*1 county from providing vents a whatever ben-
efits it chooses to fund. This is true even regard special requiring conditions provided state, to be
medical services out of
for will PHCP not be reimbursed prior it
unless has secured approval from the Department N.Y.Comp.
State of Health. Regs. R. & Although tit.
Codes 46.8.
county may provide choose not to such ser- budgetary reasons, for county
vices is free provide them expense. at its
CONCLUSION applicants
Because do not possess “claim running State,
of entitlement” grant
reverse the district summary court’s
judgment applicants. (argued), R. Gover Matthew & Caldwell Kearns, PA, Harrisburg, appellant/cross- America,
UNITED STATES of appellee Franklin R. Shaffer. Appellee/Cross-Appellant 93-7550, Nos. 93-7549 & Barasch, David Atty., M. Martin C. (argued), Atty., Carlson Sally Asst. U.S. A. Lied, Atty., Harrisburg, PA, Asst. U.S. SHAFFER, Franklin Appellant/Cross- R. appellee/cross-appellant U.S. Appellee in Nos. 93-7508 & 93-7509. 93-7508, 93-7509, Nos. 93- ROTH, Before: COWEN and Circuit 7549 and 93-7550. Judges, ACKERMAN, Judge *. Appeals, States Court of OPINION OF THE COURT
Third Circuit. COWEN, Judge. Circuit Argued May presents This ease the issue of whether the Sept. Decided guidelines, which we interpreted earlier requiring a sentencing court to calculate amount of the victim’s loss as it exists at the rather than at the time of the commission offense, permit a defendant convicted of significantly reduce his sen- by paying tence back all pоrtion or a amount he absconded with the com- mission of particular the offense. In the * Ackerman, The Honorable Jersey, Harold A. sitting by designation. Judge States District for the District of New
HI in matter, funds all the sufficient Shaffer the bank has violated a defendant of For this all the checks. to cover kiting accounts of act through the fraud statute reason, Attorney for the the United that, absence of in checks, the Pennsylvania recom- treatment, of Middle dictating other facts overriding for possible candidate ordinarily Shaffer as calcu- mended must sentencing court the August By dated order pre-trial as it exists diversion. the loss of late the on detected, 1991, placed Shaffer 21, than as court was time the months, or- sentencing. Be- for twelve pre-trial of diversion the later time at it exists the inter- pay sentenced the victim banks in this case him to dered the cause money of calculating the amount earned by would have est each the defendаnt kit- through the crime the check resulted from had borrowed loss which Shaffer perform will scheme, and ordered him the time at as it existed resen- remand community and for service. vacate tencing. diversion, again Shaffer pre-trial on While flow; of cash began kiting checks because I. firms. construction in his various shortfalls to Franklin giving rise The facts sus- government of Bank officials notified simple relatively and sentence conviction Au- accounts on activity in Shaffer’s picious formerly undisputed. Shaffer largely and 19, filed with A motion was gust 1992. and construction engineering several led be re- requesting that Shaffer large in construc- engaged were firms which The motion pre-trial diversion. from moved Dur- Pennsylvania. in central projects FBI an and the undertook granted was 1988, ac- collections ing the summer his the first vestigation. Unlike behind, re- significantly fell receivable counts discovered, was not able kiting Shaffer was for cash shortfall sulting in a sizable Four written. he had all the chеcks to cover companies’ line After companies. in by Shaffer banks used the five victim attempted canceled, Shaffer was credit gross loss- reported kiting scheme the eheck afloat keep his businesses Fulton follows: at the time detection es person- money his between large sums $18,- $40,371.46; Commerce Bank — Bank — the various and bank accounts al $206,636.60; Deposit 020.88; Dauphin Bank— writing he was At accounts.1 $197,280.66. and CCNB— funds sufficient cheeks, did not Shaffer $462,309.60. to be determined amounts. to cover the check in the accounts counts charged with two report- Shaffer 1988, a bank officer September, In 1344, fraud, of U.S.C. violation After authorities. to federal ed matter kiting incidents. separate cheek two charged with investigation, an negotiations, Shaffer plea bargain After a cheek executing attempting execute and 13, January counts guilty to both pleaded September, July through from agreement, Shaffer plea part of the As investigated the FBI By timе the check, Bank deposit time of the typical A. At example following illustrates 1. The his credit on gives kiter immediate A the check kiting scheme: there, grant of of that the basis and account A at Bank opens an kiter account The check $50,000 isit original check when pays the credit a check deposit. He then writes awith nominal presented for collection. $50,000. sum, large for a on that account scheme, some variation repeating By Bank B opеns at an account kiter then The check $50,000 it, credit can use the check kiter $50,000 Bank A deposits check from and as an interest-free given Bank B originally deposit, check is At the time that account. effect, period time. an extended loan for the account funds in supported sufficient advantage of the several- take kiter can the check B, However, of this Bank unaware Bank at A. transmittal, process- required for the day period fact, credit on kiter immediate gives from ing, payment of checks several-day During Bank B. his account States, 458 v. United Williams banks. different being pro- on Bank A period the check 1, n. 3089-90 102 S.Ct. bank, n. the check collection cessed for (1982). (quotation marks 73 L.Ed.2d account check on his kiter writes omitted). citation at Bank deposits it into his account Bank B and agreed to make restitution to the agreement was reached between Shaffer and banks in an amount to be bank, determined the fourth CCNB. district court at a pre-sentencing hearing. At hearing, Shaffer object- arraignment, At his requested a sen- ed to the 9 level increase tencing delay in order to allow get him to 2Fl.l(b)(l)(J). argued He *3 affairs give order and to him no increase was warranted because he actual- sufficient time to attempt to make ly no intended to loss banks at the to the victim banks. time of the commission of the offense. Based on the presented, evidence the district The United States pre- Probаtion Office agreed court that Shaffer at all times intend- pared presentence a pursuant report to the ed to repay the amounts borrowed during the Sentencing Guidelines through the collection of (“U.S.S.G.”) which assessed a total offense receivable, and made a factual find- level of 17 Shaffer. The offense level ing that actually perma- no intended was (1) determined in the following manner: nent loss Nevertheless, banks. a base level of 6 was pursuant assessed to disagreed district court that the loss was (2) 2Fl.l(a); §' U.S.S.G. an increase of 9 zero for all victim banks or the three banks levels was added under U.S.S.G. which had entered into agree- settlement 2Fl.l(b)(l)(J) § since the total amount of the ments with Shaffer. The district court con- loss to the victim banks $350,000 exceeded cluded that the “actual loss” at the time of but $500,000; (3) less than and an addi- $462,309.60 the total loss of tional 2 level increase less the pursuant was made amounts the three victim banks had 2Fl.l(b)(2)(B) agreed § U.S.S.G. accept because the lieu of their initial losses pursuant a involved scheme to agreements.2 defraud more settlement than one pre-sentence victim. The report concluded Since this reduced the loss for sentencing applicable guideline range sentence purposes to $347,809.60, the district court was from 24 to 30 months. enhanced Shaffer’s base level only by 8 levels pursuant 2Fl.l(b)(l)(I). § U.S.S.G. In so A sentencing hearing was held on July doing, the district rejected court govеrn- By time, 1993. Shaffer had negotiated position ment’s that “actual loss” in a check agreements settlement with three of the four kiting bank fraud case is the initial loss of the victim banks. Pursuant to agreements, these victim banks at the time the fraud is detect- Fulton Bank had accepted a settlement of ed, which should not be by any $20,000 in “full satisfaction” of its loss subsequent payments settlement in the na- $40,371.46; Commerce Bank had accepted ture of restitution that the defendant makes. $10,500 in “full satisfactiоn” of its loss of The district court granted further Shaffer a 2 $18,020.88; Dauphin and Deposit Bank level base level pursuant reduction agreed accept conveyance parcel of a 3El.l(a) § for acceptance of respon- of real estate in Shreveport, Louisiana held sibility. Premised on a base level by Shaffer in account, his retirement secured district court sentenced Shaffer to an eigh- by judgment against one of Shaffer’s busi- teen month imprisonment, tеrm of three corporations, ness promissory note in years supervised release, and ordered him $84,000 the sum of from Shaffer in “full to make restitution in full to CCNB and as satisfaction” for its loss $206,636.60. No agreed with the other victim banks.3 2. agreed district court acceptance reduce fer’s responsibility, rather than the $114,500, initial loss which was com- 2 base level granted reduction which was posed agreement settlement amounts of sentencing. Although the district court did not $10,500 Bank, $20,000 for Commercе for Fulton enter changing an order since sentence it felt Bank, Dauphin Deposit Bank. that 18 months of incarceration n and 18 months guideline was still well within the 3. Shaffer filed a post-sentencing letter with the range, the district court proba- instruct did seeking court a further 1 level base level adjust guideline office to offense level reduction in his § pursuant sentence to U.S.S.G. party Neither adjustment contests this 3El.l(b). agreed that a base appeal. level reduction required of 3 levеls was for Shaf- the deduction will reflect Kopp, II. collateral, securi- the value of the challenging notice filed a loan, the loss sustained ty for the theory that the sentence recognized lender. We defrauded of the victims’ the amount overstated as calculated if actual loss 2F1.1(b)(1). The of loss the amount sentencing understates appeal to notice of also filed inflict, then intended to the defendant taking the con- challenge Shaffer’s upward to figure should revised “loss” understated trary view Id. figure. actual loss. the victims’ not involve an present ease to 28 jurisdiction appellate calculation theory for the tended legal appeals involve These U.S.C. *4 2Fl.l(b) § be- pursuant to U.S.S.G. “loss” calculation interpretation finding of fact made a cause the 2Fl.l(b)(l), § over “loss” under U.S.S.G. of permanent actually no that Shaffer plenary review. have we authority, Citing Kopp for loss whatsoever.4 (3d Badaracco, 936 F.2d 954 v. States should the district court argues that Cir.1992). no loss to that there was have determined into which entered victim banks the three
III. Shaffer, with agreements settlement only of 7 to calcu- in an increase is whether resulted would have question The loss pursuant U.S.S.G. of the victims’ levels base late the 2Fl.l(b)(l)(H) it Mter as fourth the § a check since of purposes just CCNB, under bank, detected or a total loss offense is time the exists argues that Alternatively, the lan- sentencing. $200,000. While the time at 2Fl.l(b) itself, together loss in its сalcu- § correct court was the district guage of U.S.S.G. 2Fl.l(b) that directly § ad- commentary, not to U.S.S.G. does pursuant lation its the should as existed at it calculation was calculated the loss the loss dress whether or at as existed at sentencing, is detected not it fraud time of it when exists offense, and state that commentary the detection sentencing, preci- be affirmed. should be determined his sentence not loss need therefore “the comment, 8). (n. this case is dis- argues that § sion,” 2F1.1 U.S.S.G. “if the crimes that Furthermore, commentary states tinguishable procure- was at- fraudulent cheeks and loss that an intended determined, loan, bank both can be a secured inflict ment of tempting to to warrant sufficiently than the frauds, distinct it is be used if figure will 7). (n. under the Guidelines. differing treatment Id. actual loss.” involving fraud bank Kopp, a In case in the con held that previously informa- false submitted the borrower where bank a secured procuring text real commercial to obtain ordеr tion in misrepresentation, fraud through fraudulent the loss calcula- limited 2Fl.l(b) mortgage, we “is, estate § to U.S.S.G. pursuant “loss” 2Fl.l(b) § money the instance, amount of the first loss” higher of “actual (estimated at the time actually lost has bor- loss mea loss as potential sentencing), not the 527-36. F.2d at actually intended. rower the crime.” the time of at sured case, (3d held we In that Cir. F.2d Kopp, 951 sentencing, at the time exists calculation, that which in a 1991). loss appropriate actual on the court settled government contended argument, the 4. At oral calculating as it existed figure unnecessary whether to address it was first that it existed clearly as to rather than its erroneous the time intent, detected, concerning we need finding the crime factual clearly finding finding errone- alternatively, that the court's whether address of this we resolution clearly ous. Since erroneous. fact was whether the appropriately turns on case more not at the time the fraudulent act was First, com- the commentary to § U.S.S.G. 2F1.1 mitted, because the total amount of the loan indicates that loss valuation should be made without a reduction for the actual or estimat- in accordance with the valuation of theft loss ed value of the collateral to the bank to the commentary to U.S.S.G. would overstate the victim bank’s actual loss. 2B1.1. comment.'(n. 7). 2F1.1 id. at 528-30. determined “As in cases, theft the value of the calculation of the victim’s actual loss at thе money, property, or services unlawfully tak- time of sentencing would accurately more en.” Id. In a scheme, where reflect the defendant’s culpability for sen- the offender writes bad “temporari- checks to tencing purposes. ly ... credit,” obtain Black’s Dictionary Law 1990), ed. the amount of money Subsequently, we have indicated that the owed to the victim banks at the time kite Kopp holding provide does not a rule that is detected is the value of the money unlаw- should be followed for all fully taken effect, defendant. instance, convictions. For where bank offi- gross amount of the kite at the time of cer was convicted of bank fraud for using his detection, any less other collected funds position for personal benefit condition- defendant has deposit with the bank at approval using borrower con- any time and other offsets that the bank tractors which he interest, owned an *5 can immediately apply against the оverdraft determined that actual loss was the total (including immediate repayments), is the loss amount of the contracts received re- to the victim bank. contractors, lated rather than gain the net profit to these companies as Second, calculated or we do not believe that most check estimated the time of sentencing. United kiting frauds are sufficiently analogous to Badaracco, v. 928, (3d 954 F.2d 936-38 secured loan frauds require, held in Cir.1992). Thus, we distinguished Kopp be- Kopp, that the actual loss determination be type cause the of bank fraud at issue in made as the loss exists at the time of sen- Badaracco was more similar to an embezzle- tencing rather than at the time of detection. crime, ment where the loss is calculated as Although both of these of bank fraud gross gain, rather than a loan secured crime involve fraudulently loans, obtained the simi- where the defendant actually pledges some- larities end there. Secured loan frauds thing value, collateral, which will re- aspect clude an is ordinarily entirely duce the amount of the victim bank’s loss absent from -a check kiting namely scheme— below the face value of the loan. See collateral, probably insufficient F.2d at 937-38. protect the victim bank completely against loss, risk of usually provides recovery some We stated in Badaracco that “[ajlthough against the loan amount. By very nature, its section 2F1.1 applicable is to a variety wide of kiting ordinarily involves schemes, of fraud the sentencing judge is the borrowing of funds without entitled, authorization probably compelled, to evaluate the from the bank and without the offender pro- size of the loss based on particular of- viding any security - protect the bank fense.” Id. at 937. We believe that check against risk of loss. This distinction crimes, war- kiting because of particular their na- rants treating perpetrators of check ture, are crimes where the district court loan frauds in most cases differently from must calcúlate the victim’s actual loss as it perpetrators of secured loan frauds for sen- exists at the time the offense is detected tencing purposes. rather than as it exists at the time of sen- tencing. Katora, States v. Furthermore, Cf. we do not believe that calcu- 1398, (3d F.2d Cir.1992) 1406-07 (sentencing lating check fraud loss at the time of obliged not to reduce amount of wire detection is contrary to the commentary con- by speculative personal value of tained in the Sentencing Guidelines. The guaranties given at time commission of Sentencing Guidelines have been clarified to offense). We come to this conclusion for make explicit the rule we in Kopp announced several reasons. applicable frauds, secured loan but not
H5
—
denied,
(5th Cir.),
cert.
825-26
F.2d
kiting. The
like
frauds
loan
unsecured
—,
ous levels of involved different Specifically, of fraud. when a fraud solely misrepresentations
consists de-
signed contract, to secure a but the defen-
dant has no intention reneging
contract, that fraud must be treated differ- ently garden-variety from a fraud case. UNITED America, STATES of latter often is indistinguishable theft; Plaintiff-Appellee, the former not. itself, As in Kopp we said “some fraud involves away an intent to walk
with the full
fraudulently obtained,
FRANCISCO,
Rosa
Defendant-Appellant.
while other fraud is committed to obtain a
No. 93-5594.
contract
perpetrator
the fraud
intends to
perform.” Kopp,
Schneider, (7th Cir.1991)). 930 F.2d also principle
This is the articulated Schneider, cases we Kopp. relied on in (when
930 F.2d defendants