Campbell: Not Credit for Overhead in Loss Amount Calculation

In U.S. v. Campbell, No. 12-11952 (Sept. 3, 2014), the Court affirmed the conviction and sentence of a defendant convicted of defrauding the State of Alabama of several million dollars through a fraudulent institute. The Court rejected the argument that the “loss amount” that was the basis for a sentence enhancement should have been reduced, based on the legitimate services his institute rendered to the State of Alabama. The Court found ample support in the record that the institute “was a sham organization which served no legitimate purpose.” The Court rejected Campbell’s argument that the government should have sifted through years of bank records and itemized every single transaction that should be chalked up as a loss to the victim. “When, as here, a defendant’s conduct was permeated with fraud, a district court does not err by treating the amount that was transferred from the victim to the fraudulent enterprise as the starting point for calculating the victim’s pecuniary harm.” The Court noted that the district court correctly granted a partial credit for legitimate services rendered by the institute. The Court added, however, that Campbell was not entitled to a credit for the operating expenses of the institute, because many of these expenditures played some role in perpetuating the scheme.