United States v. Lagos, 25 F.4th 329

Sergio Lagos, CEO of U.S.A. Dry Van Logistics (USADV), pleaded guilty (2015) to conspiracy and wire fraud for inflating USADV’s accounts receivable to obtain financing from General Electric Capital Corporation (GECC).
GECC extended a large revolving line of credit; when the fraud was discovered USADV had substantial overadvances and soon filed for bankruptcy.
Lagos was sentenced to 97 months and ordered to pay restitution; the Supreme Court later reduced the restitution award, and the district court amended the judgment.
In a §2255 motion Lagos argued his sentencing counsel was ineffective for failing to object to the inclusion of $4.3 million in court-ordered advances GECC paid during USADV’s bankruptcy in the Guidelines “actual loss” calculation.
The district court denied relief, holding the $4.3 million was a reasonably foreseeable result of the fraud (properly included in loss) and that counsel’s failure to object was not deficient or, if deficient, not prejudicial. The Fifth Circuit affirmed.

Issue	Lagos's Argument	Government's Argument	Held
Whether $4.3M in court-ordered bankruptcy advances qualified as "actual loss" under U.S.S.G. §2B1.1 (i.e., reasonably foreseeable pecuniary harm)	The $4.3M was not a direct or reasonably foreseeable result of the fraud and thus should be excluded from the loss calculation	The company’s bankruptcy and related costs (including advances) were a reasonably foreseeable consequence of the large-scale fraud and therefore includable	The court held the advances were reasonably foreseeable and properly included in the loss calculation
Whether counsel was ineffective for failing to object to inclusion of the $4.3M (Strickland performance and prejudice)	Counsel performed deficiently by not objecting to inclusion; had counsel objected, Lagos would have faced a lower Guideline range	Any objection lacked merit under the current Guidelines and controlling precedent was not pellucid; counsel was not deficient and, in any event, Lagos was not prejudiced	The court held counsel was not deficient; alternatively, any deficiency was not prejudicial because the foreseeability objection lacked merit or was not clearly required by precedent

Strickland v. Washington, 466 U.S. 668 (Sup. Ct. 1984) (two-part ineffective-assistance test: deficient performance and prejudice)
United States v. Izydore, 167 F.3d 213 (5th Cir. 1999) (held certain bankruptcy-related costs were consequential losses under prior Guidelines)
United States v. Ayelotan, 917 F.3d 394 (5th Cir. 2019) (loss calculation and foreseeability are factual findings reviewed for clear error)
United States v. Williamson, 183 F.3d 458 (5th Cir. 1999) (counsel expected to raise directly controlling precedent; performance standards)
Yarborough v. Gentry, 540 U.S. 1 (Sup. Ct. 2003) (Sixth Amendment guarantees reasonable competence, not perfect advocacy)
Harrington v. Richter, 562 U.S. 86 (Sup. Ct. 2011) (courts should avoid post hoc rationalization of counsel’s actions)