Clarifying Foreseeable Loss in Fraud Sentencing and Factual-Basis Standards for Aggravated Identity Theft Pleas

Introduction

United States v. White, 24-66 (2d Cir. Apr. 11, 2025), presented the Second Circuit with key questions about two fundamental aspects of federal criminal sentencing and plea validation. Raymond White, a contractor who obtained a D.C. Army National Guard construction contract through a fraudulent scheme, pleaded guilty to major fraud (18 U.S.C. § 1031), wire fraud (§ 1343), aggravated identity theft (§ 1028A), false statements (§ 1001(a)(2)), and preparing false documents (§ 1001(a)(3)). On appeal, White challenged (1) the district court’s loss calculation under the Sentencing Guidelines, (2) the adequacy of the factual basis for his guilty plea to aggravated identity theft (Count Four), and (3) his counsel’s effectiveness for failing to object to that factual basis. The Second Circuit, after assuming familiarity with the record, affirmed on all grounds.

Summary of the Judgment

The appellate court affirmed in a summary order. First, it held de novo that the district court’s application of U.S.S.G. § 2B1.1 was correct: “actual loss” was measured by the cost difference between White’s fraudulent contract award and the replacement contract, including reasonably foreseeable administrative costs and market‐driven price changes. Second, under plain‐error review of Fed. R. Crim. P. 11(b)(3), the panel found that there was no reasonable probability White would have declined to plead guilty to aggravated identity theft had the district court more explicitly tied the plea to the misuse of another’s social security number. Third, applying Strickland v. Washington, 466 U.S. 668 (1984), the court concluded that even if counsel erred by not objecting to the factual basis, White could not show prejudice. Accordingly, the district court’s judgment was affirmed in full.

Analysis

1. Precedents Cited

• United States v. Cramer, 777 F.3d 597 (2d Cir. 2015): De novo review of Guidelines interpretation, clear‐error standard for underlying facts.
• Anderson v. City of Bessemer City, 470 U.S. 564 (1985): Definition of “clear error.”
• United States v. Mi Sun Cho, 713 F.3d 716 (2d Cir. 2013): Review limitations when the district court’s account of evidence is plausible.
• United States v. Turk, 626 F.3d 743 (2d Cir. 2010): Importance of loss calculation and deterrent rationale.
• United States v. Canova, 412 F.3d 331 (2d Cir. 2005): Procurement‐fraud loss calculations under predecessor guidelines.
• United States v. Robers, 572 U.S. 639 (2014): Restitution context—foreseeability of market fluctuations.
• United States v. Byors, 586 F.3d 222 (2d Cir. 2009): Distinction between “value” conferred and legitimate expenditures.
• United States v. Albarran, 943 F.3d 106 (2d Cir. 2019): Rule 11(b)(3) factual‐basis standard.
• United States v. Maher, 108 F.3d 1513 (2d Cir. 1997): Plea‐basis review requires only that the conduct admitted constitute an offense.
• United States v. Culbertson, 670 F.3d 183 (2d Cir. 2012): Acceptable sources for factual basis at plea hearing.
• United States v. Aybar-Peguero, 72 F.4th 478 (2d Cir. 2023): Limits on materials post–plea hearing and plain‐error review.
• United States v. Torrellas, 455 F.3d 96 (2d Cir. 2006): Plain‐error standard for unpreserved Rule 11 claims.
• Dubin v. United States, 599 U.S. 110 (2023): “At the crux” test for § 1028A aggravated identity theft.
• United States v. Omotayo, 132 F.4th 181 (2d Cir. 2025): Application of Dubin’s three‐part test in the fraud context.
• Strickland v. Washington, 466 U.S. 668 (1984): Two‐prong test for ineffective assistance of counsel.

2. Legal Reasoning

Loss Calculation under § 2B1.1: The court reaffirmed that “loss” for fraud is the greater of actual or intended loss (U.S.S.G. § 2B1.1 cmt. n.3(A)). “Actual loss” includes “reasonably foreseeable pecuniary harm,” encompassing administrative costs of reprocurement and market‐driven price increases. Following Turk and Robers, the panel held that White forced the government to repeat and redesign the procurement, making the cost difference—and consequential market fluctuations—foreseeable. White’s “legitimate” expenditures, however, were mere reimbursements, not value conferred to the victim (Byors), so no offset was required.

Factual Basis for Aggravated Identity Theft Plea: Under Rule 11(b)(3) and Albarran, the district court need only ensure that admitted conduct constitutes the offense, not guarantee a jury would convict. On plain‐error review (Torrellas; Adams), the panel found that White’s admissions—misuse of another’s signature, date of birth, and social security number to obtain an SBA guaranty in support of his fraud—satisfied Dubin’s “at the crux” test as elaborated in Omotayo. White could not show a reasonable probability he would have rejected the plea absent any error.

Ineffective Assistance Claim: Applying Strickland, the court assumed arguendo counsel’s omission but dispensed with the prejudice prong: even absent the challenged plea‐basis language, White’s extensive admissions ensured the guilty plea to Count Four would stand.

3. Impact

United States v. White reinforces several key principles:

• Sentencing courts may include replacement‐contract cost differences and market‐driven increases in “actual loss” when fraud forces reprocurement.
• Reimbursements for pre-award administrative expenses do not reduce loss unless they confer value to the victim.
• Under Rule 11, a minimal showing that the defendant admitted conduct constituting each element of an offense suffices—even in aggravated identity theft cases requiring “at the crux” analysis.
• Plain-error review of unpreserved Rule 11 claims demands a demonstration of a reasonable probability that the defendant would have declined the plea absent the error.
• Ineffective-assistance claims tied to plea‐basis objections will fail without prejudice showing under Strickland.

Future fraud prosecutions and plea proceedings will cite White for guidance on loss measurement and the sufficiency of factual bases in identity-theft pleas.

Complex Concepts Simplified

• Actual vs. Intended Loss (§ 2B1.1): “Actual loss” is what the victim really lost; “intended loss” is what the defendant planned to take. Sentencing uses the higher.
• Reasonably Foreseeable Harm: Includes costs the defendant should have known would flow from the crime—like admin fees and market upswing if a contract must be re-bid.
• Factual Basis for a Guilty Plea: The judge must confirm the defendant’s admissions cover each element of the charged crime, but need not weigh proof or predict jury findings.
• “At the Crux” Test (Dubin): For aggravated identity theft, the stolen ID must be central to committing the underlying felony—more than a side detail.
• Plain-Error Review: When an issue wasn’t raised below, the appellate court will correct only clear, prejudicial errors that undermine trial fairness.

Conclusion

United States v. White sharpens the contours of fraud sentencing and plea-validation practice. By endorsing broad inclusion of foreseeable costs in loss calculations and limiting district courts’ Rule 11 inquiries to elemental admissions, the Second Circuit affords prosecutors reliable tools while preserving defendants’ plea rights. The decision thus carries significance both for sentencing judges confronting complex procurement‐fraud losses and for practitioners ensuring that guilty pleas to aggravated identity theft rest on a firm, “at the crux” factual foundation.