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ARTICLE · 08 DECEMBER 2022

3rd Circ. 'Loss' Definition Is A Win For White Collar Defendants

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On Nov. 30, the U.S. Court of Appeals for the Third Circuit published a potential watershed decision in U.S. v. Banks,1 holding for the first time that the definition of "loss" in fraud cases...

United StatesCriminal Law
Bill Mateja
Bill Mateja
Kathryn Rumsey
Kathryn Rumsey
Jason C. Hoggan
Jason C. Hoggan
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On Nov. 30, the U.S. Court of Appeals for the Third Circuit published a potential watershed decision in U.S. v. Banks,1 holding for the first time that the definition of "loss" in fraud cases does not include "intended" loss under the sentencing guidelines.

Thus, the government may only use evidence of "actual" loss to establish an appropriate punishment for fraudulent conduct — a huge win for defendants that could have massive ramifications in white collar cases going forward.

Prosecutors exploit "intended loss" in order to manufacture higher sentences in white collar matters, a tool that has been greatly questioned and diminished. The Banks decision is a fatal blow to this unwieldy analysis, which may result in fewer white collar matters and smaller sentences.

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