United States v. Robert Nelson, 774 F.3d 1104

Defendant Robert Nelson pleaded guilty to mail fraud for running a Ponzi-style scheme promising high returns on real-estate investments and was sentenced to 66 months and about $2.6 million restitution.
Presentence report calculated total investor losses of $2.597 million, triggering an 18-level Guidelines increase (U.S.S.G. §2B1.1(b)(1)(J)); Nelson conceded >$1M but contested reaching $2.5M (which would instead be a 16-level increase).
Parties agreed on victims and agreed loss amounts for all but three investors: 3G Developments, DKW Investments, and JNL Financial; these three determined whether the loss exceeded $2.5M. Government: 3G $507,000; DKW $372,000; JNL $235,000. Nelson: 3G $73,500; DKW $34,000; JNL $0.
For 3G, the government relied on signed receipts and witness testimony from 3G’s principal (Galvin) to add $433,500 in undocumented cash to bank records showing $421,500; the court credited that evidence.
For DKW, the court accepted an investigators’ memorandum recounting the owner’s statement that $938,000 related to the scheme and $566,000 was repaid, yielding the government’s $372,000 figure.
For JNL, the court accepted the government’s showing that $235,000 was paid to a separate entity (Maxim Mortgage) and thus not creditable as repayment to JNL.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether total loss was overstated for Guidelines calculation	Gov: loss exceeded $2.5M based on documentary exhibits, witness testimony, and investigators’ memorandum	Nelson: loss did not reach $2.5M; disputed amounts for 3G, DKW, JNL and argued some payments were returns or interest excluded from loss	Court affirmed district court; loss findings supported by reliable evidence and not clearly erroneous
Whether court relied on unreliable/unresolved evidence for 3G	Gov: signed receipts and Galvin’s testimony prove additional cash investments	Nelson: bank records show only $421,500; receipts reflect rolled-up interest or inflated amounts	Court credited receipts and Galvin; accepted $855,000 initial investment for 3G
Whether DKW’s disputed transactions should be attributed to the scheme	Gov: investigators’ memorandum and owner’s statement support $938,000 scheme-related with $566,000 repaid	Nelson: only ~ $600,000 related to scheme; lacked corroboration	Court relied on investigators’ memorandum and accepted government’s $372,000 loss figure
Whether payments to Maxim Mortgage absolve Nelson of repayment to JNL	Gov: payments went to a separate entity, so JNL suffered a loss	Nelson: owner claimed full repayment; possibly intermingled entities	Court accepted government’s chart and proffer that Maxim was distinct; counted $235,000 as loss

United States v. Peugh, 675 F.3d 736 (7th Cir. 2012) (discusses exclusion of returned funds from loss calculation)
United States v. Brownell, 495 F.3d 459 (7th Cir. 2007) (returned funds excluded from loss computation)
United States v. Snelling, 768 F.3d 509 (6th Cir. 2014) (treatment of repayments in loss calculations)
Warren v. Baenen, 712 F.3d 1090 (7th Cir. 2013) (sentencing determinations must be based on reliable evidence)
United States v. England, 555 F.3d 616 (7th Cir. 2009) (standard for reliable sentencing evidence)
United States v. Littrice, 666 F.3d 1053 (7th Cir. 2012) (clear-error standard for loss calculations)
United States v. Alexander, 679 F.3d 721 (8th Cir. 2012) (discussion of excluded interest in loss computations)
United States v. Kennedy, 554 F.3d 415 (3d Cir. 2009) (similar principles on repayments and loss)
United States v. Hsu, 669 F.3d 112 (2d Cir. 2012) (contrasting view on inclusion of rolled-up interest)