Clarifying “Actual Loss” in Procurement Fraud and Factual-Basis Standards for Aggravated Identity Theft Pleas

Introduction

This appeal arises from the United States Court of Appeals for the Second Circuit’s summary decision in United States v. White, No. 24-66 (2d Cir. April 11, 2025). Defendant-appellant Raymond White pleaded guilty in the Southern District of New York to six federal offenses stemming from a fraudulent bid to build a munitions training facility for the District of Columbia Army National Guard. On appeal he challenged (1) the district court’s loss-calculation under U.S.S.G. §2B1.1; (2) the sufficiency of the factual basis for his aggravated identity theft plea (18 U.S.C. §1028A); and (3) the effectiveness of his counsel for not objecting to that factual basis. The Second Circuit affirmed, clarifying both the contours of “actual loss” in procurement-fraud sentencing and the plain-error standard for Rule 11 factual‐basis review in identity-theft cases.

Summary of the Judgment

The court unanimously affirmed the district court’s sentencing determination and plea-acceptance ruling. On the loss calculation, it held that “actual loss” under §2B1.1 means the foreseeable difference between the fraudulent contract award and the replacement contract awarded after re-procurement. It rejected White’s arguments that market fluctuations and design changes were unforeseeable or that his reimbursed expenses reduced loss. On the aggravated identity theft plea, the court found no plain error in accepting the plea without additional record materials: White’s admissions and the indictment’s allegations sufficiently established that misuse of another’s Social Security number was “at the crux” of the fraud. Finally, it declined to find ineffective assistance, since even a successful objection would not have changed the outcome.

Analysis

Precedents Cited

United States v. Cramer, 777 F.3d 597 (2d Cir. 2015): Established de novo review of Guidelines interpretation and clear-error review of factual findings.
Anderson v. City of Bessemer City, 470 U.S. 564 (1985): Defined the “clearly erroneous” standard for review of bench findings.
United States v. Mi Sun Cho, 713 F.3d 716 (2d Cir. 2013): Emphasized deference to plausible factual accounts by district courts.
United States v. Turk, 626 F.3d 743 (2d Cir. 2010): Highlighted the dramatic effect of loss-amount determinations on offense levels under §2B1.1.
United States v. Canova, 412 F.3d 331 (2d Cir. 2005): Interpreted predecessor loss note in procurement-fraud and product-substitution contexts.
United States v. Robers, 572 U.S. 639 (2014): Held market fluctuations are foreseeable losses in restitution contexts.
United States v. Byors, 586 F.3d 222 (2d Cir. 2009): Clarified that only returned “value” offsets loss, not legitimate but unbeneficial expenditures.
United States v. Albarran, 943 F.3d 106 (2d Cir. 2019) & Maher, 108 F.3d 1513 (2d Cir. 1997): Defined Rule 11(b)(3)’s factual-basis requirement.
United States v. Culbertson, 670 F.3d 183 (2d Cir. 2012): Described permissible sources for factual-basis inquiry at plea.
United States v. Aybar-Peguero, 72 F.4th 478 (2d Cir. 2023): Limited district court to materials in the record at the plea hearing and applied plain-error review.
United States v. Torrellas, 455 F.3d 96 (2d Cir. 2006) & Adams, 768 F.3d 219 (2d Cir. 2014): Articulated the four-part plain-error test.
Dubin v. United States, 599 U.S. 110 (2023) & Omotayo, 132 F.4th 181 (2d Cir. 2025): Defined the “at the crux” test for aggravated identity theft under §1028A.
Strickland v. Washington, 466 U.S. 668 (1984): Established the two-prong test for ineffective assistance of counsel.

Legal Reasoning

Loss Calculation: The court held that “actual loss” includes reasonably foreseeable costs of re-procurement—design changes, inflation, administrative expenses—when a government agency must replace a fraudulently awarded contract. It applied the plain text of U.S.S.G. §2B1.1, comments 3(A)(i) & (iv)–(v)(II), and related case law to reject White’s narrower view that only direct overpayments or inflated bids count.

Factual Basis for Plea: Under Rule 11(b)(3), the district court needed only a minimal record—defendant’s admissions and government representations—to conclude that misuse of another’s SSN was integral to White’s fraud. The Second Circuit emphasized that Rule 11 does not require a jury-level sufficiency showing and that, on plain-error review, White failed to show a reasonable likelihood he would have gone to trial absent the error.

Ineffective Assistance: Because any objection to the factual basis would have been unavailing under the same reasoning, White could not satisfy either Strickland prong. The court therefore resolved the claim on the existing record for the sake of judicial economy.

Impact

Sentencing courts will feel confident applying broad “reasonably foreseeable” treatment of design changes and market factors when computing procurement-fraud loss under U.S.S.G. §2B1.1.
Plaintiffs and defense counsel in identity-theft plea proceedings should note that Rule 11(b)(3) demands only minimal, contemporaneous record support of admissions—additional documents (e.g., post-plea PSR) are off limits.
Appellate practitioners are reminded that plea-acceptance errors not preserved in district court face plain-error review and that ineffective-assistance claims may be resolved on the existing record when no prejudice is shown.

Complex Concepts Simplified

“Actual Loss” (U.S.S.G. §2B1.1): The greater of money the victim actually lost or what the defendant intended to steal, including foreseeable re-procurement costs.
“Reasonably Foreseeable Pecuniary Harm”: Any financial harm the defendant knew or should have known could result, such as design modifications, administrative delays, and market changes.
Rule 11(b)(3) Factual Basis: At plea, the court must ensure the defendant’s admissions describe conduct that violates the charged statute; it need not replicate a jury trial’s evidence-sufficiency inquiry.
Plain-Error Review: An unpreserved error is reversible only if it is clear, affects substantial rights, and seriously undermines judicial integrity.
“At the Crux” Test (18 U.S.C. §1028A): Aggravated identity theft requires that misuse of another’s ID be central to the fraud, not merely incidental or tangential.
Strickland Standard: To prevail on ineffective assistance, a defendant must show both deficient performance and a reasonable probability of a different outcome absent that deficiency.

Conclusion

United States v. White confirms that sentencing courts may include foreseeable procurement-reprocurement costs in fraud loss calculations, even when driven by market or design changes. It also underscores the minimal record required to support an aggravated identity theft plea under Rule 11(b)(3) and reinforces the high bar for plain-error and ineffective-assistance claims on direct appeal. Together, these holdings bring clarity and predictability to two frequently contested aspects of federal criminal practice: the scope of “actual loss” under the Sentencing Guidelines and the sufficiency of a plea’s factual basis in identity-theft cases.