Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
When a man’s efforts to defraud a friend out of $310,000 were detected should take priority in his sentencing for wire fraud, regardless of the fact that he paid her back before any criminal proceedings took place, the 7th Circuit Court of Appeals has affirmed.
The appellate court issued the per curiam opinion Friday in United States of America v. Junaid Galzar, 23-1204.
In 2021, Junaid Gulzar convinced Ariana Small, a childhood friend, to invest money in Indiana gas stations that he would own and operate. He persuaded her and her father-in-law to wire $310,000, and he promised that he would invest the money and pay her back on fixed dates.
But instead of investing the money, Gulzar wagered it at a Michigan casino.
Under their agreement, Gulzar owed Small a certain amount by June 1, but he missed the deadline and fabricated excuses for the delay.
On June 4, Small accused Gulzar of scamming her.
Over the next several days, she repeated her demands for repayment and threatened to report him for bank fraud.
On June 11, at Gulzar’s request, Small drove from New York to Indiana to collect payment.
That day, he handed her several checks, but only $115,000 cleared the bank. On June 23, he wired her another $1,500.
Small reported Gulzar to the police, and on July 2, she sued him in Indiana for fraud. At his deposition in that case three weeks later, Gulzar offered to repay Small and her family.
The next day, he paid her $268,500 — the entire outstanding amount plus $75,000 in profit.
Meanwhile in March 2022, Gulzar was charged with three counts of wire fraud under 18 U.S.C. § 1343. Six months later, a jury found him guilty of each count.
At sentencing, the parties disputed the appropriate loss amount.
Central to the guidelines calculations is the determination of the amount of the victim’s “loss.” A fraud defendant’s offense level is increased under U.S.S.G. § 2B1.1(b)(1) if the “loss” amount exceeds $6,500.
The government, relying on Stinson v. United States, 508 U.S. 36, 45 (1993), argued that Gulzar intended for the victim to lose $310,000, corresponding to a 12-level increase.
The district court sided with the government, assessed the loss amount at $310,000 and applied a 12-level increase.
The court then sentenced him to 18 months. It acknowledged the “unusual” nature of the fraud in that the victim was repaid before the start of any criminal proceedings, but it deemed the fraud serious and highlighted Gulzar’s repeated lies to carry it out.
Gulzar appealed and maintained that the district court erred by increasing his total offense level based on Small’s loss at the time she detected his fraud.
He argued that the court should have followed Kisor v. Wilkie, 139 S. Ct. 2400 (2019), and exhausted all the traditional tools of statutory interpretation before deferring to guidelines commentary.
The 7th Circuit affirmed the district court’s judgment, ruling that the court was correct to defer to the guidelines commentary.
The appellate court’s opinion notes Gulzar’s argument that the district court should have rejected the guidelines commentary’s time of detection and measured the victim’s loss at the time of sentencing. He argued that any other time would be arbitrary because it lacks any grounding in the guidelines.
But according to the appellate court, caselaw offers several reasons to defer to the time-of-detection language.
Payments to victims after a fraudulent scheme may reflect a desire to avoid punishment and not genuine remorse for wrongdoing, the court stressed, citing United States v. Philpot, 733 F.3d 734, 749 (7th Cir. 2013).
The court also cited United States v. Lane, 323 F.3d 568, 589 (7th Cir. 2003), and pointed out that payment after the detection of fraud may indicate acceptance of responsibility but “does not change the fact of loss.”
“And measuring actual loss at the time of sentencing, as Gulzar proposes, would lead to perverse incentives: A defendant could simply repay the victims in full that day to assure himself the lowest of the possible sentencing ranges,” the opinion states.
Finally, the appellate court ruled that the district court may consider a defendant’s efforts to repay his victims, even after detection, under 18 U.S.C. § 3553(a) when fashioning a sentence.
“But we decline to adopt Gulzar’s suggestion that a victim’s loss should be measured at the time of sentencing to calculate the applicable sentencing range,” the court concluded.
Please enable JavaScript to view this content.