Clarifying Loss Calculations and Plea Foundations in Procurement Fraud and Aggravated Identity Theft: United States v. White

Introduction

The Second Circuit’s summary order in United States v. White (24-66, April 11, 2025) settles important questions about two aspects of federal criminal procedure and sentencing in procurement-fraud cases: how to calculate “loss” under the U.S. Sentencing Guidelines for fraud offenses involving reprocurement, and what is required to establish a sufficient factual basis under Rule 11(b)(3) for a guilty plea to aggravated identity theft. The appellant, Raymond White, admitted a multi-count fraud scheme to obtain a National Guard construction contract. On appeal he challenged (1) the district court’s calculation of loss under U.S.S.G. § 2B1.1; (2) the sufficiency of the factual basis for his guilty plea to aggravated identity theft in Count Four; and (3) the effectiveness of his counsel for not objecting to that plea. The Second Circuit affirmed across the board, reaffirming established principles on loss under Section 2B1.1 and on Rule 11 and plain-error review.

Summary of the Judgment

The Court of Appeals for the Second Circuit unanimously affirmed the district court’s judgment. It held that:

• The district court did not err in treating the “actual loss” as the difference between the contract awarded to White and the replacement contract after the government rescinded his award—this difference, including increased design costs and market inflation, was a reasonably foreseeable harm under U.S.S.G. § 2B1.1, comment. n.3(A).
• White’s arguments about offsetting the value of services he purportedly rendered were misplaced; the reimbursements he received were not consideration for services conferred on the government and thus did not reduce loss under comment n.3(E)(i).
• The district court’s acceptance of White’s guilty plea to aggravated identity theft (18 U.S.C. § 1028A) satisfied Rule 11(b)(3) because White admitted using another’s Social Security number and signature to procure the SBA guaranty as part of the fraud.
• On plain-error review, White failed to show a reasonable probability he would have gone to trial on Count Four if the court had demanded a more detailed factual record.
• His ineffective-assistance claim likewise fails: even assuming counsel erred by not objecting, White did not show a reasonable probability of a different outcome.

Analysis

Precedents Cited

The Court drew on a rich body of precedent to resolve the loss and plea-basis issues:

• Loss Calculation:
  • United States v. Turk, 626 F.3d 743 (2d Cir. 2010): emphasized that loss under § 2B1.1 can swing a defendant’s Guidelines range by up to 30 levels and must account for foreseeable harm.
  • United States v. Canova, 412 F.3d 331 (2d Cir. 2005): held that in procurement fraud, courts may look to re-procurement costs when goods or services must be recommissioned.
  • United States v. Robers, 572 U.S. 639 (2014): in the restitution context, noted that market fluctuations remain foreseeable consequences of fraud, not breaking the causal chain.
• Rule 11 and Aggravated Identity Theft:
  • United States v. Albarran, 943 F.3d 106 (2d Cir. 2019): interpreted Rule 11(b)(3) as requiring only a minimal factual basis for the plea.
  • United States v. Maher, 108 F.3d 1513 (2d Cir. 1997): clarified that the court’s role under Rule 11 is not to predict a jury verdict but to ensure the admitted conduct constitutes the crime.
  • Dubin v. United States, 599 U.S. 110 (2023) and United States v. Omotayo, 132 F.4th 181 (2d Cir. 2025): articulated the “at the crux” test for aggravated identity theft when the predicate offense is fraud.
• Ineffective Assistance: Strickland v. Washington, 466 U.S. 668 (1984), and its two-pronged test for deficient performance and prejudice.

Legal Reasoning

1. Loss Calculation under U.S.S.G. § 2B1.1: The Guidelines define loss as the greater of actual or intended loss. “Actual loss” includes “reasonably foreseeable pecuniary harm,” which here meant the extra costs the government incurred when it cancelled White’s award and hired another contractor. The court found these additional costs—stemming from design modifications, inflation, administrative delays—were the foreseeable consequence of White’s fraud. His argument that market swings or design changes were unforeseeable was rejected by reference to Robers, which confirms consequential market fluctuations are ordinarily foreseeable. The court also stressed that reimbursements for administrative expenses did not reduce loss under comment n.3(E)(i) because they did not represent services actually rendered to the government.

2. Factual Basis under Rule 11(b)(3): To establish a guilty plea’s validity, the district court must ensure the defendant’s admissions cover the essential elements of the charged offense. For aggravated identity theft under 18 U.S.C. § 1028A, the defendant must use another person’s means of identification “during and in relation to” a predicate felony (major fraud or wire fraud). Applying Dubin and Omotayo, the court determined that White’s use of a false date of birth, another individual’s Social Security number in his SBA application, and forged signatures were integral (“at the crux”) to the success of his fraudulent scheme. On plain-error review, White did not show that he would have insisted on a trial absent this minimal factual basis.

3. Ineffective Assistance of Counsel: White argued counsel should have objected to the factual basis on Count Four. Under Strickland’s prejudice prong, he needed to show a reasonable probability of a different outcome—namely, going to trial and presumably prevailing. Because the record made clear the identity-theft element was central to the scheme, no such probability existed, so the claim failed.

Impact

This decision reinforces stability in sentencing and plea practice:

• It affirms that courts may look to re-procurement costs, including administrative and inflationary components, as foreseeable loss in procurement fraud cases.
• It underscores that Rule 11(b)(3) requires only a minimal factual record—they need not re-weigh evidence or predict jury findings—provided the admissions touch every element.
• It clarifies that on plain-error review, defendants must show a strong likelihood they would have rejected a plea absent the alleged Rule 11 defect.

Future litigants in fraud cases now have a clearer roadmap for both sentencing and plea negotiations, knowing that re-procurement differentials will be captured as loss and that minimal plea-hearing facts suffice for identity-theft counts.

Complex Concepts Simplified

• Actual Loss vs. Intended Loss: “Actual loss” is the real dollar harm the victim suffered; “intended loss” is what the defendant hoped to cause. The Guidelines use whichever number is larger.
• Reasonably Foreseeable Pecuniary Harm: Costs that the defendant knew or should have known could result, such as expenses to fix or replace a defrauded contract.
• U.S.S.G. § 2B1.1 cmt. n.3(E)(i): Permits offset for money or services actually returned to the victim before detection—but not for every legitimate business expense.
• Federal Rule of Criminal Procedure 11(b)(3): Requires the court to confirm there is a factual basis for each guilty plea, but it does not require proof beyond a reasonable doubt or simulating a jury trial.
• Plain-Error Review: An appellate standard for unpreserved errors. A defendant must show (1) an error, (2) that is clear and obvious, (3) affects substantial rights, and (4) seriously undermines the fairness or reputation of judicial proceedings.
• Strickland Test for Ineffective Assistance: Counsel’s performance must be objectively unreasonable, and the defendant must show a reasonable probability of a different outcome without the error.

Conclusion

United States v. White reaffirms established principles in two critical areas of federal criminal law. First, it confirms that “actual loss” under the fraud Guidelines may include the full differential costs of reprocurement when a government contract is tainted by fraud. Second, it clarifies that a minimal but clear factual admission is sufficient under Rule 11(b)(3) for aggravated identity theft in a plea context—so long as the misuse of identity is “at the crux” of the scheme. Defendants challenging plea colloquies on appeal must overcome a high bar on plain-error review by showing they would have rejected the plea. Finally, ineffective-assistance claims tied to Rule 11 objections will fail absent a demonstration of a reasonable probability of a different result. This summary order thus provides bench and bar with solid guidance on loss calculations, plea-hearing procedures, and counsel’s responsibilities in fraud and identity-theft prosecutions.