USA V. RUSLAN KIRILYUK, No. 19-10447 (9th Cir. 2022)
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Defendant was convicted of 28 felony offenses in connection with a fraud conspiracy involving 120,000 American Express Cards. In sentencing Defendant to 27 years’ imprisonment, the district court relied in part on Application Note 3(F)(i) to U.S.S.G. Sec. 2B1.1 (“the Application Note”), which provides that the “loss” amount for the use of counterfeit credit cards must at least $500 per credit card used. Using this multiplier, the district court applied a 22-level enhancement.
The Ninth Circuit vacated Defendant’s sentence. Under Stinson v. United States, 508 U.S. 36 (1993), an Application Note is authoritative unless it is “inconsistent with, or a plainly erroneous reading of, that guideline.” Thus, if an Application Note conflicts with the Guidelines, the Guidelines must be given effect over the Application Note.
Defendant’s fraud scheme involved charging $15 to $30 per card, resulting in actual losses of $1.4 million. However, the use of the Application Note calculated the loss amount to be $60 million. Here, the Ninth Circuit found that the Application Note’s multiplier rule does not comport with the plain meaning of “loss,” and thus, Defendant’s 22-level enhancement based on the calculated $60 million loss cannot stand.
The Ninth Circuit also found that the district court erred in sentencing Defendant to 264 months for each wire and mail fraud count when the maximum statutory penalty was 240 months.
Court Description: Criminal Law. The panel vacated a sentence and remanded for resentencing in a case in which a jury convicted the defendant of 28 felonies, the bulk of which were wire and mail fraud counts, in connection with a complex fraud conspiracy involving over 120,000 stolen American Express cards. The defendant contended that the district court erred in calculating loss based on Application Note 3(F)(i) to U.S.S.G. § 2B1.1, which mandates that “loss” for use of counterfeit credit cards must be calculated at not less than $500 per credit card used. Although the defendant’s offense only caused an actual loss of $1.4 million and had an intended loss of only $3.4 million, the Application Note’s multiplier skyrocketed the “loss” to nearly $60 million and led to a 22-level enhancement. While the conspiracy in this case was designed to charge only $15 to $30 per credit card, the Application Note deems each loss to be $500. The defendant contended that Application Note 3(F)(i)’s mandatory $500-per-card minimum conflicts with the plain meaning of “loss” under § 2B1.1, and asked this court to find it non-binding under Stinson v. United States, 508 U.S. 36 (1993). The panel concluded that no Ninth Circuit precedent forecloses this challenge, that the defendant’s sentencing objection was enough to preserve de novo review of the challenge, and that he properly raised the argument on appeal. On the merits, the panel held that Application Note UNITED STATES V. KIRILYUK 3 3(F)(i)’s expansion of the meaning of “loss” is clearly inconsistent with the language of the Guideline, and operates as an enhanced punishment rather than an assessment of “loss” tied to the facts of the case. The panel concluded that Application Note 3(F)(i) is therefore not binding under Stinson, which makes clear that the role of the Application Notes is to explain the Sentencing Guidelines, not enact policy changes to them; and that the defendant’s 22-level enhancement therefore cannot stand. The panel also held that the district court erred in applying an enhancement for use of an “authentication feature” under U.S.S.G. § 2B1.1(b)(11)(A)(ii) because the purported authentication features used here—credit card numbers, passwords, and bank account numbers—were issued by American Express or a bank, not an “issuing authority,” which the Guidelines define as “any government entity or agency that is authorized to issue identification documents, means of identification, or authentication features.” Although not raised by the defendant, the government conceded that the district court imposed an illegal sentence, and committed error that was plain, by imposing a 264- month sentence on each of the defendant’s wire and mail fraud counts, where wire and mail fraud carry a maximum penalty of 240 months’ imprisonment for each count. The panel wrote that because the district court would have been free to hand down a shorter sentence had it realized the error, it would be a miscarriage of justice to give the defendant an illegal sentence in this case. The panel remanded for resentencing on an open record. 4 UNITED STATES V. KIRILYUK In a concurrently filed memorandum disposition, the panel addressed the defendant’s remaining objections to his sentence. Judge Bress dissented from the part of the decision invalidating the pre-card multiplier. He wrote that the majority opinion vastly exceeds the powers of a three-judge panel in overturning circuit precedent—namely, United States v. Yellowe, 24 F.3d 1110 (9th Cir. 1994), in which this court rejected a challenge to Sentencing Guidelines commentary allowing district courts to impose a presumptive dollar-per-credit-card multiplier for calculating “loss” enhancements under the Guidelines for certain fraud offenses.
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