S.G. § 2F1.1(a) (1997),
a 12-level enhancement for a loss of greater than $1.5 million, id.
§ 2F1.1(b)(1)(M), a 2-level enhancement for more than minimal plan-
ning, id. § 2F1.1(b)(2)(A)(B), and a 2-level enhancement for obstruc-
tion of justice, id. § 3C1.1, thus yielding an adjusted offense level of
22 with a guideline range of 41-51 months based on Merritt’s crimi-
nal history category I — i.e., precisely the calculations about which
Merritt admits he was advised.
The 140-month sentence eventually imposed, about whose possi-
bility Merritt complains he was not properly informed, stemmed from
events which occurred after trial, and thus well after the alleged dis-
cussion regarding sentencing exposure in November of 1997. First, on
February 23, 1998, the district court revoked Merritt’s release bond
as his illicit activities in Florida came to light, and the court found that
Merritt had misled it. Accordingly, on March 3, 1998, a new PSR was
prepared that listed, for the first time, a host of related criminal con-
duct in Florida, e.g., using false identification, including a fraudulent
Social Security number and fictitious business information to obtain
loans and lines of credit. The revised PSR added a 2-level enhance-
ment for obstruction of justice, U.S.S.G. § 2F1.1(b)(3)(B) (1997), and
a 2-level enhancement for abuse of a position of trust, id. § 3B1.3,
increasing Merritt’s offense level to 26 with a guideline range of 63-
78 months. On March 9, 1998, the probation office learned of an
additional 4-level enhancement — which had been overlooked by the
probation officer — based on the fact that Merritt’s offenses affected
a financial institution and he derived more than $1 million in gross
receipts from the offenses. See id. § 2F1.1(b)(6)(B). Thus, Merritt’s
adjusted offense level was 30 and the attendant guideline range was
97-121 months.5
5
At the sentencing hearing, the district court found the enhancement
for abuse of a position of trust, U.S.S.G. § 3B1.3 (1997), did not apply.
However, the court departed upward by five levels based on guideline
factors that are present in the instant offense, but to an exceptional
degree and based upon factors not mentioned by the guidelines. See id.
§ 5K2.0; see also infra at 14. Thus, Merritt was sentenced using an
offense level of 33 with a guideline range of 135-168 months.
10 UNITED STATES v. MERRITT
In this light, even assuming arguendo that Merritt’s version of
events is correct, it is apparent that at the time of plea negotiations,
trial counsel had a reasonable basis for his advice to Merritt regarding
sentencing exposure. Accordingly, Merritt has failed to demonstrate
that trial counsel was objectively ineffective because he cannot show
trial counsel’s advice regarding sentencing exposure fell outside the
range of "prevailing professional norms."
IV.
Merritt further alleges that his trial counsel was ineffective under
Strickland because, at sentencing, he failed to object to or correct
alleged factual inaccuracies in the PSR. As detailed above, Merritt’s
offenses yielded a base offense level of 6 pursuant to U.S.S.G.
§ 2F1.1(a) (1997), which governs crimes involving fraud and deceit.
That base level is subject to enhancement based on the amount of loss
caused by fraud. See U.S.S.G. § 2F1.1 (1997). An 11-level enhance-
ment is warranted for a loss between $800,000 and $1,500,000, id.
§ 2F1.1(b)(1)(L), and a 12-level enhancement applies if the loss is
between $1,500,000 and $2,000,000, id. § 2F1.1(b)(1)(M). The PSR
stated that the gross, or intended, amount of fraud was $1,742,233.38,
but that some of the victims had been repaid through the bankruptcy
process, resulting in an actual loss of $1,369,625.90 (eventually, the
probation officer added $187,455.38 to this sum consisting of various
unsecured debts arising from the Florida offenses).
Merritt contends that of the actual loss amount, the PSR errone-
ously listed amounts due to approximately fifteen of ninety total vic-
tims which had, in fact, been settled. Between the time that Merritt
entered his plea on March 10, 1998 and his sentencing hearing on
April 29, 1998, he sent trial counsel a series of letters concerning
these inaccuracies, requested that trial counsel move for an amend-
ment to the PSR, and requested that they meet. In the letters, Merritt
itemized the errors and the reasons therefore, and pointed to a cumu-
lative overstatement of approximately $480,000; Merritt also pro-
vided his trial counsel with the contact information for his bankruptcy
attorneys who could attest that the amounts had been satisfied.6 Trial
6
In support of his § 2255 claim, Merritt offers his affidavits outlining
errors in the PSR, affidavits from his bankruptcy attorneys who swear
that certain debts in the PSR had been satisfied by collateral, and the let-
ters which Merritt sent to trial counsel concerning the errors.
UNITED STATES v. MERRITT 11
counsel did not respond to these letters, nor did he meet with Merritt
until the morning of sentencing when trial counsel stated that he had
his client’s objections covered. At sentencing, however, trial counsel
did not raise the suggested objections, but instead conceded that the
actual loss amounts were correct.
In rejecting this ineffective assistance of counsel claim, the district
court stated that based on "the Court’s recollection of events," trial
counsel’s performance constituted a "vigorous defense at sentencing
that was entirely in line with accepted standards of performance."
Dist. Ct. slip op. at 11. On appeal, Merritt stresses that while his trial
counsel was generally well-prepared for the legal arguments at sen-
tencing, his failure to object to the actual loss amounts was nonethe-
less ineffective. We need not, however, reach the first prong of the
Strickland analysis, because it is clear that even if Merritt shows that
it was objectively unreasonable for trial counsel not to object to the
PSR’s actual loss figure, Merritt cannot show prejudice. See United
States v. Terry, 366 F.3d 312, 314 (4th Cir. 2004) (stating if petitioner
"conclusively fails to demonstrate sufficient prejudice from certain
acts or omissions, we need not decide whether counsel’s performance
in those regards was, in fact, deficient under Strickland" (citation
omitted)).
At sentencing, the district judge and trial counsel discussed how
Merritt’s sentence could conceivably be calculated based on either
actual or intended loss. Specifically, they discussed United States v.
Parsons, 109 F.3d 1002, 1004-05 (4th Cir. 1997), and its examination
of "tangible economic loss of the victim." In Parsons, we reviewed
a postmaster’s sentence on fraud convictions for filing partially fraud-
ulent travel vouchers. In calculating sentence, the district court in
Parsons concluded that the entire amount claimed in the vouchers —
including both fraudulent and legitimate reimbursement requests —
constituted a loss to the government. We reversed, stating: "The loss
itself (whether the actual or intended loss) is limited to the tangible
economic loss of the victim." Id. at 1004. Thus, we held that in sen-
tencing the postmaster, the loss "should be limited to the payment
fraudulently obtained in excess of the amount to which she was law-
fully entitled." Id. at 1005 (internal quotation marks, citation and
alterations omitted).
12 UNITED STATES v. MERRITT
Parsons did not, however, address the issue of whether "intended
loss" or "actual loss" is properly employed for the purpose of deter-
mining sentence, rather we simply held that a district court could not
calculate sums of which the victim was not unlawfully deprived as
"loss." Regardless, Merritt’s trial counsel urged the district court to
use the victims’ "tangible economic loss," i.e., "actual loss," in deter-
mining sentence.7 In sentencing Merritt, the district court did not
resolve whether "intended loss" or "actual loss" governed, but held
that under either calculus the loss exceeded $1.5 million. It reasoned
that the $187,000 loss from the Florida conduct could be added to the
$1.36 million in the victim impact section thereby producing a loss
amount greater than $1.5 million. Despite Merritt’s allegations that
the PSR’s actual loss figures were in error, his trial counsel conceded
that there was more than $1.5 million in actual loss.8
Trial counsel’s concession is of absolutely no moment, however,
because the plain text of the sentencing guideline and our application
of the guideline post-Parsons demonstrate that intended loss, not
actual loss, is generally applicable in determining sentence. The
guideline provides that if an intended loss can be determined and it
7
At the time of Merritt’s sentencing, our case law was somewhat
ambiguous as to whether district courts were to apply actual or intended
loss in such cases. At that point, we had not taken a position on the "eco-
nomic reality doctrine," i.e., the proposition that in fraud cases if possible
loss is less than intended loss then possible loss governs. The Sixth and
Tenth Circuits had repeatedly applied the doctrine. See, e.g., United
States v. Fleming, 128 F.3d 285, 288 (6th Cir. 1997); United States v.
Galbraith, 20 F.3d 1054, 1059 (10th Cir. 1994). However, we explicitly
rejected this doctrine in United States v. Miller, 316 F.3d 495, 501-02
(4th Cir. 2003) (stating "[t]he majority of circuits in more recent cases,
however, have rejected this "economic reality" approach . . . . We adopt
the majority approach, and hold as a matter of law that the Guidelines
permit courts to use intended loss . . . even if this exceeds the amount
of loss actually possible").
8
See J.A. 21 (trial counsel stated "What the record reflects is that the
government’s own pleading is the [$]1.3 [million]. I accept that. . . . I am
not going to challenge that at this point for the purposes of this objec-
tion."); id. at 23 (conceding that the additional $187,435.38 should be
counted as relevant conduct, thus pushing the actual loss to a sum greater
than $1.5 million).
UNITED STATES v. MERRITT 13
exceeds the actual loss, the court should use the intended loss to cal-
culate the defendant’s offense level. See U.S.S.G. § 2F1.1, cmt. n.7
(1997). The guideline states:
In fraudulent loan application cases and contract procure-
ment cases, the loss is the actual loss to the victim (or if the
loss has not yet come about, the expected loss). For exam-
ple, if a defendant fraudulently obtains a loan by misrepre-
senting 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.
Id. § 2F1.1, cmt. n.7(b) (emphasis added). Accordingly, we have
stated, "the Guidelines focus on intended loss, not actual loss," United
States v. Quinn, 359 F.3d 666, 680 (4th Cir. 2004) (citing § 2F1.1),
and held "the Guidelines permit courts to use intended loss in calcu-
lating a defendant’s sentence, even if this exceeds the amount of loss
actually possible, or likely to occur, as a result of the defendant’s con-
duct." Miller, 316 F.3d at 502; see also United States v. Shevi, 345
F.3d 675, 678 (8th Cir. 2003) (stating loss under § 2F1.1 is the greater
of that which defendant intended to inflict and the actual loss
inflicted). The Tenth Circuit has remarked, "[t]he reason the intended
loss figure is used, even if it is significantly greater than actual loss,
is to measure the magnitude of the crime at the time it was committed.
[citation] The fact that a victim has recovered part of its loss after dis-
covery of a fraud does not diminish the defendant’s culpability for
purposes of sentencing." United States v. Nichols, 229 F.3d 975, 979
(10th Cir. 2000) (additional citations omitted). Similarly, we have rea-
soned that use of intended loss serves "an important principle under-
lying the Guidelines, namely matching punishment with culpability."
Miller, 316 F.3d at 502-03.
Indeed, at oral argument, Merritt conceded that intended loss is the
correct calculus for determining sentence, and should have applied in
this instance. Nevertheless, Merritt argued that he can show prejudice
based on the district court’s 5-level upward departure. As discussed
above, Merritt must prove that there is a reasonable probability that
14 UNITED STATES v. MERRITT
the outcome of the proceeding would have been different but for his
attorney’s ineffectiveness. See Strickland, 466 U.S. at 694. Merritt
argues that had his trial counsel corrected the actual loss amount,
there is a "reasonable probability" that the district court would not
have imposed the 5-level upward departure because the number of
victims and amount of actual loss would have been reduced. We find
Appellant’s contention without merit.
The district court’s upward departure was based on far more than
simple numerical thresholds which Merritt’s conduct exceeded. In
departing upward, the district court found multiple encouraged factors
that were present to an exceptional degree and removed the case from
the Guidelines’ heartland. The court recognized: (1) the number of
victims defrauded in the case; (2) the continuing and unusual amount
of obstruction of justice and false statements by Merritt, and "the
potential for loss of confidence in public functions because of some
of the activities"; (3) the amount of planning involved in committing
the offenses; (4) the risk to victims and their solvency; (5) the inter-
ference with government functions; and (6) "the amount of criminal
behavior that perhaps is not reflected in the economic loss or harm
to the victims." J.A. 70-71 (emphasis added); see also id. at 72-80
(explicating the events supporting each of the six mentioned factors
which led to the departure). The court concluded that departure was
warranted on such factors "because all of them . . . are present to an
exceptional degree." Id. at 80. Thus, even if the amount of total loss
was diminished by approximately $480,000 and the total number of
victims was seventy-five, not ninety, as Appellant argues, Merritt’s
offense would remain most exceptional. Therefore, we hold that Mer-
ritt cannot show a reasonable probability that the departure would
have been different even if trial counsel had objected to the allegedly
erroneous amounts and was successful in doing so.
V.
For the foregoing reasons, we conclude that Merritt’s claims of
ineffective assistance of counsel fail. Accordingly, we affirm the
judgment of the district court denying relief under 28 U.S.C. § 2255.
AFFIRMED
UNITED STATES v. MERRITT 15
NIEMEYER, Circuit Judge, concurring:
I am pleased to concur in the judgment.