United States v. Alfaro, 30 F.4th 514

Background

From 2012–mid‑2015, Brian Alfaro, through Primera Energy, sold "working interest" units in oil and gas prospects to investors and was indicted for mail fraud for making material misrepresentations and misusing investor funds.
The PSR calculated total investments of $13,781,150.87 and, after deducting tax benefits, an actual loss of $9,922,428.63; PSR recommended corresponding Guidelines and restitution figures.
At sentencing the Government conceded two offsets (royalties and bankruptcy distributions) totaling $492,828.90, reducing actual loss to $9,429,599.73 and changing the applicable Guidelines adjustments.
The district court rejected the Government’s concession, adopted the PSR loss ($9,922,428.63), applied a 20‑level §2B1.1 enhancement (plus other adjustments and reductions), set the Guidelines range at 121–151 months, sentenced Alfaro to 121 months, and ordered restitution of $9,922,428.63.
Alfaro appealed, challenging (inter alia) the loss calculation, the five‑victim substantial‑financial‑hardship adjustment, the sophisticated‑means enhancement, and the restitution award.
The Fifth Circuit vacated and remanded the sentence and restitution solely because the district court erred by not accepting the Government’s conceded offsets (i.e., miscalculated total loss); it affirmed the other sentencing adjustments.

Issues

Issue	Plaintiff's Argument (United States)	Defendant's Argument (Alfaro)	Held
Proper loss measure and amount for §2B1.1	PSR actual‑loss finding of $9,922,428.63 was supported; the court may estimate loss.	Actual loss was not overstated; if offsets apply, use Government’s conceded $9,429,599.73; gain not required.	Court: District erred by rejecting the Government’s supported concession; remand required. Other loss‑related attacks rejected.
Whether district should accept Government’s concession reducing loss	Government conceded two specific offsets reducing loss to $9,429,599.73.	Argued various offsets and valuation issues; sought different calculations.	Fifth Circuit: Government’s concession was supported by evidence and district should have accepted it; failure required resentencing.
§2B1.1(b)(2)(B) — substantial financial hardship to ≥5 persons	Victims’ statements and PSR support that ≥5 investors suffered substantial hardship.	Contended insufficient proof that those submitting victim statements were victims or suffered qualifying hardship.	Affirmed: PSR and victim statements provided adequate basis; enhancement proper.
§2B1.1(b)(10)(C) — sophisticated means enhancement	Scheme’s structure and conduct justified enhancement.	Claimed conduct was not sufficiently sophisticated.	Affirmed: factual findings were plausible; no clear error.
Restitution amount tied to loss	Restitution equals the actual loss determined at sentencing.	Restitution should reflect offsets (royalties, bankruptcy distributions) and correct loss figure.	Vacated and remanded: restitution based on erroneous loss must be recalculated on remand.

Key Cases Cited

United States v. Harris, 821 F.3d 589 (5th Cir. 2016) (standard for reviewing loss calculation errors and harmless‑error burden)
Neder v. United States, 527 U.S. 1 (U.S. 1999) (elements of mail fraud require materiality)
United States v. Spalding, 894 F.3d 173 (5th Cir. 2018) (no offset for alleged value from defendant’s business expenses when victims received no benefit)
United States v. Klein, 543 F.3d 206 (5th Cir. 2008) (courts should accept reasonable concessions/evidence regarding loss offsets)
United States v. Ibarra‑Luna, 628 F.3d 712 (5th Cir. 2010) (harmless‑error standard when incorrect Guidelines range used)
United States v. Martinez‑Romero, 817 F.3d 917 (5th Cir. 2016) (selecting bottom of improper Guidelines range indicates the miscalculation influenced sentence)
United States v. Fairley, 880 F.3d 198 (5th Cir. 2018) (permitting extrapolation methods to calculate loss in fraud cases)
United States v. Johnson, 841 F.3d 299 (5th Cir. 2016) (approving extrapolation for loss computation in fraud prosecutions)