United States v. Jasen Snelling
768 F.3d 509
6th Cir.2014Background
- Snelling pleaded guilty to conspiracy to commit mail and wire fraud, obstruction of justice, and tax evasion for running a Ponzi scheme (CityFund/Dunhill) that took about $8.9 million from investors.
- The scheme paid prior investors with incoming investor funds; Snelling and his partner diverted substantial sums for personal use and did not pay taxes on those funds.
- The plea agreement and PSR diverged on Guidelines loss calculation: government/PSR used total receipts (~$8,924,451.46); Snelling argued for a reduction to account for payments returned to investors (~$3.6 million), yielding a lower loss.
- The district court adopted the government’s intended-loss figure (≈ $8.9M), applied U.S.S.G. §2B1.1(b)(1)(K) (+20 levels), producing a total offense level of 32 and a 131-month prison sentence.
- Snelling appealed, arguing the Guidelines require credit for money returned to victims during the fraud, which would reduce the loss below $7M and produce a lower Guidelines range.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether loss for fraud Guidelines should be reduced by money returned to victims during a Ponzi scheme | Snelling: Application Note 3(E) requires reducing loss by money returned to victims before detection; Application Note 3(F)(iv) contemplates such reductions and only limits offsets to investor principal | Government/District Ct: Payments were used to perpetuate the fraud, not mitigate losses, so they should not offset loss; new-investor payments are not third-party payments | Court held Snelling’s reading of the Guidelines controls: district court erred by refusing to reduce loss by amounts returned to investor-victims and vacated sentence for resentencing |
| Whether precedent applying equitable non-deduction in Ponzi cases (e.g., Nichols/Lauer) governs post-2001 Guidelines | Snelling: Post-2001 Guidelines text and Notes are controlling; pre-2001 cases (and those applying equitable principles) do not override binding Guideline text | Government: Relied on Nichols and earlier cases holding payments used to perpetuate scheme need not be credited | Court: Rejected government reliance on pre-2001-based cases (Nichols and predecessors) because the Commission’s 2001 amendments changed the controlling Guideline framework |
Key Cases Cited
- United States v. Nichols, 416 F.3d 811 (8th Cir. 2005) (Ponzi-case loss decision the government relied on; court distinguishes it as grounded in pre-2001 cases)
- United States v. Munoz, 233 F.3d 1117 (9th Cir. 2000) (case applying equitable principles to deny offsets for payments used to perpetuate fraud)
- United States v. Lauer, 148 F.3d 766 (7th Cir. 1998) (earlier circuit decision addressing loss in fraud cases, foundational to later non-deduction approach)
- Gall v. United States, 552 U.S. 38 (2007) (explains that correct Guidelines calculation is prerequisite to a procedurally reasonable sentence)
- United States v. Ware, 282 F.3d 902 (6th Cir. 2002) (standard of review: district court’s factual loss determination reviewed for clear error)