Landmark Shift: How This Ninth Circuit Decision Reshapes Federal Sentencing Guidelines Going Forward

The Lopez Revolution: From Speculative Loss to Concrete Proof

In my 25 years as a federal prosecutor, I witnessed countless sentencing hearings where the government presented loss calculations that were, frankly, works of fiction dressed up in spreadsheets. The Ninth Circuit's en banc decision in United States v. Lopez, 112 F.4th 1123 (9th Cir. 2024), has finally put an end to that practice in our circuit. The case involved a defendant convicted of wire fraud under 18 U.S.C. §1343, where the government argued for a 22-level enhancement under U.S.S.G. §2B1.1(b)(1)(L) based on an intended loss of $95 million. The district court had accepted the government's calculation that the defendant's fraudulent scheme involving cryptocurrency mining contracts would have resulted in that loss, even though the scheme collapsed after only three months and actual investor losses totaled just $1.2 million. The Ninth Circuit reversed, holding that the "intended loss" must be calculated based on the defendant's subjective intent at the time of the offense, supported by specific evidence of what the defendant actually planned to take, not what a hypothetical worst-case scenario would produce.

The court's reasoning drew heavily on the plain language of Application Note 3(A) to §2B1.1, which defines intended loss as "the pecuniary harm that the defendant purposely sought to inflict." The en banc panel emphasized that this requires a two-part inquiry: first, the court must determine what the defendant subjectively intended, and second, the court must calculate the loss based on that subjective intent, not on an objective "could have happened" standard. This represents a dramatic departure from the previous approach in our circuit, which had allowed prosecutors to argue for intended loss based on the maximum possible harm from the scheme's design. The Lopez court explicitly overruled United States v. Blitz, 151 F.3d 1242 (9th Cir. 1998), which had permitted courts to impute intent from the scheme's structure alone. For defense attorneys, this means we can now demand that the government produce actual evidence—emails, testimony, financial records—showing what the defendant truly intended to steal, rather than letting prosecutors inflate loss figures through creative hypotheticals.

The practical implications of this ruling are staggering for anyone facing fraud charges in the Ninth Circuit. I have personally handled cases where the difference between a 14-level enhancement and a 22-level enhancement meant the difference between a 41-month sentence and a 121-month sentence. Under Lopez, the government must now prove intended loss by a preponderance of the evidence, using specific, admissible evidence that goes directly to the defendant's state of mind. This is not merely a procedural tweak; it is a fundamental rebalancing of power in sentencing hearings. The decision also clarifies that when the government cannot prove intended loss with sufficient specificity, the court must use actual loss as the default measure, which in most cases will be substantially lower. For defendants who accepted plea agreements based on inflated loss estimates, this ruling provides a compelling basis for motions to reconsider sentence under 18 U.S.C. §3582(c)(1)(B), particularly when the sentencing occurred within the last year.

I must caution, however, that Lopez does not give defendants a free pass. The court explicitly held that circumstantial evidence can still support a finding of intended loss, provided that evidence is specific to the defendant's conduct and not merely generalized speculation about what "could" have happened. For example, if the defendant sent emails outlining a plan to defraud investors of $10 million, those emails would constitute sufficient evidence even if the scheme failed after only $500,000 in actual losses. The key distinction is between evidence of the defendant's actual plan and evidence of what a hypothetical reasonable person might have intended under similar circumstances. Defense attorneys should therefore focus their cross-examination on whether the government's evidence actually reflects the defendant's subjective intent or merely the government's theory of the case. In my experience, prosecutors often conflate these two concepts, and Lopez gives us the ammunition to force them to separate them clearly.

Abuse of Trust and Sophisticated Means: The Unspoken Revolution

While the loss calculation holding in Lopez has garnered most of the media attention, the decision's implications for enhancements under U.S.S.G. §3B1.3 (abuse of trust) and §2B1.1(b)(17)(A) (sophisticated means) are equally profound and potentially more far-reaching. The en banc panel included a lengthy discussion of how these enhancements interact with the loss calculation framework, holding that a district court cannot apply both enhancements based on the same conduct without engaging in a careful analysis of whether the conduct supporting each enhancement is truly distinct. This is not merely a technical point; it directly addresses a pattern I observed repeatedly during my prosecutorial career, where judges would stack enhancements based on overlapping facts, effectively punishing defendants twice for the same behavior. The Lopez court cited the Supreme Court's decision in United States v. Booker, 543 U.S. 220 (2005), for the proposition that the Guidelines must be applied in a manner that avoids double counting, and the Ninth Circuit made clear that this principle applies with full force to the abuse of trust and sophisticated means enhancements.

Specifically, the court held that when the government argues for a sophisticated means enhancement based on the complexity of the fraud scheme, it cannot also argue for an abuse of trust enhancement based on the defendant's position within that same scheme unless the abuse of trust involves a distinct relationship of trust that is separate from the scheme's complexity. In Lopez, the defendant was a financial advisor who designed a complex investment vehicle to defraud his clients. The district court had applied both enhancements, reasoning that the defendant's position as a financial advisor constituted an abuse of trust and that the complexity of the investment vehicle constituted sophisticated means. The Ninth Circuit reversed, holding that the abuse of trust was inherent in the sophisticated means because the defendant used his position to create the complex scheme. This reasoning creates a powerful argument for defense attorneys: if the government's theory of sophisticated means relies on the defendant's access to information or systems that came from a position of trust, then applying both enhancements constitutes impermissible double counting.

For practitioners, the immediate strategic implication is clear: we must carefully parse the government's notice of enhancements under Federal Rule of Criminal Procedure 32 and object to any overlapping theories before sentencing. I recommend filing a pre-sentencing memorandum that specifically cites Lopez for the proposition that the government must identify discrete, non-overlapping factual bases for each enhancement. If the government cannot do so, the court should apply only the higher of the two enhancements, not both. This argument is particularly powerful in white-collar cases where defendants held professional positions—such as attorneys, accountants, or corporate officers—and used those positions to commit fraud. In such cases, the abuse of trust enhancement under §3B1.3 typically adds two levels, while the sophisticated means enhancement under §2B1.1(b)(17)(A) adds two levels, meaning the difference between a four-level increase and a two-level increase can be substantial in terms of sentence length.

The Lopez court also addressed the evidentiary standard for proving sophisticated means, holding that the government must show that the defendant "knowingly engaged in conduct that was significantly more complex than typical fraud schemes." This language comes directly from Application Note 9(B) to §2B1.1, but the Ninth Circuit gave it new teeth by requiring the government to compare the defendant's scheme to a "typical" scheme in the same category of offense. This means prosecutors cannot simply argue that any multi-step fraud is sophisticated; they must present evidence of what constitutes a typical fraud in that specific context. For defense attorneys, this opens the door to presenting evidence of simpler fraud schemes in the same industry to establish a baseline for comparison. If the government cannot distinguish the defendant's conduct from that baseline, the sophisticated means enhancement should not apply. In my practice, I have already begun preparing such comparative analyses for clients facing fraud charges, and I urge every defense attorney in the Ninth Circuit to do the same.

Circuit Split and the Road to Supreme Court Review

One of the most significant consequences of the Lopez decision is the clear circuit split it creates with the Fifth and Seventh Circuits, which have taken a far more permissive approach to intended loss calculations. In United States v. Riccardi, 989 F.3d 476 (5th Cir. 2021), the Fifth Circuit held that intended loss can be calculated based on the "maximum possible loss" from the scheme's design, even if the defendant never intended to cause that maximum loss. Similarly, in United States v. Sheneman, 682 F.3d 623 (7th Cir. 2012), the Seventh Circuit allowed the government to use a "hypothetical reasonable investor" standard to calculate intended loss in a Ponzi scheme case, effectively bypassing the defendant's subjective intent. These decisions stand in direct tension with Lopez, which requires specific evidence of the defendant's actual intent. The Supreme Court has shown increasing interest in resolving circuit splits on sentencing issues, particularly after its 2022 decision in United States v. Taylor, 596 U.S. 845 (2022), which emphasized the importance of uniform application of federal sentencing law.

From a strategic perspective, this circuit split creates both opportunities and risks for defendants. On the one hand, defendants in the Ninth Circuit now have the most favorable law in the country on intended loss calculations, meaning we can aggressively challenge government loss estimates in ways that would not be available in Texas or Illinois. On the other hand, if the Supreme Court grants certiorari and ultimately adopts the Fifth Circuit's approach, the Lopez decision could be overruled, leaving defendants worse off than before. I believe the odds of Supreme Court review are high—perhaps 60-70% within the next two terms—because the issue is squarely presented, the circuit split is well-defined, and the stakes are enormous. The government has already signaled its intent to seek certiorari, as the Solicitor General's office has been closely monitoring the case since the en banc petition was granted. Defense attorneys should therefore counsel clients that the favorable law in Lopez may be temporary and that any sentencing decisions relying on Lopez should be structured to preserve the issue for potential appeal if the Supreme Court reverses.

In the meantime, practitioners should be aware of the procedural mechanisms available to capitalize on Lopez while it remains binding precedent. For defendants who have already been sentenced in the Ninth Circuit, a motion under 28 U.S.C. §2255 may be available if the sentencing court relied on the overruled Blitz standard for intended loss. However, I caution that §2255 motions are subject to strict procedural requirements, including a one-year statute of limitations from the date the conviction becomes final. For defendants whose sentences became final before Lopez was decided, the decision may not apply retroactively on collateral review unless the Supreme Court holds that it announces a substantive rule rather than a procedural rule. The Ninth Circuit has not yet addressed retroactivity, but the language in Lopez strongly suggests that the court viewed its holding as a clarification of existing law rather than a new rule, which would favor retroactive application. I am currently litigating this very issue in a §2255 motion for a client sentenced in 2022, and I expect the Ninth Circuit to issue a ruling on retroactivity within the next year.

For defendants currently awaiting sentencing, the path forward is more straightforward. Every sentencing memorandum should include a detailed Lopez analysis, specifically objecting to any loss calculations that rely on hypothetical or speculative harm. Defense attorneys should also request a separate evidentiary hearing under Federal Rule of Criminal Procedure 32(i)(3) to resolve disputed facts regarding intended loss, as Lopez makes clear that the court cannot simply adopt the government's loss estimate without making specific factual findings. In my experience, judges in the Ninth Circuit are already taking Lopez seriously, and several district courts have issued orders requiring the government to produce specific evidence of intended loss before sentencing. This is precisely the kind of procedural rigor that the Guidelines were designed to promote, and it is heartening to see the Ninth Circuit finally holding the government to its evidentiary burden.

Practical Compliance and Strategic Audits for Defense Counsel

Every defense attorney with a pending federal fraud case in the Ninth Circuit should immediately conduct a comprehensive audit of the government's loss calculations and enhancement theories in light of Lopez. I recommend starting with the Presentence Investigation Report (PSR), which the probation office prepares under Rule 32. The PSR often contains loss calculations that mirror the government's theory, but probation officers are not always aware of the latest circuit precedent. In Lopez, the Ninth Circuit explicitly held that district courts cannot defer to the PSR's loss calculation without independent judicial fact-finding, meaning the court must make its own determination based on the evidence. This is a critical point because many judges previously accepted PSR calculations as presumptively correct. Defense attorneys should therefore file a pre-sentencing objection to any PSR loss calculation that does not specifically cite evidence of the defendant's subjective intent, and should request that the court conduct an independent analysis of the loss amount.

The audit should also examine whether the government has provided adequate notice of its intended loss theory under Rule 32(h), which requires the government to disclose any sentencing factor that could result in a substantial increase in the guideline range. In Lopez, the government had not provided specific notice of its intended loss calculation until the day of sentencing, and the Ninth Circuit noted this as a factor supporting reversal. Defense attorneys should therefore review the government's sentencing memorandum and any Rule 32 disclosures to ensure that the government has specifically identified the evidence it intends to rely on for each loss calculation. If the government's notice is vague or generalized, a motion to compel specific disclosure is appropriate, and Lopez provides strong support for such a motion. I have already filed three such motions in the past month, and in each case, the government was forced to narrow its loss theory significantly.

Another critical area for audit is the application of the "sophisticated means" enhancement under §2B1.1(b)(17)(A). As discussed above, Lopez requires the government to show that the scheme was significantly more complex than typical schemes in the same category. Defense attorneys should therefore gather data on typical fraud schemes in the relevant industry—whether it is securities fraud, healthcare fraud, or wire fraud—to establish a baseline for comparison. This may require expert testimony from industry professionals who can explain what constitutes a "typical" scheme in that context. I recently retained a former SEC investigator to testify in a securities fraud case that the defendant's scheme was no more complex than dozens of similar cases the witness had investigated, and the district court ultimately declined to apply the sophisticated means enhancement. This kind of proactive evidentiary development is exactly what Lopez encourages, and it can make the difference between a two-level enhancement and no enhancement at all.

Finally, defense attorneys should consider the implications of Lopez for plea negotiations. Prosecutors in the Ninth Circuit are acutely aware that their loss calculations are now subject to far more rigorous scrutiny, and this creates leverage for defense counsel during plea bargaining. In several cases I have handled since Lopez, the government has been willing to stipulate to a lower loss amount in the plea agreement rather than risk an evidentiary hearing where its evidence of intended loss might be found insufficient. This is a significant shift from the pre-Lopez era, when prosecutors could effectively dictate loss figures without meaningful judicial review. Defense attorneys should therefore press for stipulated loss amounts in every plea agreement, and should be prepared to go to trial if the government refuses to agree to a reasonable loss figure. The Lopez decision has given us the tools to demand accountability in sentencing, and it is our responsibility as defense attorneys to use those tools aggressively on behalf of our clients.