United States v. Iovino

14-270
USA v. Iovino
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
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August Term, 2014
(Argued: January 13, 2015 Decided: February 2, 2015)
Docket No. 14-270
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UNITED STATES OF AMERICA,
Appellee,
—v.—
PETER IOVINO,
Defendant-Appellant.
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Before:
KATZMANN, Chief Judge, KEARSE and RAGGI, Circuit Judges.
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Appeal from a judgment of conviction entered in the United States District
Court for the Southern District of New York (Vincent L. Briccetti, J.), which
sentenced the defendant principally to 60 months’ imprisonment. We conclude
that the district court properly applied the four-level Sentencing Guidelines
enhancement for crimes involving more than fifty victims, because Iovino
defrauded a condominium association whose 70-odd members were
consequently required to pay higher common charges. Accordingly, the
judgment of the district court is AFFIRMED.
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ANDREW BAUER (Justin Anderson, on the brief), for Preet Bharara,
United States Attorney for the Southern District of New York,
New York, New York, for Appellee.
JEREMY GUTMAN, New York, New York, for Defendant-Appellant.
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PER CURIAM:
This case calls on us to clarify how sentencing courts should count the
number of victims of a fraud when deciding whether to apply a multiple-victim
enhancement under section 2B1.1(b)(2) of the U.S. Sentencing Guidelines.
Appellant Peter Iovino appeals from a judgment of conviction entered on
January 6, 2014 by the United States District Court for the Southern District of
New York (Briccetti, J.). Iovino, who was employed as the property manager of a
condominium association, was charged with one count of wire fraud for
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embezzling funds from the condominium association and one count of bank
fraud for taking out an unauthorized loan in the condominium association’s
name. Iovino pleaded guilty to both counts, and was principally sentenced to 60
months’ imprisonment.
On appeal, Iovino contends that the district court miscalculated his
Sentencing Guidelines range when it increased his offense level by four levels
pursuant to United States Sentencing Guidelines § 2B1.1(b)(2)(B), which applies
to offenses that ‚involve*+ 50 or more victims.‛ Iovino argues that the district
court erred by finding that each owner of a unit in the condominium (hereinafter
‚tenant‛) qualified as a victim, rather than just the condominium association
itself.
Because we conclude that the district court properly counted the
individual tenants as victims, and therefore properly applied the § 2B1.1(b)(2)(B)
enhancement, we AFFIRM the judgment and sentence of the district court.
I. BACKGROUND
Beginning in 2000, Peter Iovino was employed as the property manager of
the Bedford Terrace Condominium Association (‚Bedford Terrace‛), which is
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occupied by more than 70 tenants. As property manager, Iovino was responsible
for paying Bedford Terrace’s vendors, managing its finances, and reporting to
the association’s Board of Managers at the Board’s monthly meetings. Although
Iovino had access to Bedford Terrace’s bank accounts, he was not allowed to
withdraw funds without the signed approval of at least two Board members.
In 2011, the Board discovered that Iovino had taken out an unauthorized
loan in the name of Bedford Terrace. Further investigation revealed that Iovino
had also made several unauthorized withdrawals from Bedford Terrace’s bank
accounts. Iovino concealed his withdrawals by providing the Board with forged
bank statements that hid the true balance of the accounts.
Iovino was charged with a single count of wire fraud, based on his
unauthorized withdrawals from the Bedford Terrace bank accounts, and a single
count of bank fraud, based on the unauthorized loan. On January 16, 2013,
Iovino pleaded guilty to both counts.
As relevant here, the district court quantified the loss caused by Iovino’s
illicit withdrawals from the Bedford Terrace accounts as $139,292.00. At a Fatico
hearing, the district court heard testimony from the president of Bedford
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Terrace’s Board of Managers, who explained that the bank accounts from which
Iovino had stolen were funded by the common charges paid by the tenants of the
condominium association. The Board president further testified that, after
Iovino’s fraud was uncovered, Bedford Terrace raised its common charges by
roughly $100 per month in order to replenish the accounts depleted by Iovino’s
fraud. Based on this testimony, the district court found that each of the tenants
of Bedford Terrace had been a victim of Iovino’s fraud because each was forced
to pay these higher common charges as a result of the theft from the Bedford
Terrace bank accounts. Accordingly, the district court increased Iovino’s offense
level by four levels pursuant to United States Sentencing Guidelines
§ 2B1.1(b)(2)(B), which applies to offenses that ‚involve*+ 50 or more victims.‛
II. DISCUSSION
Iovino’s sole argument on appeal is that the district court erred by
counting each of the individual tenants of Bedford Terrace as a separate victim of
his fraud. Because Iovino’s argument depends on the Sentencing Guidelines’
definition of ‚victim,‛ we begin by reviewing the interlocking provisions of the
Guidelines. Section 2B1.1(b)(2)(B) of the Sentencing Guidelines instructs
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sentencing courts to increase a defendant’s offense level by four levels when the
offense ‚involved 50 or more victims.‛ Application note 1 to § 2B1.1 defines
‚victim‛ as, inter alia, ‛any person who sustained any part of the actual loss
determined under subsection (b)(1).‛ ‚*S+ubsection (b)(1),‛ in turn, refers to the
provision of the Sentencing Guidelines that charges sentencing courts with
calculating the loss caused by the defendant’s crime, and setting the offense level
accordingly.1
Because a victim must have sustained part of the ‚actual loss determined
under subsection (b)(1),‛ U.S. Sentencing Guidelines Manual § 2B1.1 cmt. n.1, we
have previously held that a victim must have suffered some part of the loss
actually calculated by the district court. In United States v. Abiodun, 536 F.3d 162(2d Cir. 2008), the defendant pleaded guilty to defrauding hundreds of
individuals by obtaining credit card advances in their names. Although in most
cases the individuals suffered no direct financial loss because they were
reimbursed by their banks, the district court nonetheless counted them as victims
because they ‚had spent an appreciable amount of time securing reimbursement
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The ‚loss‛ is calculated as ‚the greater of actual loss or intended loss.‛
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for their financial losses.‛ Id. at 166. On appeal, we vacated and remanded,
holding that these individuals had not been properly counted as victims. Id. at
169. Although the lost time was cognizable as a loss under the Sentencing
Guidelines, the district court had not quantified the monetary value of this lost
time when calculating the ‚actual loss‛ caused by the fraud. See id. at 169.
Instead, the district court had focused solely on the total value of the fraudulent
credit card advances procured by the defendant. See id. at 165. Because the lost
time was not ‚part of the actual loss determined under subsection (b)(1),‛ U.S.
Sentencing Guidelines Manual § 2B1.1 cmt. n.1, we held that the individual
account-holders were not victims as defined by the Sentencing Guidelines.
Abiodun, 536 F.3d at 169.
Similarly, in United States v. Skys, 637 F.3d 146 (2d Cir. 2011), the defendant
unsuccessfully attempted to defraud several banks by falsely representing that his
business owned substantial assets, and by seeking to take out an 83 million dollar
loan secured against those assets. The defendant was charged with securities,
bank, and wire fraud after his deception was discovered. At sentencing, the
U.S. Sentencing Guidelines Manual § 2B1.1 cmt. n.3(A).
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district court considered evidence that the defendant had also perpetrated several
other, uncharged frauds. The district court calculated the ‚intended loss‛ of the
fraud as $83 million, the size of the loan the defendant attempted to procure from
Citigroup; the district court did not calculate the ‚actual loss‛ caused by the
defendant’s various frauds. See id. at 153—55. Nonetheless, the district court
counted both the banks and the targets of the uncharged frauds as victims under
the Sentencing Guidelines. Id.
Again, we remanded. Citing Abiodun, we explained that ‚‘victims,’ within
the meaning of subsection (b)(2), are only those persons or entities who sustained
‘actual loss determined’ by the court ‘under subsection (b)(1).’‛ Id. at 153.
Because the district court had not calculated the actual loss caused by the
defendant’s schemes, the banks and targets of the uncharged frauds could not
have suffered a ‚part of the actual loss determined under subsection (b)(1).‛ Id. at
154-55. Accordingly, we remanded to the district court to calculate the actual loss
caused by the defendant’s frauds and, if necessary, to recount the number of
victims who had suffered part of this actual loss. Id. at 155—56.
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Relying on Abiodun and Skys, Iovino argues that the district court erred by
counting the individual tenants of Bedford Terrace as victims. As relevant here,
the district court calculated that the actual loss caused by Iovino’s theft was
$139,292.00, the amount that Iovino withdrew from the condominium
association’s bank accounts. Because this amount was taken from Bedford
Terrace’s accounts, Iovino contends that the only person or entity that ‚sustained
. . . part of the actual loss determined‛ by the district court was Bedford Terrace
itself. Although Iovino acknowledges that the individual tenants had to pay
higher common charges as a result of his theft, he argues that these higher
common charges were not included in the actual loss calculated by the district
court. Accordingly, he reasons, the individual tenants do not qualify as victims
under the reasoning of Abiodun and Skys.
Iovino’s argument is without merit. The district court found—and Iovino
does not dispute—that Bedford Terrace increased its common charges because it
needed to ‚replenish‛ the bank accounts depleted by Iovino’s fraud. Appellant’s
App. 72. The individual tenants therefore sustained actual, out-of-pocket losses
when they were required to pay these higher charges as a result of Iovino’s fraud.
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Moreover, these losses were ‚part of the actual loss determined under subsection
(b)(1)‛ because, as the district court found, the higher common charges directly
replaced the funds that Iovino had stolen from the condominium association’s
bank accounts.
This case is thus distinguishable from Abiodun and Skys, both of which
involved victims who had suffered ‚losses‛ entirely separate from the losses that
the district court ‚determined under subsection (b)(1).‛ In Abiodun, the district
court focused on the strictly financial loss caused by the defendants’ fraud. But it
did not include in its calculation the monetary value of the time the individuals
expended to secure reimbursement from the banks. Had it done so, adding the
value of the individuals’ lost time would have increased the total actual loss, and
the individual victims would therefore have qualified as victims. And the district
court in Skys did not calculate any actual loss at all, instead relying solely on the
‚intended loss‛ of the defendant’s scheme.
Here, by contrast, Iovino concedes, as he must, that the district court
correctly totaled the actual loss as $139,292.00, the amount that Iovino stole from
the Bedford Terrace accounts. The individual tenants paid higher common
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charges to replenish these accounts. But this replenishment does not change the
‚actual loss‛ caused by Iovino’s fraud. Instead, every dollar paid by a tenant in
the form of higher common charges was one dollar reimbursed to Bedford
Terrace. As such, the total loss—the sum of the increased common charges paid
by the individual tenants and the loss absorbed by Bedford Terrace to the extent
that the tenants have not fully replenished the accounts—remains $139,292.00.
And while Iovino is right that the district court did not calculate this amount by
totaling up the higher common charges paid by the individual tenants, the district
court nonetheless correctly measured the loss collectively sustained by Bedford
Terrace and the individual tenants.
Because it is undisputed that the tenants paid higher common charges to
replenish the association’s depleted bank accounts, the individual tenants
‚sustained *a+ part of the actual loss determined under subsection (b)(1),‛ and
were properly counted as victims.2 Accordingly, the judgment and sentence of the
district court are hereby AFFIRMED.
2
The government urges us to find that the individual tenants qualify as
victims because they suffered a loss based on their shared interest in the money
Iovino stole from the Bedford Terrace bank accounts. Because the tenants here
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sustained direct, out-of-pocket losses when they were forced to pay higher
common charges, we do not reach this argument.
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