United States v. Alphas, No. 14-2228 (1st Cir. 2015)Annotate this Case
Appellant submitted at least ten fraudulent claims to his insurers for lost, stolen, or damaged produce and sought reimbursement. In sum, the ten claims totaled over $490,000, yet Appellant received payments totaling only $178,568. Appellant later pleaded guilty to a single count of wire fraud. The PSI Report recommended boosting Appellant’s offense level by 14 levels based on an intended loss of approximately $480,000. The PSI report also recommended a restitution award of $178,568. Appellant objected to the recommendations, arguing that the loss figure should exclude legitimate losses embedded in the fraudulent claims. The district court overruled Appellant’s objections, concluding that where, as here, insurance policies contain void-for-fraud clauses, intended loss is equal to the aggregate face value of the claims submitted. The court then sentenced Appellant to an incarcerative term of twelve months and ordered payment of restitution in the amount of $178,568. The First Circuit vacated Appellant’s sentence, including the restitution order, and remanded for resentencing, holding that the district court erred in (1) calculating the amount of intended loss attributable to the fraud and, thus, in fashioning the guideline enhancement; and (2) ordering restitution in the full amount paid to Appellant simply because the insurance policies included void-for-fraud clauses.