Jesse J. LaGrossa ,left, and Edward Waddington ,right, of Marcum. Courtesy photos Jesse J. LaGrossa, left, and Edward Waddington, right, of Marcum. Courtesy photos

Introductory Comments

Accurately determining the financial losses in white-collar federal criminal matters is vital to all parties as the loss may impact court-ordered restitution and the length of any incarceration imposed by the court. The guidelines manual issued by the U.S. Sentencing Commission (often referred to as the federal sentencing guidelines), first enacted by the U.S. Congress in 1987 provides recommendations that judges may consider when imposing a sentence. These guidelines correlate in part to the amount of loss attributable to the alleged misconduct with the length of a sentence; hence, the greater the loss, the longer the sentence. While federal judges may consider the sentencing guidelines, they are not obligated to adhere to them— hence the term "guidelines."

The considerations for determining the financial loss in a federal criminal matter are analogous to those a practitioner may employ in other issues requiring measuring a financial loss (i.e., damages in civil litigation). As any disputed loss will be litigated in federal court, the loss analysis must comply with applicable professional standards and considerations for "expert" testimony outlined in Federal Rule of Evidence 702 (FRE 702). FRE 702 provides a properly qualified expert may testify, if:

  • The testimony is based upon sufficient facts or data.
  • The testimony is the product of reliable principles and methods.
  • The expert's opinion reflects a reliable application of the principles and methods to the facts of the case.

A 2022 federal case captioned United States v. Porat illustrates the importance of adhering to criteria set forth in FRE 702 when determining the amount of loss attributable to a defendant's alleged fraudulent conduct.

The Porat matter involved the dean of a well-known business school who was convicted of conspiring with others to fraudulently inflate his school's rankings in U.S. News & World Report. The identified victims of Porat's fraudulent activities were those students and donors who relied on and made decisions based on the school's fraudulently inflated ranking.