Introduction

United States v. Tyler N. Ross is a precedential Sixth Circuit decision addressing, for the first time in this circuit, when the sentencing enhancement in USSG §2B1.1(b)(17)(A) applies. That provision adds two offense levels and imposes a floor of offense level 24 (see §2B1.1(b)(17)(D)) if “the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense.”

Ross, a manager and co-CEO of a real-estate investment enterprise (ROCO), pleaded guilty to a §371 conspiracy premised on violating 18 U.S.C. §1014 by submitting falsified financials—especially trailing twelve-month operating statements (T12s)—to influence mortgage lenders. The key sentencing question was whether Ross “derived” more than $1,000,000 in “gross receipts from” a financial institution where his proceeds (just over $2 million) came to him from a private buyer (the Chetrit Group) who, in turn, financed the acquisition with a loan from JPMorgan.

The district court applied the enhancement, finding that the falsified T12s moved through the buyer to JPMorgan; the bank relied on those (in underwriting and in CMBS-related disclosures), and loan proceeds financed the purchase from which Ross personally profited by more than $1 million. On appeal, Ross contended the enhancement could not apply because he was paid by a real-estate firm, not by a bank; his conduct did not “target” a financial institution; and he neither caused nor intended loss.

The Sixth Circuit affirmed, holding that the enhancement applies even when the defendant’s receipts are indirectly obtained from a financial institution; that “derivation” turns on the funds’ source and flow from the financial institution’s possession/control; that a financial institution is “victimized” or placed at risk even absent a proven loss; and that the enhancement does not require proof of actual or intended loss. This ruling harmonizes the Sixth Circuit with the Eleventh Circuit’s “source + victimization” approach and limits the reach of decisions like Huggins where the bank is merely a conduit.

Summary of the Opinion

• The Sixth Circuit holds that USSG §2B1.1(b)(17)(A) applies where the defendant’s >$1,000,000 in receipts were indirectly derived from a financial institution’s funds that flowed from the bank’s possession/control to the defendant, even via an intermediary such as a buyer in a financed transaction.
• The court adopts, in substance, the Eleventh Circuit’s “source” and “victimization” framework from United States v. Muho, requiring that the financial institution be the source of the property (possessing/controlling it before it flows to the defendant) and be victimized or put at risk by the offense conduct.
• Actual or intended loss is not required. The enhancement focuses on the defendant’s benefit and the risk to the financial institution, consistent with the guideline’s text and the Crime Control Act of 1990’s directive.
• On the facts, the government proved by a preponderance that JPMorgan relied on falsified T12s to underwrite a $481 million loan and to structure CMBS-related disclosures; those loan proceeds financed the transaction paying Ross more than $2 million.
• The Sixth Circuit rejects arguments that the enhancement requires direct payment from a bank, that the offense must have initially “targeted” a bank, or that a loss showing is necessary. The commentary’s “directly or indirectly” phrasing reinforces the broad reach.

Analysis

1) Precedents Cited and Their Influence

The Sixth Circuit canvasses decisions construing §2B1.1(b)(17)(A):

• United States v. Huggins, 844 F.3d 118 (2d Cir. 2016): The Second Circuit reversed application of the enhancement when the defendant withdrew funds from his own bank account after defrauding investors. Because the bank neither suffered loss nor was meaningfully leveraged (it acted as a mere conduit to return the depositor’s funds), the enhancement did not apply. Huggins emphasized the enhancement’s purpose to punish placing financial institutions at risk by borrowing/stealing to support criminal activity.
  Sixth Circuit’s treatment: Ross is unlike Huggins—JPMorgan was not a neutral conduit. The falsified T12s were used to induce and price lending, shaping bank risk and CMBS disclosures, thereby leveraging the bank’s balance sheet and exposing it to undisclosed credit risk.
• United States v. Muho, 978 F.3d 1212 (11th Cir. 2020): Muho established that, for “gross receipts from a financial institution,” the bank must be the source of the property (possessing/controlling it before the offense) and must be victimized. Property must flow directly or indirectly from the bank’s possession to the defendant; no need for the bank to own the funds outright.
  Sixth Circuit’s alignment: Ross’s case is “more like Muho”—JPMorgan’s funds flowed into the deal and were deployed because of falsified underwriting data; the bank was victimized (risked more than it knew, potentially mispriced the loan, and took on reputational/regulatory risk in CMBS distribution).
• United States v. Stinson, 734 F.3d 180 (3d Cir. 2013): Construed “derive” to require identifying the specific source of the property.
  Role here: Supports the Sixth Circuit’s textual reading: the source of Ross’s receipts was JPMorgan’s loan proceeds, even if the funds reached Ross via the buyer.
• United States v. Hartz, 296 F.3d 595 (7th Cir. 2002): Discussed the 2001 Guidelines amendment shifting the language from “gross receipts from the offense” to “gross receipts from one or more financial institutions” while retaining commentary defining “gross receipts from the offense” to include property obtained “directly or indirectly.”
  Role here: Confirms the Commission deliberately allowed indirect derivation and that the text shift sharpened the focus on the financial institution as the source, not the mere existence of an offense.
• United States v. Earquhart, 795 F. App’x 885 (4th Cir. 2019): The Fourth Circuit reversed the enhancement where the defendant sold fraudulently “freed” properties to third parties and pocketed sales proceeds that came from purchasers rather than lienholding financial institutions.
  Sixth Circuit’s distinction: Earquhart’s receipts were sourced from buyers he defrauded, not from lenders. In Ross’s case, the bank’s funds actually financed the purchase, and the bank relied on the falsified financials; had Earquhart’s proceeds been shown to come from purchasers’ lenders based on tainted underwriting, the analysis could be different.

In addition, the Sixth Circuit cites circuit and in-circuit authority on standards of review and burdens (e.g., Lalonde, Abdalla, Ummin, Golson) to frame deference and the government’s preponderance burden.

2) The Court’s Legal Reasoning

a) Text and Commentary: “Derived … from one or more financial institutions”

The court anchors its analysis in the Guideline’s text and the Commission’s commentary:

• “Derived … from” requires identifying the specific source of the receipts; it does not require immediate or direct payment from the bank to the defendant.
• Comment note 13(B) explains that “‘[g]ross receipts from the offense’ includes all property … obtained directly or indirectly as a result of such offense.” The court uses this to confirm that indirect flows—loan proceeds routed through a buyer—qualify when the bank is the source of the funds.
• While mindful that commentary weight is debated post-Kisor, the court emphasizes the plain meaning of “derive” and uses the commentary consistently with the text.

b) Source and Flow of Funds

Applying Muho’s logic, the court requires that the bank possess or control the property before it flows to the defendant. In Ross:

• JPMorgan underwrote and funded a $481 million loan to finance the Chetrit Group’s acquisition.
• Those loan proceeds served as the source of Ross’s >$2 million distributions.
• Thus, the funds flowed—indirectly but traceably—from JPMorgan’s possession/control to Ross.

c) Victimization and Risk—No Loss Requirement

The court adopts the conceptual “victimization” element: the bank must be more than a conduit; it must be exposed or leveraged. On this record:

• JPMorgan relied on falsified T12s for underwriting (leverage, interest rate, and credit decisions), appraisals, and CMBS-related disclosures.
• The loan was riskier than the bank believed; the bank’s security interest was potentially devalued, and reputational/regulatory obligations were implicated.
• Importantly, the enhancement has no textual loss requirement. The court relies on Guideline structure and the Crime Control Act of 1990, which directs a minimum offense level when >$1 million in gross receipts are derived from a financial-institution-related offense. Congress and the Commission chose to focus on the defendant’s benefit, not loss.

By emphasizing ex ante risk and mispricing rather than ex post loss, the court avoids making the enhancement rise and fall with realized default or measurable loss.

d) Foreseeability and “Targeting” a Financial Institution

The court rejects Ross’s contention that he did not “target” JPMorgan when he gave falsified T12s to the buyer. In CRE transactions of this size, bank financing—and lender review of seller-supplied T12s—is customary and foreseeable. Evidence showed Ross knew, by closing, that JPMorgan was the lender and would review historical financials. In a conspiracy to falsify property-level financials to secure or maintain favorable mortgage terms, lenders are inherently in the zone of intended influence.

e) Standards and Burden

The Sixth Circuit notes “due deference” applies to the district court’s application of guidelines to facts, and that the government bears a preponderance burden. Here, the government’s evidentiary showing—industry custom, lender reliance, loan structure, CMBS disclosures, and payment tracing—met that threshold.

3) Application to the Facts

• Ross ran a scheme to inflate NOI on underperforming properties by manipulating T12s (reducing expenses, inflating income).
• In 2019, ROCO provided falsified T12s to the Chetrit Group in connection with a ~$520 million portfolio sale; the buyer submitted those T12s to JPMorgan to secure financing.
• JPMorgan relied on the falsified data to underwrite a $481 million loan and in CMBS-related disclosures, and would have halted the deal had it known the truth.
• Loan proceeds financed the acquisition, and Ross received more than $2 million from the sale proceeds funded by that loan.
• Therefore, Ross “derived more than $1,000,000 in gross receipts from” JPMorgan, a financial institution, “as a result of the offense.”

4) Rejection of the Defense Theories

• “I was paid by a real-estate firm, not a bank.” The court rejects a “direct payment” limitation. The commentary’s “directly or indirectly” language, the ordinary meaning of “derive,” and Muho’s “flow” analysis all authorize indirect chains where the bank’s funds are the ultimate source.
• “I did not target a bank.” In large CRE deals, lender involvement and review of seller-supplied T12s are foreseeable and customary. The scheme’s purpose—obtaining favorable mortgage/refinance terms—by its nature engages banks.
• “No loss, no enhancement.” The text contains no loss requirement; the Commission structured loss as a separate, independent enhancement. The gross-receipts enhancement punishes the defendant’s benefit and the risk imposed on the bank. Congress’s directive confirms the focus on benefit.
• “Earquhart controls.” Earquhart involved proceeds from buyers who were the fraud victims; no showing the banks’ funds were the source or that banks relied on falsified underwriting. Here, the bank’s funds financed the purchase and were deployed in reliance on falsified T12s.

5) Guideline Structure and History

The Sixth Circuit recounts the 2001 amendments (Amendment 617) that:

• Consolidated theft and fraud guidelines and expanded the loss table.
• Reduced this enhancement from four to two levels but kept the minimum offense level of 24 to avoid overpunishment when combined with the expanded loss table.
• Did not add any loss requirement to §2B1.1(b)(17)(A).

Congress’s Crime Control Act of 1990 specifically directed a minimum offense level of 24 where a defendant derives >$1 million in gross receipts in offenses affecting financial institutions. Thus, the enhancement properly centers on the defendant’s gain rather than the bank’s realized loss.

Impact

A. Practical Consequences for White-Collar and Financial-Crimes Sentencing

• Expanded reach via indirect flows: Defendants can be subject to the enhancement even where their checks come from non-bank counterparties, if those payments trace to bank financing induced by or relying on the offense conduct.
• No loss showing required: The government need not prove actual or intended loss. Evidence of reliance, risk mispricing, and funds flow from bank possession/control will suffice.
• CRE and structured finance sensitivity: In commercial real estate, where seller-supplied T12s and lender diligence are standard, misstatements to buyers can trigger this enhancement if the data predictably flows to lenders. CMBS securitizations add regulatory and reputational stakes.
• Plea leverage: Because the enhancement imposes a base offense level of 24, it can dramatically increase the guideline range, strengthening prosecutorial leverage even in cases without guideline “loss.”

B. What the Government Will Need to Prove

• That a financial institution possessed/controlled the funds that ultimately reached the defendant (directly or indirectly).
• That the offense conduct caused or foreseeably resulted in the bank deploying those funds (e.g., via reliance on falsified underwriting inputs).
• That the total receipts derived from the financial institution exceeded $1,000,000 for the defendant (not merely for co-conspirators in aggregate).

C. Defense Strategies Post-Ross

• Challenge source and flow: Argue the funds were buyers’ equity or came from a different non-bank source, with no traceable flow from bank possession/control.
• Attack reliance/causation: Show the bank did not rely on the allegedly false inputs; demonstrate independent underwriting that would have deployed the funds anyway, on the same terms.
• Dispute foreseeability and scope: Narrow the conspiracy’s scope, contest relevant conduct, and argue that lender involvement was not reasonably foreseeable.
• Quantify the defendant’s actual take: If individual receipts did not exceed $1 million, the enhancement does not apply (the threshold is defendant-specific).
• Seek variances where no loss: Even if the enhancement applies, Ross shows courts may vary downward when no loss materialized.

D. Inter-Circuit Landscape and Potential Tension

Ross aligns the Sixth Circuit with the Eleventh Circuit’s Muho approach. The Second Circuit’s Huggins, while emphasizing risk, suggested a “loss or liability” requirement that is difficult to reconcile with Ross’s express no-loss requirement. The Sixth Circuit does not reject Huggins outright; instead, it cabins Huggins to circumstances where the bank is a mere conduit of the defendant’s own funds. The Fourth Circuit’s Earquhart is distinguished on traceability and reliance. This landscape may invite further appellate refinement in cases with more attenuated funding chains or absent lender reliance.

Complex Concepts Simplified

• T12 (Trailing Twelve-Month Statement): A rolling one-year snapshot of a property’s revenues and expenses. Lenders use T12s to compute net operating income (NOI) and debt service coverage ratio (DSCR).
• NOI (Net Operating Income): Income from a property after operating expenses, before debt service. Higher NOI supports larger loans and better pricing.
• DSCR (Debt Service Coverage Ratio): NOI divided by required debt payments. If DSCR is overstated, lenders may lend too much or price too low.
• CMBS (Commercial Mortgage-Backed Securities): Banks often place loans into trusts and sell bonds backed by them. Accurate underwriting disclosures are critical for investors and regulators.
• Gross Receipts vs. Loss: “Gross receipts” measures the benefit to the defendant; “loss” measures the harm to victims. This enhancement turns on the defendant’s receipts from a financial institution, not on proving victim loss.
• “Derived … from a financial institution” (plain English): The money the defendant got came from bank funds that the bank controlled before they flowed (directly or via intermediaries) to the defendant.
• Preponderance of the evidence: More likely than not—i.e., just over 50% probability based on the evidence.
• Relevant conduct: At sentencing, the court can consider uncharged or acquitted conduct if sufficiently related to the offense and proven by a preponderance.

Unresolved Questions and Future Litigation

• How attenuated can “indirect” flows be? Ross involved a straightforward intermediary (buyer) funded by a single bank loan. Future cases may test multiple layers of intermediaries or syndicated/securitized funding channels without clear underwriting reliance on the falsity.
• Reliance threshold: Ross presented strong evidence of JPMorgan’s reliance. Is reliance necessary, or is causation satisfied if the offense foreseeably leads to bank funding, regardless of actual use of the misstatement? The text does not require reliance, but evidence of reliance will often be key to proving “as a result of the offense.”
• Which entities qualify as “financial institutions”? Banks plainly qualify; non-bank mortgage lenders and other modern financing platforms may raise definitional issues that Ross did not need to reach.
• Relationship to Huggins: While Ross cabins Huggins to “mere conduit” scenarios, some tension remains with the Second Circuit’s “loss or liability” phrasing. Whether this ripens into a clear circuit split may depend on future Second Circuit applications.
• Commentary weight post-Kisor: Ross relies primarily on text but cites commentary as reinforcement. Future cases may further test the degree to which commentary (e.g., “directly or indirectly”) carries weight when clarifying versus expanding the text.

Conclusion

United States v. Ross establishes a clear Sixth Circuit rule: the §2B1.1(b)(17)(A) enhancement applies when the defendant’s >$1,000,000 in receipts are traceable to a financial institution’s funds that flowed from the bank’s possession or control to the defendant, even indirectly, and where the bank was victimized or placed at risk as a result of the offense. The enhancement does not require a showing of actual or intended loss.

On the facts, Ross’s falsified T12s—created to inflate NOI and DSCR for underperforming properties—were provided to a buyer, forwarded to JPMorgan, and used in underwriting and CMBS disclosures for a $481 million loan that funded the acquisition. The bank’s funds were the source of Ross’s >$2 million proceeds, and the bank’s risk was mispriced due to the misstatements. That is enough to trigger the enhancement.

Practically, Ross sharpens the government’s sentencing toolkit in complex transactions where misrepresentations predictably reach lenders. It warns market participants—particularly in CRE and structured finance—that falsifying property-level financials can expose defendants to a level-24 floor even without realized losses. While questions remain at the margins (how indirect is too indirect, the necessity and quantum of reliance, and the precise contours of “financial institution”), the core holding provides a durable, text-based framework grounded in the guideline’s language, its history, and Congress’s directive.

Key Takeaway: In the Sixth Circuit, “derived … from a financial institution” under §2B1.1(b)(17)(A) includes indirect receipts funded by a bank when the offense causes or foreseeably leads a bank to deploy funds in reliance on misstatements—no loss showing required.

Key Citations

• USSG §2B1.1(b)(17)(A), (D); cmt. n.13(B)
• Crime Control Act of 1990 §2507, Pub. L. No. 101-647, 104 Stat. 4789, 4862
• United States v. Muho, 978 F.3d 1212 (11th Cir. 2020)
• United States v. Huggins, 844 F.3d 118 (2d Cir. 2016)
• United States v. Stinson, 734 F.3d 180 (3d Cir. 2013)
• United States v. Hartz, 296 F.3d 595 (7th Cir. 2002)
• United States v. Earquhart, 795 F. App’x 885 (4th Cir. 2019)
• United States v. Golson, 95 F.4th 456 (6th Cir. 2024)
• United States v. Abdalla, 972 F.3d 838 (6th Cir. 2020)
• United States v. Lalonde, 509 F.3d 750 (6th Cir. 2007)